January 31 – Cryptocurrency Tax D-day

Dr Clare Jones, Law, Associate Professor in Law, UWE


For those of us that complete a tax return for HM Revenue and Customs, the 31st January comes around very quickly each year. Previously those who have invested in digital currencies may not have considered declaring these investments. However, with the rise in investments in digital currencies during the last year and with some people making trading in cryptocurrencies their full-time job, then the 31st of January should now be relevant.[1] Although earnings via digital currencies within this current tax year 2017-2018 may not be pertinent, the next financial year will surely see a rise in revenue for the Government due to the activities over the last year.[2]

Digital currencies have the reputation of being used to facilitate crime whether it is money laundering or fraud, yet tax evasion is a real and present threat and digital currency investors often ignore or are unaware of the prospect of paying tax on earnings.

In 2014 the Government issues a Brief outlining the tax implications for Bitcoin and other Cryptocurrencies.[3] HM Revenue and Customs states that: “Cryptocurrencies have a unique identity and cannot therefore be directly compares to any other form of investment activity or payment mechanism”.[4] Having said that, they are not exempt and must comply with EU wide tax VAT rules. Revenue and Customs are quick to point out that guidance given in the briefing does not provide a regulatory stance over cryptocurrencies.  The tax treatment as outlined in the briefing paper is as follows:

  • income received from Bitcoin mining activities will generally be outside the scope of VAT on the basis that the activity does not constitute an economic activity for VAT purposes because there is an insufficient link between any services provided and any consideration received;
  • income received by miners for other activities, such as for the provision of services in connection with the verification of specific transactions for which specific charges are made, will be exempt from VAT under Article 135(1)(d) of the EU VAT Directive as falling within the definition of ‘transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments’;
  • when Bitcoin is exchanged for Sterling or for foreign currencies, such as Euros or Dollars, no VAT will be due on the value of the Bitcoins themselves, and,
  • charges (in whatever form) made over and above the value of the Bitcoin for arranging or carrying out any transactions in Bitcoin will be exempt from VAT under Article 135(1)(d) as outlined at 2 above.[5]


In terms of Corporation Tax, Inheritance Tax and Capital Gains Tax, will be judged on a case by case basis and will be dependent on relevant legislation and case law to determine the correct tax liability. Any business that accepts Bitcoins for services or good, there is no change to when revenue or collected or tax paid.

Although cryptocurrencies are proving to be an enigma within the legal and tax industries, it is clear that the UK Government along with other international governments are keen to look at piecing together rules and regulations to bring cryptocurrencies under the umbrella of governance. The 31st of January ,may next year, be more of a bug-bear to digital currencies investors than ever before.

[1] BBC News. Bitcoin – the revenue comes calling. 31 January 2018. http://www.bbc.co.uk/news/technology-42872610 accessed 31 January 2018.

[2] Ibid.

[3] HM Government. Revenue and Customs Brief 9 (2014): Bitcoin and other Cryptocurrencies. https://www.gov.uk/government/publications/revenue-and-customs-brief-9-2014-bitcoin-and-other-cryptocurrencies  Accessed 31 January 2018.

[4] Ibid

[5] Supra n. 3.


Online games as risk generators for children and adolescents – Analysing risk factors in gaming environments

(Copyright @Alex pixabay CCO)

