MMORPG currency exchange defrauded for $3,000

The massively multiplayer online game currency exchange Gaming Open Market will be closing its doors to currency trading for all games except Second Life until further notice, said the company’s founders in a letter posted on the GOM Web site. The closing comes in response to a transaction that occurred on Sunday, in which a client obtained $3,000 worth of online currency for nothing.

According to GOM President Jamie Hale, the perpetrator purchased $3,000 worth of Star Wars Galaxies and EVE Online credits. Immediately after he received the currencies in-game, he retracted the PayPal payment, claiming that the goods were never delivered. Hale suspects that incident is part of a larger case of identity theft.

GOM allows players of massively multiplayer online games to exchange in-game currencies for real-life dollars. The company holds the game currencies for sellers, and after receiving payment via PayPal, delivers the purchased currencies to the buyers through in-game avatars. The incident takes advantage of a PayPal policy in which sellers of “intangible goods,” such as a subscriptions or computer software, receive no protection because there is no widely accepted proof-of-shipment methods for these goods.

GOM has provided detailed information to the PayPal fraud department, yet the company does not hold much hope. In the letter, cofounders Hale and Tom Merrall expressed their “great frustration and anger” over the event, saying that “PayPal's dated policy on the sale of ‘intangible goods’ is well-known, and yet they refuse to accept any responsibility for the fraud that this policy actually encourages.”

They have also filed a complaint with the FBI Internet Fraud Department about both the incident and PayPal’s policy. But Hale said today that he does “not expect to hear back from them for months, if not years.”

What will it take to bring the other games back to the GOM exchange? Hale says that both PayPal and the online game publishers will have to rethink their policies. “The game companies need to recognize in-game commodification is going to happen,” said Hale. “They have to agree to work with us, and work with PayPal.” Until that happens, however, several hundred GOM users will have to take their business elsewhere.

GOM previously supported currency exchanges in Second Life, Star Wars Galaxies, There, Horizons, EVE Online, Project Entropia, and RuneScape. The company is based in Markham, Ontario, Canada.