Class action suit: SL Businesses VS Griefer

Thank you Captain, for being on my side, least someone around here has some sense. My point I tied to make that it is insane to worry about a virtural business in a game, opps I mean "Cyber Community." People who are store owners in SL are usually paying subcribers right? That means they had a soucre of income before joining SL, meaning most of them have REAL JOBS which should be providing for your basic REAL Life needs. We all should be adults here, and unless you are still living in your parents bsement and earning money through the exchange is truly your source of income, get over it. Yeah it sucks that assholes take down SL but in my humble opion suing the attackers for profit lose is laughible. Maybe suing for under gaming laws is better, I'm not a lawyer. Oh and BTW I'm not a billion dollar princess as acused by others, I'm a college student who just hangs out and has a good time on SL when its up.

Poker chips aren't real money.....but they sure as hell are valuable and can be changed INTO real money.

There IS a precedent!

But I'd hate to see US law brought into this and I think you'd all agree if you think about it.

Agreed.

But there is another very interesting question to ask before you could have a legal class action.

As I type this question on a real life BB my avatar is sitting in a casino, being paid to advertise its place on the grid via camping chairs.

Before that he was in Caladon admiring the view, and he also had a brief stroll through Dreamland's Central Park.

So "where" is he?

Is he in the Casino, or could he be in Caladon, Dreamland, or perhaps the world of Second Life where King Phillip I rules as an absolute monarchy.....

To use another example when I look at another screen on my computer (Stock market live feed) the law is very clear, I am in the UK and any action on that screen is subject to UK financial laws......

In Second Life I am not so sure....

I think the question of emanate domain needs to be addressed


Regards

John

I'm not confusing any issues - I never said that someone has to violate a State or Federal law to be sued. I merely pointed out the fact that no State or Federal law has been violated so there under Criminal law individuals cant sue the greifers. LL could.

My point is that under Civil law a lawsuit cold be filed, but for what? Damages to Business due to downtime? ? No no no no no!

THIS IS A GAME! ANY PROFIT MADE HOWEVER BIG IS THE RESULT OF GAMING NOT BUSINESS.

Sheesh!

Is the internet a huge network of servers passing bytes to one another to allow our interactive experiences?

Or is it a virtual space / domain which we populate and interact with one another?

Under law it would be and ahs been classified as the former and therefore RL businesses (banks, stores, etc.) can do legimate RL trade by leverage of a RL computer network (however vast).

SL is a gaming application of the internet and any trade that happens within SL is part of that gaming experience. Any profits drawn from that gaming experience are not taxable and are not RL business.

Rather than a lawsuit, i personally would like to see the griefers arrested and put under house arrest with his/her computer privileges taken away until he/she gets past puberty.

In addition, as with convicts that were arrested for larceny, say, and cannot be hired in any job involving the control or handling of money, the griefers should have a record that prevents them from working on computers.

"Would you like fries with that?"

Suing a kid on an allowance would be pointless- but taking away what defnes him/her, i.e. scripting/programming skill would be ouchy indeed.

Sorry but you are wrong

Regards

John

Captain Clipper, have a look at the SL homepage. It doesn't say anything about a game there. The website calls SL an "Online 3D Digital World". Further down the page it's called "one of the internet's most populous virtual world shops". A click on "developers" will reveal additional characterizations: a 3D platform for developers, a 3D content creation tool, a user community with embedded market, a place for real-time development and so on... in short: a development and business platform.

Of course, I'd also prefer to see any SL income as non-taxable gambling profits. But an attack on this platform should at least be treated like the attempt to bring the webserver of a business enterprise down with a DOS attack, or like spreading a virus within a vast LAN.




Well, this weekend I've lost approx. 270 - 280 US$ (calculated with a typical sales rate of 290 L$ / dollar), and I'm surely none of the big players in SL. Weekend sales tend to be around 80,000 - 90,000 L$ (and dropped to 4k this weekend), but I run a rather small shop in comparision to others.




SL is far from being just a game. Many companies and individuals do serious business here. Large RL companies (like IBM, for example) hold meetings and do presentations on SL, others (like Adidas) use it as a platform for product placement. Record labels (Sire Records) promote their artist's work in SL, universities (Harvard Law School) hold lectures here, telephone sex providers expand into the market of virtual escort services, RL psychologists treat patients with SAD or social phobia in virtual sessions... not to speak of private individuals who gave up their RL job to work solely on their SL business.