Online games as risk generators for
children and adolescents –
Analysing risk factors in gaming environments
Diana Selck and Thomas- Gabriel Rüdiger
Winter 16
Table of content
1 Introduction
Breck Bednar, a 14-year old boy became victim of a cybergroomer1 on the Internet.
He met his perpetrator in a secretive online game forum in which he was invited due
to his talent. Breck was an average adolescent, with a good relationship to both of
his parents, good grades, overall a smart kid interested in technology. He enjoyed
playing online games, meeting and making new friends online. And this is how he
met Lewis Daynes, a boy supposedly 17-years old, running a well off computer engineer
firm. Breck spend increasingly time with Daynes online. After awhile this became
evident by the way Breck started behaving, not willing to finish school homework
or do chores or accept parental measures in order to limit his Internet consume,
and thus separate him from the voice that came constantly out of his headphones.
His mother became worried, approached other parents and teacher in order
to receive some advice. At the end, she called the police, describing the new online
friendship of her son and expressing her concern that she had towards the stranger,
whom her son talked to on a daily basis. She was worried that her son might be
groomed online. The police, teachers and other parents tried to convince Breck’s
mother that this is a normal behaviour of a 14-year-old boy, which would pass, eventually.
At the end Breck’s father suggested to meet with Lewis Daynes in the real
world in order to make sure that he is who he claims to be. The meeting never took
place. Instead Daynes claimed to be very sick and therefore would soon need
someone to take over his company. At the end, Breck pretends to hang out with one
of his real friends but instead drives to Daynes’ apartment to finally meet his online
friend. In the night of the 17th of February in 2014, Breck was stabbed to death, the
court later ruled that the actions were sexually or sadistically motivated and conducted
by the 19-year-old unemployed Lewis Daynes (Elgot, 2016; Moore, 2016).
The Internet and the usage of platforms to communicate, exchange information,
meet people online as well as play online games are ubiquitous. Especially children2
of today grow up with information and communication technologies (ICTs), using
1 Online grooming or cyber grooming can be understood as sexual harassment of children through online-based
programs as well as the establishing contact with a child through the Internet with the intention of sexual misconduct.
This phenomenon is called cyber grooming, the person assaulting is most often termed as an online predator
(Rüdiger, 2015a).
2 Children in this study will be considered within the legal term of a child under the German penal law, which defines
children until the age of 14.
them in a wide range of activities. Online gaming claims one great part of leisure
activities of children and adolescents. Online games can be defined as a “[…] digital
game that needs a live network connection in order to be played. This includes not
only games played on the Internet, but also those played online through consoles3,
across mobile phones or via peer-to-peer networks.” (www.pegionline.eu).
In Germany, 56 per cent of the 6 and 7-years old children play online games occasionally
(Kempf, 2014). According to the “Bundesverband Interaktiver Unterhaltungsmedien”
(BIU), already 26.4 million of the German population plays online games
(BIU, 2014).
Consequently, children and adolescent have been introduced to online gaming and
the interactive nature of virtual worlds. Nevertheless, online games also produce
risks for this specific user group. In media, several cases regarding high amounts of
telephone invoices and the billing of surprised parents by telephone provider have
been published. In these cases, children often did not realise that the proclaimed
free-of-charge-games had a billing function (e.g. in-game purchases) within the applications
of the games and thus spent hundreds or thousands of euros with virtual
Research regarding the risk of sexual online perpetration as well as financial losses
in online games for children and adolescent are especially in the German-speaking
areas almost non-existent (Rüdiger, 2016). Existing studies barely considered online
games as platforms to interact and communicate with strangers. Consequently, an
analysis of possible risks is imperative.
In this study4, data from thirty-two online games of mostly German online game providers
was conducted5. Nevertheless, due to the nature of the Internet, German
online gaming providers are accessible from all over the world, only restricted by
Internet access and regulations of IP inspections.
The purpose of analysing online games underlines three important implications.
First of all, the age restriction regulations of each online game. Here, the first obstacle
to overcome was that no universal age regulations as well as age recommenda-
3 Consoles are generally considered when talking about online risks in online games. This study has only focused
on browser games accessible via browser and mobile app games accessible via phone and tablet devices. Consoles
are generally accommodating the same online risks considered in this study.
4 The current study concentrated on Germany or a German-speaking field as the examination field. This is important
when considering legal frameworks and definitions, e.g. in the area of child and youth media protection and age
5 This does not imply that game provider and servers are located in Germany
tion could be found6. Online games are provided on different platforms, for the analysis
the focus was on downloads such as mobile games from the Google Play store
(Android), iTunes (Apple) or games accessible through the browser such as free-toplay
(F2P) browser games. This was also one reason why different actors were involved
for age recommendations of games and thus irregularities in age regulations
could be found.
Secondly, it was focused on payment options within online games to find out how
many verification or locks would be faced before one would be allowed to spent real
money. And at last, the possibility of communication within the games were analysed.
Here, the focus lay on the accessibility to children and adolescent. How easy
would it be to talk to any stranger within an online game?
From a criminological perspective, these questions are important in order to identify
the risks of online offences such as (sexual) online perpetration of children and adolescents
in online games as well as enable prevention measurements to prevent
tragically endings such as the Breck Bednar’s case provided. In the future, security
agencies should be able to identify online grooming and act accordingly in order to
prevent crimes against children and adolescents.
2 Risk factors in online games
2.1 Forms of online games
Many different forms of online gaming exist, which to a certain degree depend on a
functional Internet connection in order to play with other players. In this paper it will
be focused especially on online games in which players are able to meet people,
join gaming groups and other forms of alliances in order to communicate with each
other. Games, for example massively multiplayer online role- playing games
(MMORPGs) and massively multiplayer games (MMOGs) are widespread and two
of the most popular types (Yu-Wei-Chang, 2015; Williams & Skoric, 2005) of games
6 Generally, Germany provides two legal frameworks when considering age regulations and recommendations.
First, the youth protection legislation (in German: Jugendschutzgesetz), which regulates age recommendations
regarding disk-based programs, e.g. computer games that can be purchased on a physical disk. In this case, the
USK (in German: Unterhaltungssoftware Selbstkontrolle) implements the age classifications. Regarding online
games that do not need a physical disk but are accessible through the web browsers and mobile Apps and thus
only need an Internet connection, no comparable standard exists. Online games are held under the Interstate
Treaty on the protection of minors (in German: Jugendmedienschutz Staatsvertrag – JMStV), which does not prescribe
age recommendation for online products towards the youth protection legislation (also see Rüdiger, 2016).
played online with genres as casual, strategic, first-person-shooter (FPS), sport and
MMORPGs are characterised by predominant medieval or future-oriented fantasy
worlds in which gamers act through avatars. Avatars are faced by challenges and
gain strength with each mastered task. Managing game stages and levels is highly
interactive and involves other game members as well as group mechanisms. As
Ballard and Welch (2015) state, most online games allow for social interaction, leading
to organised alliances or groupings known as guilds, clans and tribes, which
collaborates with a small but still unknown group of people (ibid.; Ducheneaut et al.,
2006). Ducheneaut et al. (2006) characterise guilds as places in which most of a
player’s relationships are formed. Guilds, clans, tribes and other forms of alliances
play an important role and show how easy it is to meet strangers online and form
relationships on the basis of the provided information given by players themselves.
Both, adolescents and adults are equally engaged in these forms. Until today,
MMORPGs are very popular games in the digital games market, offering a platform
for virtual communities and a basis for social interaction (ibid.: 472f).
Some games involve group mechanisms that are depending on the length of a
game provide incentives for users to join groups instead of playing individually. Alliances
are characterised by clear work distribution and hierarchies, which can have
an advantageous effect. Participants of these groupings are in a constant development
of their avatars and virtual realms.
Generally, online games can then be differentiated in their utilised business models.
Pay to play (P2P) games such as World of Warcraft, which has to be purchased for
a certain amount of money before it can be played. In many cases, the user has to
agree similar to a form of monthly paid subscription. In opposite of this model,
stands the business model of free to play (F2P) games, which suggests that the
game is not bound to any costs and is free to purchase and download. The F2P
games finance themselves through so-called in-game purchases or in-app purchases.
In-game purchases are purchases for virtual items or gain of game advantages.
In many cases, virtual items will be purchased with an in-game currency, which often
inherits a playful title such as coins, elixir, gems, sunflowers, etc. These virtual
currencies can either be acquired by rather lengthy game operations or with real
money. If one individual gamer is not able to participate for a certain amount of time,
disadvantages will show expeditious. In order to be not left behind and remain in the
lowest hierarchy, the user must push his or her developments. One appealing way
of upgrading to stages that others might have reached during a time of the users
absence could be with real money and thus in-game purchases. One of the most
well known online games – Clash of Clans from Supercell – generates up to 5 million
Dollars per day for purchasing virtual items (Diaz, 2015).
2.2 How online games need to be considered as possible risk
Online games have become a big part of children and adolescents leisure time and
thus can put their users at risk to become victim of harmful behaviour, criminal activities,
immense financial losses and gamecrime (Krebs & Rüdiger, 2010; Rüdiger &
Pfeiffer 2015). Gamecrime will be elaborated more deeply in the following section
2.3. The amount of time children and adolescents spend in online games is also
underpinned by several studies. A German study called “Jugend, Information und
Multimedia” (JIM) conducts every year a study documenting the usage of information
and communication technologies (ICTs) and media competence of 12 to 19-
year-old adolescents. According to the study, 25 per cent (n= 1,200) play online
games on a daily basis (Medienpädagogischer Forschungsverbund Südwest (mpfs),
2015: 11). Twenty-two per cent of the interviewed adolescents are playing online
games several times a week (ibid.). A similar finding provides the report of EU kids
online from 2014. According to the report, 28 per cent of 11 to 16-year-olds play
online games with other people on the Internet. Back in 2010, only 16 per cent of the
questioned adolescents were playing games online (EU kids online, 2014: 11). Another
study, namely getsafeonline (2015), analysed parents perspectives (n= 2,000)
about their 5 to 18 years old children and adolescents and their online behaviour.
They found out that one third of parents feel that they do not really know about their
kid’s online gaming activities. Sixteen per cent of the parents are aware that gaming
platforms can increase the risk of being bullied or verbally abused (getsafeonline,
2015). Even though, the study is right at the point of asking parents how much they
know about their children’s gaming activity; the study does not consider risks of
online perpetration and cyber grooming or the risk of financial losses.
In the majority of these studies, it is not clear how online games are understood and
considered in their analyses. The JIM study (2015) found out that every second adolescent
plays ‘digital games’ in their leisure time on a regular basis (Jim, 2015: 12).
JIM understands digital games as games on the computer, consoles or games in the
Internet (ibid.). It seems that mobile games via applications (app) are not considered
at all, even though online games are increasingly played on mobile devices. According
to statista (2015a) the weekly time spent by children between the ages two and
17 playing mobile games has increased from 5 hours weekly in 2011 to 7 hours in
2013. In December 2015, the most popular App store category by share of available
apps was gaming with 22.49 per cent (statista, 2015b). Gaming apps are the most
popular app category based on availability and top-grossing iOS gaming apps that
generate more than 1 million U.S. dollars per day (ibid.). According to getsafeonline,
the most popular devices to play games online are tablets, 62 per cent of the children
use this device to play online games. This is followed with 47 per cent of children
and adolescent using their parent’s mobile phone to play games
(getsafeonline, 2015).
It is significantly important to consider all forms of online games and clearly distinguish
between them in order to understand the risks they can pose. For example,
there are online games that can be considered as games, which are offered on
online platforms such as Steam7, which can be played online, but include no possibilities
for communication and interaction with other gamers. These forms of online
games do not face the same online risks that can be experienced with games that
provide an anonymous way of communication and interaction with strangers. It is
noteworthy, that other risks exist, which will not be considered in this paper. Among
others risks such as violence, exposure to pornography and extremism can occur in
online games (Krebs & Rüdiger, 2010; Rüdiger & Pfeiffer 2015).
Another issue that will be considered is the integration of various paying methods in
