There’s much angst around regarding Linden Lab’s updated terms of service and part of that angst has been caused by Linden Lab not being clear about what they claim to be being clear about. The blog post, seems straight forward enough:
“When you log in to the Second Life Viewer today, you’ll be asked to accept an updated Terms of Service. As with any legal document, it’s important to read in its entirety before accepting, but we wanted to highlight one of the changes we’ve made in this update: to better protect Second Life users against fraud, the updated Terms of Service make it clear that trading of Linden dollars (L$) on exchanges other than the LindeX, Second Life’s official L$ exchange, is not authorized or allowed.
As the official exchange owned and operated by Linden Lab, the LindeX is the best place to buy and sell L$ for use in Second Life. It consistently offers the best rates for both buyers and sellers, and by limiting L$ trading to the exchange we operate, we are better able to protect users against fraudulent activity.”
That to me sounds like Linden Lab are limiting trading of Linden Dollars to the Lindex, that the likes of Virwox are not allowed and that if I do trade on Virwox, I’m doing something that is not allowed and in breach of the terms of service. However the relevant section of the new Terms Of Service makes no reference whatsoever to trading on third party exchanges being forbidden:
“5.3 There are other exchanges that are operated by third parties on which Linden dollars are exchanged.
Third party exchanges are not authorized by Linden Lab and Buying or Selling Linden dollars on third party exchanges are not authorized transactions. Third party exchanges are wholly distinct from both the LindeX exchange and Linden Lab and they have no affiliation with Linden Lab. We do not endorse or otherwise guarantee the legitimacy of the Linden dollar transfers offered on them, and we are not liable for purchases of such Linden dollars. Buying or Selling Linden dollars anywhere other than the LindeX is done so solely at your own risk. If you Buy Linden dollars that are traced to unauthorized credit card activity or other fraudulent activity, we will recoup these Linden dollars from your Account. The only authorized exchange is the LindeX.”
This suggests that if I purchase Linden Dollars on a third party exchange, I do so at my own risk, which I always thought was the case anyway, but nowhere does it say it’s not allowed and that is rather an important discrepancy which Linden Lab should be looking to clear up because I don’t want to trade on a third party exchange at my own risk and then find my account is in jeopardy because Linden Lab consider it a breach of the Terms Of Service.
The Blog Post seems to have a strange definition of what making things clear comprises of. I’m not happy about this move, the apparent removal of the Risk API and Linden Lab apparently shutting off other means of trading Linden Dollars. There are a few reasons for this.
I’ve used Virwox in the past and although the exchange rate isn’t as good as the Lindex, the speed of transaction is vastly superior. A speedy transaction does not mean a risk free transaction, even when I get the message from Paypal telling me the payment from Virwox had completed, there was a note that the transaction could be reversed, that’s a standard message. The slow speed of cashing out from Linden Lab is probably the primary reason people like using third party exchanges. When I was playing DIABLO III and cashing out via them, transactions did not take as long as they do from Linden Lab. Linden Lab’s process is extremely slow by pretty much all measures.
Another reason I like Virwox is because I could play around and see if I could get a better rate if I traded with British Pounds, The Euro or US Dollars, something Linden Lab does not offer.
There are people, whom for whatever reason, have difficulty buying and selling Linden Dollars on the Lindex, these people use third party exchanges, they may well now be snookered.
I suspect that this change is aimed at protecting the status of the Linden Dollar as a license to use and that there are legal ramifications going on, these are issues that Linden Lab will not talk about but there are some things Linden Lab can do to ease the burden and the first is to improve the cashing out process, it is extremely slow and there’s no reason for that especially when someone has already cashed out to a Paypal account a few times and they are using the same details.
Another thing Linden Lab could do is clear up the confusion about whether using third party exchanges is merely done at one’s own risk or is indeed a breach of the terms of service because the latter has more ramifications than the former, if it is a breach of the terms of service a lot of people will be upset, but at least then we all know how the land lies.
I would imagine that cashing out is going to be slow over the next few weeks as people scramble back to the Lindex from the third party exchanges.
“I suspect that this change is aimed at protecting the status of the Linden Dollar as a license to use ”
Yup, as I’ve commented on my own blog post in response to a finger pointed at FinCEN’s interpretative guidelines on virtual currencies as a reason for the change, this to me smacks more of LL attempting to put further clear water between the Linden Dollar as a token and it being considered a “virtual currency”. Whether such a move will actually work pending any future changes to the BSA (1970) or how FinCEN intreprets the Act – regulations for which have not actually changed since 2011 – might be considered questionable.
I also think that, with respect, you’re getting too hung up on the wording of the blog post and that of the ToS. There are practical reasons for the wording as-is in the ToS (as I mentioned in reply to your comments on my blog). While there is ambiguity in the blog post which should be cleared-up, I’m reasonably convinced that that aim of this move isn’t to drop any kind of ban hammer on a user who opts to go via a third-party exchange.