In my opinion online worlds like Second Life are the future of the internet, the first step towards Gibson's vision of cyberspace, the internet model of the future, the next evolution step of business websites and online shops. Linden Labs is not developing another MMORPG, they're doing field work in the development of a new communication medium.



I don't have a "real job" anymore, but I also don't live in my parent's basement. I'm an early retiree with just a small pension. I started out paying $18 a month for my account and a little land, I'm paying $215 now and I'm thinking of buying an island in addition to the mainland sim for a roleplay project. Paying those land fees without some payback in form of the shop sales would really hurt. I could afford it, but barely.

If it makes you happy call it a game. I don't care. The fact is ANY INCOME IS TAXABLE UNDER US LAWS. You can make that money dealing drugs and it is still taxable.

Much as I'd love you to be right, my accountant (and the UK IRS) would argue with you.

The amount that I earn from providing content in SL has led to me having to register with the UK government as a business. I pay taxes on all my SL earnings. I even have to pay weekly UK national insurance contributions for time spent on my SL "work". I would expect that most of the other top SL content creators are in the same boat.

My SL business is a bona-fide, legal, real-world entity, that just happens to use a virtual world as its primary trading platform.

In short: You're wrong.

If that is the case then I stand corrected for people in your situation and with a registered RL business. That is the path you have chosen to your financial detriment.

I, however, would be prepared to argue in a court of law against the IR, that the moneys I make are not tax deductable, they are in fact the result of gaming and can not be classified as income. Just because YOU have chosen to classify your SL profits as RL income does not mean that everyone does. So therefore, in short, I am not wrong, I just have a different opinion.

I'm suprised that many people with SL business have been so shortsighted as to pay tax on their 'winnings' when it can be easily argued that that they are not a part of a sustainable RL business model.

This is a huge 'grey area', particularly in the UK and I for one will not pay tax on anything I make here in SL.

Income made from gaming is NOT tax deductable. Yet!

You gonna define how i am 'wrong'? Or just post ur opinion on if I am wrong or not? What about the debate? Do you beleive a class law suit could be brought by individuals against the greifers for loos of earnings? Please, if you gonna comment make it relevent.

It's only grey in your eyes because you have arbitrarily decided to use the term "winnings" by which you mean gambling I assume ? In the UK gambling winnings are tax exempt under the terms stated here :

http://www.adviceguide.org.uk/n6w/index/life/tax/tax-exempt_and_taxable_income.htm

However i would imagine you would have a harder time trying to prove that income derived in SL by providing a service to people and being reimbursed for it is gambling or a game of chance than the taxman would have arguing that it is income derived from a business. LL themselves state SL is a platform not a game. You would be taxed for any business run via a website, what makes SL any different ?

Here is a link to the form you can use to report your winnings and pay taxes on it (not that SL is a game).

http://www.irs.gov/pub/irs-pdf/fw2g.pdf

Not a grey area at all, it's not a case of registering a RL business it's a case of spending time to earn money. If Joe Blogg's go's and fixes his friend John Smith's PC and get's paid what amounts to labour ( i.e. Joe earns money from it ) then legally he should declare that as earnings to the tax office. Whether people do is a different matter and the tax have bigger fish to catch than £10 earned here and there this way but it is still earning which legally should be declared. SL in that situation is no different. If your making RL money from a service you spend RL time on then you legally should declare it. If your making £1000's then if the tax office where to find out they WOULD be interested.

I might do but before I start I would point out I am posting in my private capacity rather than that of a financial advisor or accountant (UK based)

The Inland Revenue in my country call any business an adventure in trade, if it produces revenue it is accessible for income or corporation tax, if it produces capital gain it is assessable for capital gains tax.

As far as gambling is concerned it is fair to say that the occasional social gamble or lottery win is not tax assessable in my country, however if it is carried out as the result of a profession or trade it is. Spread betters on the stock market discovered that several years ago....

Therefore in my country and by default the EU, revenue or capital would become tax assessable as it accrues.

However while potential profits remain in Linden dollars and are not converted into Sterling, Euros or Dollars I would deem it to be un-accrued, regardless of the fact that the Linden Dollar does have fungible value.