online games. Therefore, this study will focus on games with communication and
interaction possibilities as well as payment options in online games. It will be particularly
focused on F2P browser games, which can be played through the browser or
mobile application (App) and client.
In general, F2P browser games can be easily accessed with a functional Internet
connection and the fitting hardware such as laptop or computer. App games are
accessible through mobile phones and tablets devices and can be downloaded on
specific platforms such as Google Play store, Windows store and iTunes. Another
7 Steam is an online platform that can be installed to play pay-to-play computer games and free-to-play online
games. (http://store.steampowered.com/about/)
form of an online game can be operated through a client. By downloading a client,
the gaming experience can be better than playing a game in the browser due to
faster processing and a stable connection.
2.3 Gamecrime
Characteristically, crime arises from interaction between two individuals. Participants
of this interaction do not always have to be aware of their participation, but it takes
place nevertheless. Consequently, a child or any other game member is often unaware
of interacting with an offender and thus does not report the interaction or files a
complaint. On the other hand, criminal activity can evolve out of an aggressive confrontation
between two individuals in which both participants are aware of the situation.
Consequently, whenever two individuals interact, actions and decisions take
place. Why would this be different in virtual worlds such as online games? Appropriately,
criminal actions in online games are called gamecrime (Krebs & Rüdiger,
2010; Rüdiger & Pfeiffer 2015). Gamecrime can be understood as forms of crime
that erupt in online games or gaming environments such as online game platforms
as Steam, PSN or Xbox- Live (ibid.). It inherits various forms of crimes depending if
criminal offences are in-world (within the game) or out-world (outside of the game).
Out-world offenses are crime forms that aim to interfere from outside into game
mechanisms, e.g. gaining access to login data or attempts to hack game accounts.
In-world crimes are offences, which result from communication and interaction of the
players within the game. This area of gamecrime is particularly of concern in this
study, questioning the issues of ubiquitous and anonymous interplay of adults with
children in online games.
This issue is described more thoroughly in a blog thread written by Rüdiger (Rüdiger
2015a). In his article he compares the online gaming environments with an offline
playground. It is scrutinised how the presence of online groomers in gaming environments
seem rather ordinary and are not sufficiently questioned. In comparison,
the presence of a stranger and possible perpetrator on a public playground would
lead to some sort of action. The article argues further: “Imagine a playground where
your 10-year old son or daughter is playing and a 35-year old man walks up and
begins playing with your child.” The reaction to this situation would be vigilant if not
aggressive-protective. Parents would want to know who this stranger is and which
intentions he or she has of approaching their child, pretending to be a like-minded
10-year-old. Such meet-ups of children or adolescents with adults are nowadays
ubiquitous in the online gaming landscape (Rüdiger, 2015b).
Consequently, one immensely prevalent risk for children and adolescent is the danger
of meeting an online perpetrator. Breck Bednar’s case is only one of many in
which the victims are not aware of the risk their so-called online friends could pose.
Breck became victim of an online (sexual) perpetrator, leading to an offline face-toface
meeting. In their study, Cheong et al. (2015) analysed predatory behaviour in
game chats and thus defined sexual predation with the characterisation of age disparity,
and hence an adult who chats with a minor in an inappropriate intimacy
Another risk that is until now under-researched is the risk of financial losses. Especially
children, who play online games on mobile devices, have in the past spent
unknowingly great amounts of money with in-app purchases. In-App purchases are
purchases made from within a mobile application (www.webopedia.com). In some
cases Apple has decided to refund parents of great financial losses (Lipka, 2014). At
the presence, there exist no regulation for unwillingly purchased virtual items made
by children and adolescents. In Germany, the legal situation regarding similar cases
has not found a legal consent yet. In the past, German courts have ruled differently
in cases like this, for example the regional court of Saarbrücken commented on a
case in which parents had to pay a bill of 2.800 Euro. In this case the 12-year-old
son spent 2.800 Euro for virtual items in an online game. As e result, the court expressed
that the whole system of these games enabling children to play (and pay),
is close to a violation of moral principles (Schulzki-Haddouti, 2014; Sevriens, 2011).
Consequently, parents cannot rely on the current legal situation or court ruling,
which is far from clear and thus can only hope for the goodwill of platforms, which
provide games such as iTunes by Apple or Google play store.
2.3.1 Sexual perpetration in online games
One of the main risks analysed in this paper is online sexual perpetration in games
through Cyber Groomer8. In the study of possible chat room regulations, Joint
(2003) reasons that paedophiles using chat rooms to increasingly target victims and
lure children into potentially dangerous situations. He further argues that children
8 In the German-speaking area, one general term has been established when speaking of sexual harassment of
children through online-based programs as well as the establishing contact with a child through the Internet with
the intention of sexual misconduct. The phenomenon is called cyber grooming, the person assaulting is most often
termed as an online predator (Rüdiger, 2015a).
enjoy the exciting opportunity to flirt and chat to others in their own age. This becomes
problematic due to the anonymity of the Internet, children and adolescents
cannot be sure of the proclaimed age of their fellow players.
“By creating a false identity, lying about their age, ‘grooming’ their potential victims
and then arranging to meet them in person, children easily become sitting ducks for
child abusers.” (Joint, 2003: 44). While admitting to the possibilities of grooming
children in chat rooms, Joint does not consider online games as potential platforms
for these criminal activities. This might be due to the date of the year in which the
article was published. In 2003, online games might not have been recognised of an
equally used platform by children and adolescents as well as child abusers than the
more common place such as social media platforms. This is also evident in the research
of Sylvia Kierkegaard from 2008. Even though, she considers the Internet as
a place for positive and negative opportunities and thus recognises online grooming
and sexual perpetration as a growing issue, Kierkegaard does not consider online
games as such. In her analysis, Kierkegaard (2008) states that among privacy issues
and exposure to harmful content such as pornography, grooming and encouragement
of harmful behaviour, these issues have become problems of an international
wide-ranged nature. She identifies chat rooms, blogs, email exchanges, mobiles
and other social network sites as places in which deliberate grooming exploitation
of a child by an adult takes place (ibid.) and thus covers various meeting points
for victims and offender but not online games specifically. Nevertheless, Kierkegaard
(2008) considers the virtual world and the Metaversum of Second Life and
age play. Second Life is the largest virtual world created entirely by its users
(www.secondlife.com). Children age play is an in-world sexual activity between a
child avatar and an adult avatar that engage in simulated sex (Dirry & Rüdiger,
2015). With the issue of age play, a whole new discussion emerges of rather simulated
sex and online rape should be considered as criminal activity and thus illegal
(Kierkegaard, 2008: 44). Once again, the reason why Kierkegaard is not considering
other online games could be that in 2008, online games in general were not (yet)
viewed as possible grooming places. Even though, according to Rüdiger (2015)
online games have established in the past 15 years, research might take some time
to recognise the issues at stake. While Joint considers the rather technical and legal
issue of criminal reliability of the Internet service provider (ISP) itself, Kierkegaard
focuses on a national as well as international legal ground in order to combat cyber
crime against children. Nevertheless, both argue that nearly everywhere legislation
is still playing catch-up to the advanced and sophisticated techniques of child abus12
ers (Joint, 2003: 47; Kierkegaard, 2008). Joint (2003) follows this and states: “After
all, in real life, there are places where parents can leave their children quite happily
and they would be safe to play unsupervised, and there are others where they would
never dream of leaving children on their own. The same rule should apply in cyberspace.”
(ibid.: 48). Kierkegaard agrees that technology develops faster than law, and
thus law need to be strengthened to address challenges like this (Kierkegaard,
2008: 55), and therefore catch up with technological advances.
The risk of meeting online perpetrators also becomes evident when looking at the
recently published data from the United Kingdom. English Police noticed between
2013 and 2016 that 400 children were either abused or became victim of cyber
grooming over the Internet, more specifically through social media platforms. Interestingly,
one of the main platforms that provided a meeting point between children
and offender were online games. Police stated one game in particular, Clash of
Clans, which has already received law enforcements attention lately. The game provider
of Clash of Clans namely Supercell has as a reaction of the statement of the
police announced that the game’s terms and condition exclusively recommend the
game only for the age 13 and older (Supercell, terms and service) and thus only
children and adolescents should download it (Scheerhout, 2016).
In fact, if one takes a closer look, the game provider Supercell recommends the
game for the age 13 and older, while Google play store classifies the game for age
0, iTunes for the age 9 and Google search results as well as computer-related blogs
recommend the age 6. This underlines the issue of the irregularities of age recommendations.
2.3.2 Financial loss
Financial loss for children and adolescents is one of the considered risks of this paper.
Due to the absence academically research, media reports will be considered
regarding cases of financial losses. Financial losses in this case, will be understood
as unintentionally high expenditure of money within online games. In all of the cases,
neither children nor parents were aware of spending real money while purchasing
game money such as coins, jewels, weapons, lives or other virtual items. The
cases here presented are from different countries, underpinning once again the borderless
and international nature of this issue and the lack of an international legislation.
Until today, cases that will be stated below were only handled by the gaming
companies on the basis of goodwill, and thus make it evident that regulations are
Case 1: United Kingdom
In the UK, three children have summed up their parents credit card bill to 350 pound
by playing two games, which were free to download (Clash of Clans and DragonVale).
The children purchased “virtual gems”. The mother argues: “They think it is virtual
money in a fantasy land […]” (Martinson, 2013). Jane Martinson is pointing her
finger to Apple, who in the past has refused to cancel the thousands of pounds
spent by other kids, citing parental responsibility and pointing out the fact that its
products all contain password locks to prevent unwanted or accidental purchase.
Martinson wonders if these in-game purchases for free games are just another way
of exploiting their children (ibid.).
Case 2: Belgium
A 15-year-old boy spent approximately 37,000 Euros on gold in the free-to-play
game called Game of War: Fire Age. The boy from Belgium bought in-game gold
with his grandfather’s credit card. He was only able to use the credit card information
because he helped his mom purchasing an e-Book. Both, the mother and the
grandfather were not aware that the boy linked the credit card information to his own
iTunes account (http://www.nieuwsblad.be, 2014). In the article it is not stated
whether the boy knew what he was doing or not, still the mother and grandparents
are left with a great amount of debts.
Case 3: Sweden
In Sweden a free-to-play online game cost a family 60,000 SEK. The 9-year-old son
played in a time period of two weeks the free to download game Clash of Clans. The
boy spent two weeks at his grandparents place asking his parents for permission to
play a free game during that time. When the first bill of 21,000 SEK arrived, the parents
tried to investigate why such a great amount was charged from their credit
card. Only one day after, the bill mounted up to 49,000 SEK. When the parents contacted
Apple for help, the total credit card bill was 60,000 SEK. The parents still
await answer from Apple and hope for a refund (Svahn, 2015).
All of the three cases have shown that proclaimed free-to-play games or free to
download games are not as free of costs as they seem to be at first glance. Google
Play store or Apple iTunes, which are providing platforms for Android or Apple devices
to download games, have responded to these issues by introducing password
locks and providing safeguard options. However, Apple still requires the linkage of a
credit card to any created iTunes account, especially after using the iTunes store or
App store for the first time (Apple support, https://support.apple.com/dede/
HT203905). Without an iTunes account and thus an Apple-ID, Apple devices are
not able to purchase any items. Consequently, every functioning iPhone or iPad or
other Apple-driven device is linked to a credit card or other payment options. Furthermore,
in-app purchases are only one of many options to pay for virtual items.
Free-to-play browser games, which are played on a computer or laptop, have a wide
range of payment options.
Case 4: Germany
According to the law firm Hollweck, a mother of a minor (under the age of 14) received
a shocking high telephone bill of the total amount of 4,700 Euro. Google Play
store and a provider called BOKU charged her due to purchases made in online
games. Online games such as Clash of Clan, Rayman Jungle Run, The Sims were
listed on the telephone bill. Clash of Clan was one of the games that the under-aged
son has spent the most in. All of the games were free to download but offered ingame
purchases, e.g. through telephone and text messaging or provided credit card
As the last case shows, other payment methods than paying by credit card are possible
in online games.
One of a rather easily accessed method is the payment method by phone. In the
