TechCrunch's Michael Arrington was busy over Halloween weekend. After stirring it up (video) on Friday at the Virtual Goods Summit in San Francisco, he penned Scamville: The Social Gaming Ecosystem Of Hell and challenged the ethics of virtual goods offer providers and game publishers.
For those of you that haven't been accosted by these offers on Facebook, here's how Arrington describes a typical scam:
Users are offered in game currency in exchange for filling out an IQ survey. Four simple questions are asked. The answers are irrelevant. When the user gets to the last question they are told their results will be text messaged to them. They are asked to enter in their mobile phone number, and are texted a pin code to enter on the quiz. Once they've done that, they've just subscribed to a $9.99/month subscription. Tatto Media is the company at the very end of the line on most mobile scams, and they flow it up through Offerpal, SuperRewards and others to the game developers.
One of Arrington's beefs is that that mainstream media can't stop applauding the companies involved long enough to understand what they're doing - "The real story isn't the business success of these startups. It's the completely unethical way that they are going about achieving that success." This MSNBC video interview with Super Rewards Co-founder Adam Caplan is a great example.
Today Arrington followed up with Two Companies That Said No To Social Media Scams which includes yet another Vancouver connection - popular dating site Plentyoffish. As a result, Plentyoffish founder Markus Frind is sharing his experience with virtual currency on his personal blog today:
Looks like the media finally wakes up to the fact that much of the social gaming/virtual currency is in fact a complete scam. Its been a open secret for at least the last 3 years, that no one ever questioned any of this is absolutely amazing.
TechCrunch continues to uncover more dirt today with a guest post by BlitzLocal's Dennis Yu titled How to Spam Facebook Like a Pro: An Insider's Confession. While Yu has cleaned up his act and is no longer in the business of spam, he's open about his previous success generating millions of dollars from Facebook offers and his experience with the major players including Vancouver's Super Rewards.
SuperRewards is run by Jason Bailey (aka ChickenHole), who was able to quickly morph himself from Millnic Media to this new company. This fellow would call me up and yell at the top of his lungs, as I wouldn’t refund his money for setting up multiple accounts to game our network. I did refund his money, only once he agreed to a ban on our network.
So, is Arrington being too tough on the virtual goods industry or is he on to a much bigger story here?