That brings me back full circle to my earlier point of emanate domain. I think we are in a grey area here insomuch as UK or US law may or may not be relevant to Second Life. Please see my earlier post on that one. What is clear is that regardless of the source, funds once remitted are tax assessable.

That would be my own professional opinion for UK subjects, but as I said I am posting here in a private capacity and all should seek their own qualified guidance

Regards

John

PS I think we should give others here the chance to comment, I am interested in other peoples thoughts on a class action and the concept of emanate domain

1.4 Second Life "currency" is a limited license right available for purchase or free distribution at Linden Lab's discretion, and is not redeemable for monetary value from Linden Lab.

You acknowledge that the Service presently includes a component of IN-World FICTIONAL currency ("Currency" or "Linden Dollars" or "L$", which constitutes a limited license right to use a feature of our product when, as, and if allowed by Linden Lab. Linden Lab may charge fees for the right to use Linden Dollars, or may distribute Linden Dollars without charge, in its sole discretion. Regardless of terminology used, Linden Dollars represent a limited license right governed solely under the terms of this Agreement, and are not redeemable for any sum of money or monetary value from Linden Lab at any time. You agree that Linden Lab has the absolute right to manage, regulate, control, modify and/or eliminate such Currency as it sees fit in its sole discretion, and that Linden Lab will have no liability to you based on its exercise of such right.

1.5 Second Life offers an exchange, called LindeX, for the trading of Linden Dollars, which uses the terms "buy" and "sell" to indicate the transfer of license rights to use Linden Dollars. Use and regulation of LindeX is at Linden Lab's sole discretion.

The Service currently includes a component called "Currency Exchange" or "LindeX," which refers to an aspect of the Service through which Linden Lab administers transactions among users for the purchase and sale of the licensed right to use Currency. Notwithstanding any other language or context to the contrary, as used in this Agreement and throughout the Service in the context of Currency transfer: (a) the term "sell" means "to transfer for consideration to another user the licensed right to use Currency in accordance with the Terms of Service," (b) the term "buy" means "to receive for consideration from another user the licensed right to use Currency in accordance with the Terms of Service," (c) the terms "buyer," "seller", "sale" and "purchase" and similar terms have corresponding meanings to the root terms "buy" and "sell," (d) "sell order" and similar terms mean a request from a user to Linden Lab to list Currency for sale on the Currency Exchange at a requested sale price, and "buy order" and similar terms mean a request from a user for Linden Lab to match open sale listings with a requested purchase price and facilitate completion of the sale of Currency.

You agree and acknowledge that Linden Lab may deny any sell order or buy order individually or with respect to general volume or price limitations set by Linden Lab for any reason. Linden Lab may limit sellers or buyers to any group of users at any time. Linden Lab may halt, suspend, discontinue, or reverse any Currency Exchange transaction (whether proposed, pending or past) in cases of actual or suspected fraud, violations of other laws or regulations, or deliberate disruptions to or interference with the Service.




The above is what I copied right off the user agreement statement. Notice the term I capsed for you in the second paragraph, Linden Labs even considers their currency fictional. And from what I get from the last paragraph that it is a privilage not a right to be able to use the exchange.

Captain, before I begin, let me just say that I thought about directly quoting you and responding point by point as I normally do, but since you've said the same thing so many times now, quoting and responding to each instance would get pretty redundant. So, let me just snip what I believe to be your main point, the foundation of your argument, and respond to that.



Please don't take any offense when I say this, but the more you keep harping on that point, the more you serve to trumpet your own ignorance. What you're saying simply couldn't be further from the truth, and it illustrates an extreme, fundamental misunderstanding on your part of what income and business really are.

I'd highly recommend you read two of my previous posts in this thread, How L$ Income Translates to Real Income In a Legal Sense, and this untitled one about the proper way to file US federal income tax on earnings from an SL business. I think you'll find them educational.

The answer to your question is yes, those of us running SL businesses (properly) do declare that income with our respective governments, and we do file taxes accordingly.

I can promise you it's not considered gaming income; it's business income. To attempt to declare it as gaming income would be illegal.

While we're on the subject of what's illegal, by the way, have you considered your own actions in this thread? Your constant attempts to convince people not to pay taxes on their SL earnings could be construed as inciting others to break the law, which is a crime. You might want to think about whether it's worth continuing to do that.