case of paying by phone, children and adolescents only can dial a 0900 – number,
which charges the individual telephone provider within the next monthly bill. In case
4, the telecommunication provider Telekom was charged by the third parties Google
Play store and BOKU. Telekom in turn, charged the mother with the total amount of
purchased virtual items (Holloweck, 2014).
3 Methodology
This study was conducted by means of a multiple approach of qualitative methods in
order to analyse certain levels of risk factors for children and adolescent in online
games. Qualitative research was more fitting due to the insights qualitative methods
can provide of the research subject (Flick, 2000). In this case, the research was
conducted in the Internet in which the Internet is considered as a) a medium of
communication and b) as a context of social construction (Markham, 2004; Hine,
2005). The Internet as medium for communication provides new channels of communication
with other individuals or groups. On behalf of the Internet as a context of
social construction, Markham (2004) states that the Internet is a unique discursive
milieu in which the researcher can witness and analyse structure of talk, development
of relationships and communities (ibid.: 97). Therefore, the Internet offers the
qualitative researcher many ways of observing and/or for interaction with participants
(ibid.). Hine (2005) agrees and names the online world a fruitful field for researchers
and thus suggests that the online context can be claimed as ethnographic
field (ibid.: 8). A consistent discussion can be found of whether new research methods
are required for new online settings in the virtual ethnographic field site (Emmison,
2004; Hine, 2005; Williams, 2007).
Mann and Stewart (2000) found out that the main tools for data collection in the Internet
favoured by qualitative researchers are still the conventional ones such as
interviewing, observation and document analysis (ibid.: 65). Even though, ethnographic
fields can be found in new online settings, existing methods can still be applied
to the field.
The qualitative method chosen in this study was participant observation. According
to DeWalt and DeWalt (2011) the goal of participant observation is to establish an
understanding of the nature of phenomena. Other advantages in participant observation
are that this method provides a lower level of interaction with the researcher
and a stronger emphasis on documentary analysis (Man & Street, 2000: 84). According
to Foster (1996), observational techniques can also have advantages over
interviews. First of all, information can be recorded without relying on others; observers
may see the familiar as strange, noting features of environments or behaviour
that participants may not be able to see (Man & Street, 2000: 84). Additional
advantages are that the observation can take place over a longer period of time and
therefore observations allow access to information about people who are otherwise
too busy, deviant or hostile to take part in research (ibid.). Also, collected data and
its interpretation might have an enhanced quality; making this method both data
collection and an analytical tool (DeWalt & DeWalt, 2011: 10).
In this study, risk factors for children and adolescent in online games were the primary
research subject. In order to identify different levels on risk factors, participant
observation was used for only one purpose: to observe activities and interactions,
people and thus gamers as well as gaming mechanisms. According to Spradley
(1980) participant observation has generally two purposes: 1) engagement and 2)
observation. He argues further and states that the participant observer will experience
both insider and outsider simultaneously (ibid.: 57). Back in 1980, Spradley
used the example of a poker game, while participating in poker games and thus
identifying the observer as insider. But at the same time experiencing him and the
other players as objects from an outsider perspective (ibid.). The same dual participant
observation method was applied to this study. Even though, at first glance engagement
and therefore a dual participant observation were not intended at first. In
order to become an insider of online games and obtain data, a registration and creation
of an avatar was necessary. Therefore, engagement in this case was not to
make contact with other players and thus leading to interviews but engagement was
mandatory in order to identify game mechanisms such as registration processes,
observation of chat functionality and means of various payment methods.
As participant observers, avatars were created, villages set up, clans, guilds and
other association were joined and it was participated in group-activities, e.g. clan
wars and communication with group members. Simultaneously slipping into the insider
and outsider role as a participant observer.
3.1 Investigation period
The research was conducted between December 2014 and March 2015 and last
checked of its validity between September 2015 and November 2015. The total of
32 online games were tested, most games chosen from well-known online gaming
companies from Germany. Approximately 70 hours of game time, including systematic
observation of game mechanisms such as registration processes, age recommendation,
enablement of chat functionalities, interaction between players and
payment options.
3.2 Choosing the research subjects
Free-to-play games were chosen due to the low cost expenses. Not only research is
limited with the need of maintaining costs low but also children and adolescents
have in general a low budget and thus might use these games more frequent.
The games tested were all free to download and mainly browser games and hence
played in the browser without any further steps to install or download applications.
Yet, some of the games were also available in mobile app versions, which were
tested on smartphone or tablet devices. Others had to download a client first, which
the game provider offered to download from the games website. That is why four
classifications of the tested games were made. Noteworthy, all of the tested games
classified themselves through their enablement of an Internet connection and provision
of interaction and communication ability within the games. The first type of the
tested games was browser games. Secondly, games that could only played via applications,
namely mobile games. Third, games that were offered as a browser
game and could be played on a mobile device via an App, namely browser game
and mobile games. And last, games that were played via clients, and thus called
client games. In summary, the amount of games that were tested within their classification
was browser games (20), mobile games (4), browser games & App (5) and
client games (3). All tested games and the associated game companies were anonymised
so that no disadvantages will result from the study’s findings. Due to the time
consuming task of testing online games, the authors were not able to test every
free-to-play online game that is on the market. It is noteworthy to point out that the
selected games only provide a temporarily insight. Each year, new online games are
released on the market that might replace old games or illustrate a completely new
set of online gaming with different challenges and risks.
A total of four online gaming companies were tested and four individual games,
which have their origin in Finland, Denmark and Germany. Game company 1 (GC1)
provided eight games (game 1-8) with reliable data that was comparable to the other
companies. Game company 2 (GC2) supplied this study with eight games (game 9-
14). Six games (game 15 – 20) could be tested from game company 3 (GC3) and
eight games (game 21- 28) gave enough information to include in this study from
game company 4 (GC4). Additionally, four individual games chosen by their popularity
were tested as well. Each was chosen from a different game company and thus
is named the GC5, GC6, GC7 and GC8. The four individual games are therefore
according to their company continuing with the game number game 29, game 30,
game 31 and game 32. Some of the individual games were already known to have
had experienced cyber grooming cases. Noteworthy, games that enable online
communication always inherit the risk of sexual harassment (Rüdiger, 2016; Sauerbrey,
In order to identify possible risks for children and adolescents in online games, three
main focuses were set, namely age recommendation, payment options and chat
4 Age recommendation
4.1 Background
Age recommendation9 is one important aspect in managing the risk for children and
adolescents in online games. Age recommendation can guide parents, legal guardians
and children themselves of whether the games are classified for their age or
not. Until today, there is no verification regarding registration processes in online
games. A valid email address and a password are sufficient and are the only requirements
needed to fulfil registration conditions of the tested online games.
One obstacle to overcome was the difficulty in finding one clear age recommendation
for each game. Interestingly, many of the tested games were classified for the
age of 12 and under by the official institution of USK (see also diagram 1). Since
2015, USK is also responsible to classify age recommendations for games on an
international level within the framework of the international age rating coalition
(IARC) for all forms of game providing platforms including the App store and Google
Play store as well as Windows store (http://www.usk.de/iarc/). Nevertheless, this still
remains only an age recommendation that can be voluntarily followed or not. Until
today, there is no legal regulation or age recommendation that is either embedded in
the youth protection legislation or in the Interstate Treaty on the protection of minors.
Among the tested gaming companies only one game provider stated in its terms and
conditions that players must be 18 years old regardless of age recommendations
9 This study focused within the framework of official age recommendations defined by USK. An similar analysis
regarding age recommendation in an European (Pan European Gaming Systems (PEGI)) or international context
would be fruitful and interesting to compare with national results.
from others such as USK, computer related blogs or other search results (see also
appendix p. 35ff).
Diagram 1: Age recommendation of game provider and online game platforms
4.2 Methodological approach and results
The first issue was to find out, if one of the tested online games recommends or
even restricts the access to the game. Consequently, each game was thoroughly
browsed through regarding age recommendation. In order to do so, legal terms and
conditions were read (in German: AGBs) and each game website (if existing) was
searched for signs such as the German USK would provide. If the game website
itself did not provide any recommendations, it was checked on the homepage of
USK (usk.de) and the search function was used to find the games individually. If still
no result was visible, the search engine Google was utilised to find age recommendation
for a specific game. When results were shown from an unknown computerrelated
blog page, it was double checked with other search results in order to conclude
which age recommendation for the desired game was applicable. Out of the
total of 32 tested online games, age recommendation were drawn from either the
game itself, the USK website, Google search or the websites of the games, and thus
often three different age classification were provided. Other than that, identifying a
recommended age group for each corresponding online game was next to impossible.
Resulting from there, eight games were recommended for the age 0 (USK0).
Four games were classified for the age of six and older (USK6). And five out of 32
games were recommended to play at the age of 12 and older (USK12). For fifteen of
the tested games, finding a reliable age recommendation was not possible (see also
diagram 1).
The non-existence of a universal age recommendation makes it rather difficult to
move through the jungle of gaming blogs, official age recommendation sites as well
as websites of gaming companies. In four cases, age differences between each
recommendation were so great, that a sufficient conclusion of which age restriction
should be applied was not possible.
Similar results can be found for another online game. In this case, the game provider
does not recommend any age on the game’s website, while iTunes recommends
the age 12 and Google search produces the age recommendation of the age 6 (see
also diagram 2).
Diagram 2: Age classification by different sources
The tested online games were then compared by the source of age recommendation.
The average age of the official source such as the USK in the German case,
were compared to the average age recommendation classified by the individual
game provider. In the cases of the online games game3 and game4, USK recommended
age 6, while the game provider GC1 stated in their legal terms and condition
that the recommend age is 18. Game4 was published from the same game provider
and therefore also has the age recommendation of 18 years. But at the same
time, the game provider published on the game’s website the age recommendation
of 12 years (see also diagram 3).
Diagram 3: Average age recommendation by USK and individual game provider
4.3 Analysis
The focus of age recommendation has taken a great part of this analysis. Age recommendation
is the first step for parents to take in order to make sure that this specific
game is applicable for their children and adolescents. Testing these online
games has shown how difficult and unreliable age recommendation can be, and
hence confuse or even mislead parents or other guardians, who try to act in their
parental or guardian responsibility. Almost half of the here considered online games
did not provide any age recommendations. Not only did the game provider fail to
implement such important information but also official institutions such as the USK
were not able to present age recommendation of the here chosen games. Noteworthy,
the online games selected for this analysis were all well known and mainly published
by German gaming companies.
Additionally, age recommendations found, varied to such a great extend that reasonable
conclusions by parents, guardians or children and adolescents could not be
drawn. One interesting result presented by the data is the average age difference
between the official site of USK and the game provider itself. Over half of the average
age recommendations were not consistent, and thus inquiries need to be made
whether the game providers should lower their age recommendation or USK should
raise theirs. The latter seems more adequate considering the risks children and adolescents
face in online games.
5 Payment Options
5.1 Background
After registering and downloading the adequate application for each online game,
payment options were tested. Most of the online games contained tutorials, which
provided insights of the games’ interface and functionality. These tutorials were
necessary to enable functions within the game while levelling up during the first
steps provided in the tutorial. Functions enabled were for example access to wider
geographical areas, a finding-friends-option and the chat functionality, which concerns
