Real money lost in a pretend world
The players of Second Life can deposit real money into the game, which shows up as "Linden dollars." They play the game, potentially opening businesses or working at jobs, and earn virtual money. They can buy real estate and pay for entertainment. But that money can be drawn back out as real money, so players can make or lose real money within the game.
Now the game has a banking scandal. Players of the game opened banks that other players could use in the virtual reality. But players complained because the banks didn't pay the returns on the deposits that they promised. Players started withdrawing the real money from the game, but some have found that the pretend banks aren't allowing them to withdraw their money. They've lost Linden dollars and real life dollars.
The people who run Second Life decided to shut down all the virtual banks. Many players aren't sure whether or not they'll lose their money, how much they lose, or whether action will be taken against the banks who owe them.
This bizarre online world clearly has the ability to cross from the virtual into reality. Real companies even pay for advertising in the game, believing that promoting their products in the game is a good investment. The good news? There are attorneys in Second Life, as evidenced by the Second Life Bar Association. Maybe they can start suing the avatars.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.