Anyway, even if SL business earnings were to be considered gaming income (which it's not), it would still be taxable. As Raster and others have pointed out, gambling winnings are taxable under US federal law. All income is taxable, period.

I noticed in your response the first time Raster brought that up that you used the phrase "not tax deductible" as your defense. This would seem to further illustrate your misunderstanding of how income tax works. The term "tax deductible" refers to expenses that get subtracted from your income, and in turn serve to lower your tax liability. So of course "income made from gaming is not tax deductible". It can't be. It's not an expense. There's nothing to deduct.

If the math doesn't make sense to you, then at least think about the language. By declaring it "not tax deductible" what you're saying is that it is taxable. Isn't that the exact opposite of what your argument was supposed to be? Weren't you the one trying to say that SL income is not taxable? Of course, that's completely wrong because it is taxable, but "not taxable" was what you've been trying to say, right?


Captain, I must wonder. Have you ever filed income taxes before? Have you ever owned a business? Have you ever had any experience whatsoever with any of this? I strongly suspect the answer is no.

I notice you're quick to scold others when they don't "define how you're wrong", but you don't seem to care that you actually are. On this subject, you couldn't be more wrong if you tried. In any case, you certainly haven't "defined" how you're right. You're not, so you can't.

I'd encourage you to do a little research on income tax and business before you jump into a thread like this and just blindly spout your uninformed opinion on a topic about which you appear to know nothing at all.

And if you're wondering where I'm coming from on this, about whether or not I happen to really know about this subject, the answer is I do. As I mentioned earlier, I've been a business owner in RL for over 12 years, and one in SL for over two years. I do my taxes every year, all by my little old self. Doing it wrong could cost me a lot, so like every honest citizen, I'm careful to do it right. That means I've had to learn a thing or two about this over the years. I'd imagine the same is true for pretty much everyone else who's been arguing against you this whole time.

When you've got equal experience, Captain, perhaps you'll be able to add something constructive to the discussion. Until then all you're really doing, if you'll forgive more saying so, is making yourself look silly. You'd do well to listen to those who know what they're talking about instead of just making stuff up and assuming it's true.


Please accept my apologies if anything I've said here was too blunt or too harsh. It was not my intention to try to make you feel bad. It's just that after reading your same untrue statements so many times throughout this thread, I finally felt I had to say something to try to set things straight.

No one is debating the fact that the L$ is not currency. Anyway, LL sold more than L$20,000,000 of this "fictional" currency last month and received over $70,000 real money for it. And you can be sure that they will file that on a tax return. Do they REALLY think it is worthless?

I think it was John Horner who pointed out in one if his posts "if it quacks like a duck, walks like a duck...

This legalise you placed here is to protect them from being liable for any damages that may occure with respect to the L$.

Sue the griefers? I wonder how long it'll take for Ginsu to realize that Leonard J. Crabs isn't a real person.

Does gold have Physical properies granting it more than simple aesthetic or abstract Value Other than it's Dollar Value in the real world?

Yes, It's proprties of density, maleability, conductivity (Electrical and Thremal) and it's relative chemical, and Biological Inertness grant it Hundreds of Practical uses in the fields of Industry, Technology, and Medicine

Linden Dollars? Nope, sorry.

Gold, or Any other real world Comodity mentioned here has one thing that Linden Dollars do not posess. a Stand alone Purpose. The stock Markets trade in everything from Food stocks to petroleum because ALL of those items, Bar None have a function Other than simple aesthetic or abstract value. They have a Use, and the NEED for those commodities in a Given period is a measurable and oft times predictable thing.
In the Full analysis, Lindens posess two functions. Inside SL they Mimic the function of Money, and in RL they are converted to Real Money.
But the terms of that conversion are wholley at the discresion of LL. Today, the exchange rate is between 250 and 300 Lindens to the real Dollar, But LL could decide tomorrow that their Value would be Half that, or Double. There IS no Real world Function for the Commodity of Lindens that can be used to accurately or solidly set it's RL Vale.

Gold isn't worth $400.00+ an ounce "Just because we say so".

That is the Difference betweem Gold and Lindens, and that Nebulous Value would probably be the single greatest Obstical to launching a Class Action Suit.