the third issue considered in this paper. After finishing first tours and tutorials,
payment fields could be clicked on in order to purchase virtual items such as coins,
jewels, gems, elixir, weapons and thus upgrading ones character or kingdom. Payment
options varied from game to game.
5.2 Methodological approach and results
Every game offered a minimum of eight different payment options or more. Even
though, the focus of the payment method issue was to find out if they were any restrictions
and in which way would they be available, the one most of interest was the
telephone payment option. By clicking on the option “paying by telephone”, two
payment options were offered by the game. After choosing the desired item or
amount, the user was asked to choose text messaging or dial a 0900- number.
All free-to-play online games inherited in-game purchase functions. Besides payment
options such as debit card, credit card, transaction, PayPal and others (see
Table Part 2, p.37f.), payment by phone was available in the majority of the tested
games (see diagram 4).
Diagram 4: Number of games that offered payment options
Of all 32 tested games, no game had any further verification requirements in order
to continue the payment procedure. The only restriction that was evident was the
amount of money that could be spent during 0900 calls or text messaging. Some
games only allowed amounts of the total sum of 10,00€ per call or text message.
Noteworthy, some game provider advertised the simplicity of the purchase while
purchasing a total amount of 49,99€, no registration was needed.
From all tested games only three online games did not provide telephone as a payment
option. Twenty-nine of the tested games offered 0900 numbers to call or pay
via text messaging (see also diagram 5). Noteworthy, the three games that did not
offer payment option by phone are App games; purchases could only be made
through in-App purchase. All other games provided the payment option paying via
phone, e.g. payment through text messaging or fee-based hotlines. Other payment
option that could be found were pay methods such as SponsorPay, which “rewards”
the user with virtual items by signing up for online subscriptions.
Diagram 5: Number of games that offered payment option via phone
5.3 Analysis
Online game companies have changed the types of online games by offering freeto-
play games in forms of browser or mobile games. At first glance, parents or children
assume that the downloaded games are without further expenses. In-game
purchases allow users to upgrade their characters, purchase virtual items such as
coins, jewels, gems, weapons and other. Especially the payment option via phone
was of interest in this analysis, but other payment methods should raise concerns.
First of all, twenty-nine online games offered payments by telephone. Only a minority
implemented restrictions such as a limited amount per phone call or text messages.
However, the limitation of 10,00€ per call can easily be bypassed by calling
anew the hotline such as the 0900 hotline10. This specific payment option does not
face any “natural enemies” such as not possessing a credit card as a minor or facing
a password lock in a mobile game. Children can easily access landline telephones
as well as mobile phones, not being aware of high costs for purchasing magic coins.
Another payment option that drew our attention was the payment method SponsorPay,
which rewards the user with desired virtual currency by “only” clicking on
subscriptions or surveys or other purchases. If children or adolescent play a free-toplay
game on a family-owned mobile device such as an iPad, Apple-ID and thus the
iTunes account is set up with an payment method, purchasing unintentionally online
subscriptions, which will be done most likely as unaware as the high telephone bills
produced during the cases described above. Consequently, the payment method
SponsorPay needs to be equally of concern as the payment option by telephone.
6 Chat Function
6.1 Background
Additionally, the possibility of communication and interaction within the games were
analysed. Similar steps as for analysing payment options were taken. After registration
and first steps within the game, it was searched for chat functions and messaging
possibilities. In some games, a great amount of time had to be spent due to limitations
within the games. Limitations were for example the necessity to play and
10 There is a possibility for parents and supervisors in Germany to block phone numbers such as 0900. Therefore,
game providers do not consider themselves to bear liability. What makes this argument critical is the question of
how many parents and supervisors have the knowledge of this payment option and the possibility to block it in the
first place (Schulzki-Haddouti, 2014).
upgrade to a specific level before functions are enabled. Concluding into rather long
involvement before amongst others chat functions were enabled. Other games provided
chat functions from the start. Online games, which provided accessibility to
other gamers only in higher levels, were consequently more time consuming to analyse.
Chat options in the online games were called differently (guild chat, clan chat,
global chat, buddy chat, etc.) but functionality was the same. The provision of opportunities
to communicate with other gamers was usually shown in an open or global
group chat. But other forms of communication and interaction between users were
visible. Some online games also offered private communication possibilities between
only two users. This could be similar to emailing or private messaging, without
other players being able to follow up on messages and thus is considered more
problematic when it comes to communication between adults and children.
The purpose of this analysis was to find out whether the game supplies chat channels,
if yes, in which formats. Can any stranger contact anyone? Is there a private
chat available, in which online perpetrators could gain a rather secure access to
6.2 Methodological approach and results
Twenty-six online games that were tested made communication channels for user to
other users available. The forms of communication were different in each game,
nevertheless, the overall chat function, which means adding and exchanging information
with others was enabled by the game. Twenty-six games provided either one
form or several forms of communication opportunities. Forms of communication that
were found were global chat, private chat, guild and clan chat (see also diagram 6).
Diagram 6: Total amount of enablement of chat functions within online games
Only one of the tested games differentiated communication channels by the categories
“buddies”; “alliances” and “strangers”.
6.3 Analysis
Nearly 81% of all tested online games grant strangers access to other gamers. Children
and adolescents have many opportunities to communicate with other online
gamers, not knowing whether the opponent is the person he or she claims to be.
Twenty-six online games provide a global chat, a private chat or alliance-like chats
such as clans and guilds. Related to the age issue, other gamers can claim any age,
knowing that approximately 28% of 11 to 16 years old play online games in within
European countries (EU kids online report, 2014). Furthermore, chats provide the
opportunity to exchange personal information and thus privacy for children and adolescents
can be endangered. This is especially questionable because a discussion
about an ageless interaction and interplay of children and adults within an academic,
economic or security discourse is (nearly) non-existent.
7 Conclusion
Risks factors considered in this analysis for children and adolescents were online
sexual perpetration and financial losses as well as an inconsistent age recommendation.
Moreover, other risks such as hate speech, cybermobbing and gamecrime
are evident in online games. These risks are faced by children and adolescent in
game environments and should not be underestimated and thus need recognition
(Krebs & Rüdiger, 2010). As various studies show, online games are in many cases
not (yet) considered as platforms that enable access to children and adolescents.
Online Perpetrators can anonymously interact and communicate with children and
adolescent without identifying themselves as adults. Online games create an increasingly
entertaining and attractive virtual world in which children and adolescent
enjoy being part of. Surprisingly then, that research regarding online games and the
accessibility which online games provide between children and online perpetrator is
nearly non-existent. Additionally, online games can vary in their types, F2P and P2P
as well as on which device games are played. Only one study identified mobile gaming
and thus app gaming as an increasing way of playing online games
(getsafeonline, 2015). Still, this study did not include risks such as online perpetration
and financial losses.
One consideration that should be more than problematic is the fact that in normal
life, adults adapt their behaviour to children. For example, if a father plays football
with his 6-year-old son, he will simply lighten his charges against the goal when his
son is the goalkeeper. In order to do so, each game participant would need to know
the (real) age of one another. None of the tested games or online games in general
provides such an age labelling/marking/identification of the gamer. Hence, children
and adolescents are exposed to risks considered in this paper, but also to risks such
as bullying, pornography and extremism (Rüdiger & Pfeiffer, 2015; Rüdiger, 2016)
On the other hand, a visible age proclamation can also be counter-productive and
thus, generating an even greater risk. Marking children as a child will make them
more visible to online sexual perpetrators. Still, societal debates seem necessary in
order to explain why we forbid games for children under the age of 18 in some cases,
but allow adults to play and interact anonymously with children in other cases.
Additionally, all tested games in this study were recommended either for the age 12
or under or age recommendation was unknown.
This is an issue that can only be addressed by society and an active process of negotiations
in which the meaning of protecting children and youth in the virtual world
has to be clarified and risk generators identified. The question that needs to be answered
is: Should the Protection of Minors in the media (in German: Kinder- und
Jugendmedienschutz) only inherit the task of stopping and preventing negative influences
for children such as they do now by recommending and thus suggesting a
certain age group for specific games? Or should they also be responsible for preventing
crimes such as cyber grooming, sexual online perpetration and misused
payment options and thus restricting certain age groups to access the game?
Considering all the risks, it is essential to understand that current research and legal
regulations for online games and chat rooms still play “catch-up” with the rapidity of
technological development such as MMORPGs and MMOGs provide. Therefore,
considerations of widening responsibilities in order to protect children and adolescents
accordingly can only be made when this particular issues are being identified
and addressed.
Until now, game companies are insufficient regarding parental and guardian guiding
as well as taking responsibility in order to protect children and adolescent from risks.
As the research is scarce, so might be the knowledge of criminal activities in gaming
environments. Even though, some research has focused on social media sites and
their chat rooms such as Facebook, MySpace and others, online games have
scarcely been considered. In fact, except a blog entrance and the getsafeonline
study cited earlier, online games seem to not play a significant role when considering
online risks for children and adolescents.
By testing these 32 online games, it became clear, how strongly research in this
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Retrieved: 14th of February 2016.
Schulzki-Haddouti C (2014) Chats in Online-Spielen bleiben unberücksichtigt. Golem.
bleiben-unberuecksichtigt-1403-105420.html. Retrieved: 22nd of February
Second life. http://secondlife.com. Retrieved: 3rd of February 2016.
Sevriens D (2011) Die Berufung der Klägerin gegen das am 26.02.2010 verkündete
Urteil des Amtsgerichts Saarbrücken (Az.37 C 312/09(02)) wird zurückgewiesen.
10/. Retrieved: 22nd of February.
Spradley JP (1980) Participant observation. United States of America: Holt, Rinehart
and Winston.
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mobile-games/. Retrieved: 22nd of February.
Statista (2015b) http://www.statista.com/statistics/270291/popular-categories-in-theapp-
store/. Retrieved: 22nd of February.
Supercell. Terms of service. http://supercell.com/en/terms-of-service/. Retrieved: 1th
of February 2016.
Svahn C (2015) Gratisspel kostade familjen 60.000 kronor. Dagens Nyheter.
http://www.dn.se/ekonomi/gratisspel-kostade-familjen-60000-kronor/. Retrieved: 12th
of September 2015.
Temmerman M (2014) 37.000-euro van mama verspeeld met ‘gratis’ game.
http://www.nieuwsblad.be/cnt/dmf20141002_01300598. Retrieved: 31st of January
Wallop H (2014) My son spent hundreds of pounds on in-app purchases without me
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About the authors
Diana Selck is a German criminologist student at the University
of Hamburg. Her focus in criminological research is in crime
and aggressive behaviour online. She is mostly interested in
interpersonal relationships that develop through communication
and interaction on online platforms and establish opportunities
to meet strangers whom take on identities, which do
not correspondent to their real selves. The focus of her current research project is to
analyse victimisation processes through online romance scam and webcam blackmail.
Both of these online crimes correlate with research in scam and fraud, online
grooming, dating scam and sextortion. In 2015, she began managing a Facebook
page called researching cyberaggressions – online romance scam, sextortion, which
aims to inform and educate individuals about new forms of online crimes such as
webcam blackmail (often called sextortion), online romance scam and other aggressive
behaviour online. Connect with Diana on Twitter.
Contact: diana.selck@googlemail.com
Thomas-Gabriel Rüdiger is a German criminologist,
researcher and lecturer at the Institute for Police Science
at the University of Applied Science of the Brandenburg
Police. He is an expert in criminological research
regarding digital policing – especially the usage
of social media for digital community policing; the
development of norms as well as their judicial review
in digital space and its online crimes. His focus is with emphasis on
youth violence and sexual delinquency, hatespeech, cyber crime, and risks in web
social communities and virtual worlds (in particular, online gaming). In this particular
space, he consults political and juridical instances as well as NGOs and is often
asked for interviews focusing on digital risks and regulation and control possibilities
in leading German media. In 2013, Thomas-Gabriel was awarded the first European
Future Award for Policework for his publication “Gamecrime” about crime in virtual
worlds. Connect with Thomas-Gabriel on Twitter.
Contact: thomas.ruediger@fhpolbb.de