Rather, the aim would appear to be to further limit LL’s expsoure from involvement in any potential legal action between SL users and a “third-party exhange”. By this I mean residents see “Exchange X”, listed by LL, which (despite the former warnings in the ToS) is considered “safe” simply because in is listed by LL, but which actually engages in shady operations. Thus,said users attempt to take “Exchange X” to court – and in doing so, seek to implicate LL in their action because “LL condoned and supported Exchange X”, by allowing them access to their Risk API, by listing them in their website, etc.
I agree that it is more than likely related to FinCEN and I feel that’s why Linden Lab won’t talk in public about this. Keeping the Linden Dollar as a license to use is extremely important.
However I have a post coming up and it looks like my concerns with the wording of the blog and TOS were indeed justified, third party exchanges have been told to cease in some cases, others have ceased trading whilst seeking clarification, the ban hammer does seem to have been used.
We now seem to be using “ban hammer” in different contexts :).
I was more referring to people being banned as a result of using a TPE (third-party exchange), which I may have misinterpreted as being your original concern, as in:
” I don’t want to trade on a third party exchange at my own risk and then find my account is in jeopardy because Linden Lab consider it a breach of the Terms Of Service.”
As to third-party exchanges getting warned-off, I’d actually heard through the grapevine last night that an e-mail might have been sent-out, but held off from commenting until there was some concrete confirmation that this was in fact the case.
Also, and being pedandic :). Suspendng L$ trading while seeking clarification isn’t necessarily the ban hammer falling. At least not until LL definitively state “thou shalt not” – which, admitted could be as soon as a follow-up e-mail.
Suspending trading whilst seeking clarification is not the ban hammer, agreed, but looking at some other posts and quotes, it looks like it will arrive shortly.
No I still think there are concerns about getting your account banned for using an external exchange, the comment to Zoha Boa from his account manager is rather direct:
“We will shut down any resident for a violation of the terms of service if we discover they are trading L$ outside of the LindeX.”
This strikes me as a done deal, no ‘ ifs, no buts ,no maybes ‘. Regardless of the Lab’s usual lack of clarity, this is a shut down of the 3rd Party Exchanges as far as they are concerned. There has already been seen Exchanges stopping trading and others stating that they have received emails requesting that inworld terminals and scripts be removed. The risk api has been whipped away and many concerned residents have been advised by LIVE CHAT that 3rd Party exchanges are not allowed. I cannot see it as the Lab saying “third party exchanges are risky and we advise you not to use them”
Whatever the reason for the change, whether that be compliance with government legislation, reducing liability or just plain money grubbing , the Lab has performed in its customary “shoot first ask questions later” fashion.
This will have a profound effect on the grid. The question is : have the Lab factored in the effect ? Let’s not forget the Homestead debacle.
What’s next… 3rd party viewers?
We wait uncomfortably to see the outcome.
Third party viewers have actually been told to ensure the buy LS function in their viewers only points to the Lindex, but that’s not what you meant 🙂
I agree, it looks like the end of third party exchanges.
Looks like the end of Fergie too hey 😉 Take Alex McLeish!
End of an Era. Got mixed feelings really. Have been aware that the hammer would fall at some point.
Moyes would be my pick, but whoever it is a huge shadow will be on them. Mourino is chelsea bound and I am glad. He is too much of the maverick and is very much a manager of revolution rather than stability. United need no such thing.
Wigan’s implosion has pretty much made you guys safe. I am glad, cannot see a premier without the Villa!
I thought Mourinho would be perfect, flair, publicity. Moyes is a great manager mind you.
Villa are in champions league form, 16 points from last 8 games! Bring on Chelsea!
Is there any possibility for the third party exchanges to sue for unfair business practices, or something of the sort?
I doubt that there was any kind of contract in place.
Well, as I’ve already said elsewhere…. there are apparently a number of SL users in countries that don’t have access to PayPal, or to any other system that allows them to easily cash out, or to cash out at all, or that causes them an unfairly large local transaction fee. What if a good number of paying customers *completely* *pull* *out* *of* SL over this? In short, this move could backfire AND cost them more money than they expect, even if they *do* wind up making a larger percentage of money from the buying and selling of L$ within the worldwide amount of L$ exchange going on (because many more ppl switch to Lindex for it). What if the number of actively-paying people who leave SL forever, or simply *stop* *buying* *anything*, or go from Premium to free account over this, cancels that uptick out?
Some people will have to leave SL over this but I find that sad for two reasons. One it’s sad to see someone who has been enjoying SL leave but secondly it’s sad because these third party exchanges have clearly been providing a service with multiple payment options that allows people to participate.
Why on earth can the LindeX not compete with the third party exchanges on payment methods and speed?
Sl destroys itself with al the rules and dictatorial policy, its alrerady not that populair anymore. Compagnies did run away, shoppingcenters getting more empty and now its done for the exchange offices even when they are reliable and good. This kind of measures without asking what the users want makes it not better, they rule the world and not the residents. The first signs that sl was collapsing was after the federal decision to close the casino’s in 2007. Maybe its time to go to https://www.avination.com looks the same as SL and it has still the possiblilities what SL had when they started. This because they are not under the American legislation.