Angel.

That's all true, but it's also all completely irrelevant. The money in your pocket only has value because you believe it does. Gold only has value because people believe it does. Linden dollars only have value because you believe they do. Value is not an inherent property of anything. It's a judgment that we assign to things. That's all.

The fact that gold is a tangible item isn't what gives it value. Stock options have value, but they're completely fictional, not tangible at all. Most of the world's money is also fictional, existing only as numbers. What makes anything valuable, whether it be tangible or intangible, is the fact that people want it, and are willing to give up other things in order to have it. The specifics of what they happen to want it for are not relevant in any way, shape, or form.

All the properties of gold that you mentioned are simply examples of what someone might want gold for, perhaps motivation for value, but not actually value itself.

Pick up any economics text book, by the way, and this concept of value will be covered on page one.


Again, that's completely irrelevant. However, since you brought it up, I would argue strongly that Linden dollars do have a stand alone purpose. Some people like to accumulate as many as they can, just for the sake of having them; that's a purpose. Some people like to trade them in the interest of earning a profit; that's a purpose. Some people use them as the means by which to "purchase" space to upload files to the SL servers; that's a purpose.

It's not for anyone to judge what makes an item "purposeful" except for the person who actually wants the item. Don't forget, a grilled cheese sandwich that some people believe looked like The Virgin Mary was purchased on eBay for like $30,000. To that person, clearly that item had a purpose. To you and me, it was meaningless. To them, its value was thousands of dollars; to me, it's value would just be a couple hundred calories.

There's nothing inherent about ANY item that makes it valuable. It's all about whether or not someone wants it, and what they're willing to give up to have it. Again, economics 101.


Stock markets trade stocks, which are an intangible, imaginary item, just like Linden dollars. They represent a concept of ownership, nothing more than an interpretation. They're not "real" at all, but they still have a use, just like Linden dollars.

Commodities markets, not stock markets, trade commodities. Commodities are tangible goods like gold, pork, or frozen concentrated orange juice (Trading Places, anyone?).

The "need" for any commodity is no different than the "need" for an intangible good or service. If someone wants something, it's needed, it's valuable. If they don't, it's not. That's it. Again, the reason why they want it is not relevant. It only matters that they do.


There's nothing "real" about money, just so you know. We commonly refer RL money as "real" in conversation to differentiate it from SL money, but in either world, money is just a concept. It only has value because you believe it does. That belief may be unshakable or unquestionable to you since you grew up in a society that has ingrained it into your sense of reality, but I can assure you it's not a fact; it's just a belief.

Particularly if you're in the US, you'd really be amazed to do a little research into what an imaginary thing money really is. Banks create it out of thin air at will.

I hate to keep harping on this, but an economics text book really would be a good read for you.



First of all, Linden Lab does not directly set the exchange rate. It's solely at the discretion of the traders. When a lot of people want to buy Linden dollars, the price goes up. When a lot want to sell, the price goes down. In other words, it's just like any other market on Earth.

Second, LL's ability to affect the value of the Linden dollar is no different than any other relevant organization's ability to affect the value of something else. Take petroleum for example. Why are gas prices so high right now? Mostly because the powers that be in the petroleum industry decided they should be. Last week, prices started to fall a bit, so OPEC in their infinite greed decided to cut production. In any economic system, cutting supply while keeping demand the same equals higher prices.

If LL really wanted to drastically alter the value of the Linden dollar, could they? Sure, they could, in the same way that OPEC is able to influence oil prices. There's no such thing as a stable price on anything.

LL can't just dictate what the Linden dollar costs though, not directly. All they can do is influence in accordance with economic principle. If they want the Linden dollar to be more expensive, they could put in so many sinks in place that it costs a million L$ just to walk down the street, resulting in so few Lindens being available that they each cost a fortune to aquire. Or, if they wanted the Linden dollar to be cheaper, they could just flood the market with so many of them that we could all buy a million of them for a penny. Either way, it's not direct price-setting; it's market influence by supply & demand, which is exactly how it works for every other item in the world.


Yes it is. Once again, economics 101.


First, there is no difference, as I've said. Second, even if there were, it wouldn't have any bearing on whether or not a lawsuit were possible. It might make it a little trickier to determine actual damages, but it wouldn't stop anything from happening.