Are Virtual Currencies being accepted as risk and could be regulated?

Dr Clare Chambers-Jones

25 February 2016


Virtual Currencies (VC) are unregulated and generally speaking they have not fallen under the watchful eye of government or regulatory authorities with much legislative gusto. However, the tide is changing and the European Union has started to acknowledge that VC can pose financial risks and threats and that there may now be the possibility of regulating them. This is big news which has fallen under the radar of most news outlets.

In September 2013 the European Banking Authority (EBA) undertook a consultation to examine VC and in December 2013 they published an opinion paper on VC[1]due to their obligation to monitor new and existing financial activities[2]. They saw VC as a new innovative in finance that they should be mindful of.[3]  The findings were that VC were unregulated and their risks unmitigated.[4] In 2014 the question that the EBA was asking was whether VC should be regulated or not.

The EBA identified some 70 risks spanning several categories, yet also acknowledged that VC offer benefits to the user as well, such as speed, reduction of costs in transactions and financial inclusion.[5]

In February 2015 the EBA published a further warning to consumers on VC.[6] The EBA outlined several risks associated with VC for consumers, these being:

  • Loss of money on exchange platform
  • Money stolen from digital wallets
  • Unprotected when using VC as a means of payment
  • Fluctuating values of the VC
  • Cab be misused for criminal purposes
  • Maybe subject to tax liabilities[7]

Guidance as to how to protect yourself was briefly offered in the form of ‘use carefully’, ‘do not use money which you cannot afford to lose’ and be ‘aware of the risks’. This not so useful guidance demonstrated the EBA’s lack of understanding of the issues that VC can offer, whether they are positive or negative.

More sound guidance came in February 2016 with the European Commission providing a clear indication that VC could soon be regulated under the 4th Anti-Money Laundering Directive 2015 (AML).[8][9] The European Commission openly acknowledged that VC can be used “by terrorists to conceal financial transactions, as they can be carried out more anonymously”.[10] The Commission has indicated that they wish to bring in VC exchange platforms under the 4th AML Directive. This would enable exchange platforms to carry out Know Your Customer (KYC) due diligence checks. The commission is also considering whether to bring in licences for VC exchange platforms and VC wallet provider. This requirement would then fall under the licencing and supervision rules of the Payment Service Directive (PSD2) 2015.[11]

The Commission consider the proposal to ban all VC yet they have said that unlike some other jurisdictions globally and indeed some within the European Union, the EBA has not issued an outright ban on VC. This is because of the perceived benefits which are offered by the ease, speed and low cost of the financial transaction. The risk the EBA and Commission, have concluded is minimal and does not pose a financial stability risk.[12]

The tide in oversight, acceptance and regulatory possibility has therefore changed within the European Union. VC are not banned but the possibility of them falling under some of the AML regulation is now a distinct possibility because regulators now accept the feasible risks of terrorist financing.

[1] European Central Bank (2014) EBA Opinion on ‘virtual currencies’. July. https://www.eba.europa.eu/documents/10180/657547/EBA-Op-2014-08+Opinion+on+Virtual+Currencies.pdf accessed 25 February 2016.

[2] European Central Bank (2014) EBA Opinion on ‘virtual currencies’. July. https://www.eba.europa.eu/documents/10180/657547/EBA-Op-2014-08+Opinion+on+Virtual+Currencies.pdf accessed 25 February 2016.

[3] European Central Bank (2014) EBA Opinion on ‘virtual currencies’. July. https://www.eba.europa.eu/documents/10180/657547/EBA-Op-2014-08+Opinion+on+Virtual+Currencies.pdf accessed 25 February 2016.

[4] European Central Bank (2014) EBA Opinion on ‘virtual currencies’. July. https://www.eba.europa.eu/documents/10180/657547/EBA-Op-2014-08+Opinion+on+Virtual+Currencies.pdf accessed 25 February 2016.

[5] European Central Bank (2014) EBA Opinion on ‘virtual currencies’. July. https://www.eba.europa.eu/documents/10180/657547/EBA-Op-2014-08+Opinion+on+Virtual+Currencies.pdf accessed 25 February 2016.

[6] European Central Bank, (2015) Warning to consumers on virtual currencies. https://www.eba.europa.eu/documents/10180/598344/EBA+Warning+on+Virtual+Currencies.pdf accessed 25 February 2016.

[7] European Central Bank, (2015) Warning to consumers on virtual currencies. https://www.eba.europa.eu/documents/10180/598344/EBA+Warning+on+Virtual+Currencies.pdf accessed 25 February 2016.

[8] Fourth Anti Money Laundering Directive 2015. http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32015L0849 date accessed 25 February 2016.

[9] European Commission, (2016) Press Release, Questions and Answers: Action Plan to strengthen the fight against terrorist financing. 2 February http://europa.eu/rapid/press-release_MEMO-16-209_en.htm accessed 25 February 2016.

[10] European Commission, (2016) Press Release, Questions and Answers: Action Plan to strengthen the fight against terrorist financing. 2 February http://europa.eu/rapid/press-release_MEMO-16-209_en.htm accessed 25 February 2016.

[11]Payment Services Directive 2015 (amended)  http://ec.europa.eu/finance/payments/framework/index_en.htm accessed 25 February 2016.

[12] European Commission, (2016) Press Release, Questions and Answers: Action Plan to strengthen the fight against terrorist financing. 2 February http://europa.eu/rapid/press-release_MEMO-16-209_en.htm accessed 25 February 2016.

New EU Wide cyber security laws in the year of the cyber attack

Late in the evening of the 7th December 2015 the European Parliament and the Luxemburgish Presidency of the Council reached a highly critical agreement on the way forward for Europe in relation to cybersecurity.  The agreement they reached was to implement a European Wide Cyber Security Directive, The Network and Information Security Directive. This “hugely complex”[1] piece of legislation is a milestone in the work towards a Single Digital Market. Previously there have been no agreements as to how EU Member States should deal with a cyber security attack.[2]

Currently it is estimated by the European Agency for Network and Information Security (ENISA) that breaches result in annual losses of between 260bn Euro’s to 340bn Euro’s.[3]

Cyber-attacks are becoming a frequent occurrence in everyday life. They are occurring in businesses, government offices, university systems as well as within Children’s Toys (VTech China). Also on the date that the EU agreement was disused Universities in the UK came under attach which bought down the university submission system thereby not allowing student to submit coursework for assessments.[4] In this instance a Distributed denial of service (DDoS) attached the university wide computer systems.

Vodafone was also targeted on the 8th December as their service was disrupted for a few hours following a cyber-attack.[5] Again the attack was a DDoS and the core servers were not part of the attack.  Vodafone has been the target of several cyber-attacks over the last few years.[6]

Government agencies are also not immune to cyber-attacks with the US Government blaming China on carrying out a cyber –attack on the Bureau of Metrology computer system compromising several sensitive systems.[7]

Similarly on the 10th December the Japanese PM’s website came under cyber-attack taking it off line for serval hours.[8] These attacks are growing and increasing in severity. 2015 is known as the year of the cyber-hack.[9]  There are other high profile cyber hacks which have also occurred during 2015. Hacks such as VTech, where hackers could have accessed children’s tablets and online toys, allowing hackers to record voices and images of children over the internet. Ashley Maddison was another major hack this year. IN this instance the database of an online dating website was hacked and the details of those who has signed up to the site was released. The website was for those in a relationship to meet someone to have an affair with.

The largest political hack came in the form of the Office of Personnel Management which was hacked by a group of Chinese hackers. The attack was massive and effected up to 18 million employees and effected 21.5 million records.[10]

The EU Wide agreement can therefore only be welcomed as it proposes three levels of actions which will create a more harmonised approach to tackling, reporting and managing cyber-attacks. These are:

  1. Each Member State will be required to improve their national cyber-security regime. This will include having a national strategy in which to deal with attacks and also to have a Computer Security Incident Response Team which deal with any attacks.
  2. The Computer Security Incident Response Teams will have to cooperate with other Member States teams to ensure that there is parity in the way in which attacks are dealt with.
  3. To ensure that vital services such as power companies, financial institutions, transport providers, health care and digital infrastructure, as well as, online market places, search engines, and cloud computer services, must ensure they have appropriate security measures and inform the authorities when an attack happens.[11]

In order to achieve the Single Digital Market[12] there needs to be a coordinated approach towards combating cyber-attacks and consumers need to have the trust and faith in the online market place for it to grow into a reality. This is achievable as long as there is cooperation among international governments and legislators. 2015 really has been the year of the cyber-attack.


By Dr Clare Jones

[1] BBC News. (2015a) Europe agrees response to cyber-attacks. 8 December 2015. http://www.bbc.co.uk/news/technology-35038424 date accessed 9 December 2015.

[2] Oettinger, G.  (2015) First EU Wide legislation on Cybersecurity agreed. Europa. 8 December 2015 http://ec.europa.eu/commission/2014-2019/oettinger/blog/first-eu-wide-legislation-cybersecurity-agreed_en date accessed 9 December 2015.

[3] For current information of statistics see ENISA website located https://www.enisa.europa.eu/about-enisa.

[4] BBC News (2015b) Universities suffer cyber-attack. http://www.bbc.co.uk/news/education-35043243 accessed 10 December 2015.

[5] Fontaine, P. (2015) Vodafone Falls Prey to Cyber Attack. http://grapevine.is/news/2015/12/09/vodafone-falls-prey-to-cyber-attack/ date accessed 10 December 2015.

[6] Fontaine, P. (2015) Vodafone Falls Prey to Cyber Attack. http://grapevine.is/news/2015/12/09/vodafone-falls-prey-to-cyber-attack/ date accessed 10 December 2015.

[7] Uhlmann, C. (2015) China blamed for ‘massive’ cyber attach on Bureau of Metrology Computer. http://www.abc.net.au/news/2015-12-02/china-blamed-for-cyber-attack-on-bureau-of-meteorology/6993278 date accessed 10 December 2015.

[8] ZeeNews. Japanese PM’s website under possible cyber-attack. http://zeenews.india.com/news/world/japanese-pms-website-under-possible-cyber-attack_1832776.html  Date accessed 10 December 2015.

[9] Kean. J. (2015) Hacked in 2015: The year in cyberattacks. http://www.pastemagazine.com/articles/2015/12/hacked-in-2015-the-worst-cyber-attacks-of-the-year.html date accessed 10 December 2015.

[10] Kean. J. (2015) Hacked in 2015: The year in cyberattacks. http://www.pastemagazine.com/articles/2015/12/hacked-in-2015-the-worst-cyber-attacks-of-the-year.html date accessed 10 December 2015.

[11] Oettinger, G.  (2015) First EU Wide legislation on Cybersecurity agreed. Europa. 8 December 2015 http://ec.europa.eu/commission/2014-2019/oettinger/blog/first-eu-wide-legislation-cybersecurity-agreed_en date accessed 9 December 2015.

[12] For more information, see: Europa. (2015) Single Digital Market. http://ec.europa.eu/priorities/digital-single-market/  date accessed 10 December 2015.

Cyber-grooming as the nucleus of global digital policing?


Thomas-Gabriel Rüdiger, M.A.

The Internet enables people of all ages to interact and communicate relatively anonymous. Besides the language differences there are effectively no national borders for the individual person. This leads to a situation where the user cannot know which criminal regulations apply for which website, chat room or messenger service in the World Wide Web. Most countries and societies claim that their penal codes also applies to the virtual space. Especially politicians try to intensify this claim in arguing the Internet is not a legal vacuum. But laws only make sense if they can be enforced.

However the enforcement of rules traditionally reaches its limits. The users, including criminals, do not think in national terms anymore, but the law enforcement agencies still do. In order to arrive in the digital world from the law enforcement perspective a nucleus for the understanding of which violations should be criminalized is necessary. Due to the partly different moral and ethical preconceptions national legislations cannot create the benchmark. Only common legal perceptions can be the basis for joint law enforcement.

However, one category of offences – initiating of sexual child abuse over the Internet – has the potential to act as such a nucleus for a possible digital criminal legislation. This phenomenon is worldwide known under different names like Cyber or Online Grooming and Online Predator. The approach is always the same. Adults but also juveniles try to persuade children to meet them somewhere and to abuse them physically, partly by establishing a long-lasting online relationship. Another way is to make children to send them pornographic pictures or videos of themselves (http://www.fhpolbb.de/sites/default/files/field/dokumente/ora-schriften-s-2013.pdf). Thereby, it is a living reality that a perpetrator who lives in the USA can digitally abuse a child in its playroom in London. In one case a German offender forced a boy in Vienna to send him pictures with sexual content. The only remaining border is the language, but this one is also crumbling in a globalised English-speaking world.

Some police authorities try to counter this development at least with some local operations (USA http://www.saultstar.com/2015/07/03/sault-police-help-catch-online-predator http://www.bradfordtoday.com/2015/09/17/child-pornography-charges-filed-against-two-pennsylvania-men-2/#.VhaQpWuNDKk ;  UK http://www.theguardian.com/social-care-network/2012/aug/22/police-investigators-catching-paedophiles-online ; Germany http://www.fosigrid.org/europe/germany http://www.stern.de/panorama/stern-crime/cyber-grooming-razzia-gegen-mehr-als-40-mutmassliche-paedophile-3663960.html ). To do this, police officers often masquerade as minors in respective forums and chats in order to bring criminals to justice. It stands out that many news articles report about perpetrators from the same state, county or region as where the victim comes from. But there are barely any local social networks and the police will have to deal with criminals who operate out of other regions, countries or even continents.

The perpetrators take advantage of the possibility of networking from any place in the world to victimize children in the digital space. The responses of the respective law enforcement authorities are predominantly based on their area of responsibilities. How blatant perpetrators operate showed a campaign that was executed by the organisation “Terres des Hommes” in 2013. Terres des Hommes used a deceptively real looking virtual 10-year old girl named “Sweetie” who presented herself for live webcam sex on a Philippine website. A total of 20,000 persons contacted “Sweetie” over a period of 10 weeks and offered money for performing sexual acts on a webcam

(http://www.newsweek.com/computer-generated-10-year-old-girl-leads-conviction-online-predator-278811).  Around 1,000 out of these 20,000 persons from 72 countries (amongst others USA, UK, India, Australia, Canada, and Germany) have been identified and in some cases legal proceedings have started (http://www.terredeshommes.org/sweetie-first-conviction/). In combating child abuse on a Global scale Terres des Hommes achieved something what is usually expected from the police. Thereby, this private organisation could act so flexible only due to the fact that it is not bound to the legal restrains law enforcement agencies usually have to face when collecting evidence and convict offenders.

The police also must be enabled to operate on a Global scale to combat and prevent such serious crimes. Therefore, the debate about transnational or harmonised criminal codes for the digital space and joint police operations must achieve concrete results. Would it be possible to establish a new police authority with a worldwide area of responsibility in this field?

It is certainly worth thinking about it…

About the author

Thomas-Gabriel Rüdiger is a German criminologist, researcher and lecturer at the Institute for Police Science at the University of Applied Science of the Brandenburg Police. He is an expert in criminological research with emphasis on youth violence and sexual delinquency, political extremism, cyber crime, and risks in web social communities and virtual worlds (in particular, online gaming).  In 2013, Thomas-Gabriel was awarded the first European Future Award for Policework for his publication “Gamecrime” about crime in virtual worlds. Connect with Thomas-Gabriel on Twitter.

Mt Gox and update

This exchange was a leading exchange based in Japan and failed to comply with US money laundering regulations. The problems with Mt Gox stated when it was sued by CoinLab which is a Seattle start up. CoinLab claimed that Mt Gox failed to reach a conclusion over an agreement to go into business which would have seen CoinLab being in control over Mt Gox’s North American’s accounts[1]. The benefit of the partnership would have been the legitimisation of Mt Gox’s business ventures in North America because CoinLab is regulated withFinCen to provide Bitcoin exchanges.[2]  This lack of cooperation with Coin Lab has led to another fraction with the law as MutumSigillum a US Intermediary for Mt Gox, has had its accounts ceased. MutumSigillum was found to be not in compliance with the US money transmitter rules and regulations. Mt Gox was using this US intermediary as a means of exchanging Bitcoins in North America. It appears that Mt Gox deliberately sought intermediaries who did not want or were not regulated by regulators in the US. This in turns casts speculation over the legitimate use of the exchange. The troubles at Mt Gox continue as the COE of MtyGox is a Mr Mark Karpeles, yet he is also the owner of Mutum Sigillum. It is important to state that Bitcoins themselves were not being directly target by US authorities but it was their ‘criminal use possibilities’ which have caused regulators globally concern.[3]  It seems as if Bitcoins can be used as a currency for criminal activities and this in turn badly effects the legitimate possibilities of the digital currency. As  McMillan[4] highlighted legislate banking institutions are now avoiding using Bitcoins so as to not be tarnished with the taint of criminal activities. This can only be a bad thing for the legitimate use of Bitcoins and one which regulators must tackle head on. Calvery, Director of the Financial Crimes Enforcement Network, made mention to this in June 2013 when she acknowledged that digital currencies can and are used for criminal activities but that regulators must not forget the innovative advancements and financial inclusion these new technologies afford society and as such should not be over regulated.[5] However Bitcoins are unlike Mt Gox or even Liberty Reserve. The digital currency is not controlled by anyone and “operates as a much more transparent digital currency where money transfers can be tracked in public”.[6] It is the exchanges themselves which operate an anonymous service but not the collection of Bitcoins themselves.

In September 2015 Mark Karpeles was arrested in August in Japan on charges that he falsified data about how many Bitcoing Mt Gox held. He also faces charges that he funneled $1.7m Bitcoins towards other companies he owned before Mt Gox closed.

Also in August a Japanese court ruled against a man seeking compensation through the loss of money following the demise of Mt Gox saying that the currency was “not subject to ownership”[7] and thus not not applicable to seek repayment. This worrying stance by Japan on the legal status of digital currencies once again shows how the lack fails to keep pace with the changing economic technology.

[1] Hill, K. (2013a) The Feds are cracking down on Mt. Gox (not on Bitcoin). 15 May 2013. Forbes. https://www.mtgox.com/ accessed 9 January 2014.

[2] Hill, K. (2013a) The Feds are cracking down on Mt. Gox (not on Bitcoin). 15 May 2013. Forbes. https://www.mtgox.com/ accessed 9 January 2014.

[3] Hill, K. (2013a) The Feds are cracking down on Mt. Gox (not on Bitcoin). 15 May 2013. Forbes. https://www.mtgox.com/ accessed 9 January 2014.

[4] McMillan, R. (2013) Bitcoin shunned by Big banks as Mt Gox halts dollar payouts. Wired.com. 21 June 2013. http://www.wired.co.uk/news/archive/2013-06/21/mt-gox-stops accessed 9 January 2014.

[5] Calvery, J.S.  (2013) Remarks of Jennifer Shasky Calvery, Director Financial Crimes Enforcement Network. The Virtual Economy: Potential, Perplexities and Promises United States Institute of Peace, Washington, DC, June 13 2013. http://www.fincen.gov/news_room/speech/html/20130613.html accessed 9 January 2014.

[6] McMillan, R. (2013) Bitcoin shunned by Big banks as Mt Gox halts dollar payouts. Wired.com. 21 June 2013. http://www.wired.co.uk/news/archive/2013-06/21/mt-gox-stops accessed 9 January 2014.

[7] BBC News, (2015) Former Bitcoin exchange boss charged in Japan. http://www.bbc.co.uk/news/technology-34221871 accessed 14 September 2015.

Me, as stolen by Richard Prince

Dr Angela Adrian (re-posted on Dr Adrian’s personal blog http://angelaadrian.com/)

Artist and thief, Richard Prince, reminded us that what you post is public. It can be shared for anyone to see and, apparently, use. As a part of the Frieze Art Fair in New York, Prince displayed giant screenshots of other people’s Instagram photos without warning or permission. He then sold these prints for $900,000 apiece. Is copyright law so very flexible?

Let me start by saying my picture was not, in fact, stolen by Richard Prince as I do not have an Instagram account. However, if I had been one of the many whose photo was stolen, printed, and sold for $900,000, I would definitely be one of those who would be suing. This is not art. This is theft.

Both the meaning and value of intellectual property occurs at the interface of production and consumption. This article deals with the complex problem of protecting intangible property interests in what transpires online. Image Rights are the suggested solution.

So, who is Richard Prince? How can he get away with this?

He is an American painter and photographer who began appropriating photographs in 1975. His image, Untitled (Cowboy), a re-photograph of a photograph taken originally by Sam Abell and appropriated from a Marlboro advert, was the first re-photograph to raise more than $1 million at auction when it was sold at Christie’s New York in 2005.

In 2011, Prince was hit with a lawsuit for using images from Patrick Cariou’s book Yes Rasta without permission in a series of collages. One of those collages sold for around $2.5 million, according to The New York Times. Judge Deborah A. Batts ruled Prince was breaking fair use laws with his appropriation of Cariou’s images. Batts said Prince’s work did not transform or “add value” to the originals. But Prince appealed, and, with the exception of five paintings that needed to be re-evaluated, the ruling was overturned in 2013.

 What is Art?

The Oxford Dictionary defines it as: “The expression or application of human creative skill and imagination, typically in a visual form such as painting or sculpture, producing works to be appreciated primarily for their beauty or emotional power.”

 How is it protected?

“Copyright law delineates our linguistic and artistic palettes by subjecting creative expression to monopolization and by restricting the reproduction and manipulation of cultural content.” (Tehranian, 2011)  The 1976 U.S. Copyright Act provides that copyright protection “subsists … in original works of authorship fixed in any tangible medium of expression, now known or later developed” (17 U.S.C.A. § 102(a)). So three things must be present for a work of art to be copyrightable: originality, a fixed medium and authorship.

Originality is the most important quality. Originality is not dependent on the work’s meeting any standard of aesthetic or artistic quality. Thus, a work need not be fine art to be copyrightable.

A fixed medium means virtually any form of fixed recording is protected, no matter how new the technology.

Authorship is not a simple concept and is greatly debated. Authorship, they argue, is a cultural construction. What makes an author? Do not some “authors” (even Shakespeare) stitch together texts from pre-existing plots? Or even borrow characters and scenes whole cloth from other narratives? Why should certain kinds of expression, like literary production, be privileged above other types? (Jaszi, 1988).

What is a Derivative Work?

A derivative work is a work based on or derived from one or more already existing works. Common derivative works include translations, musical arrangements, and art reproductions. To be copyrightable, a derivative work must incorporate some or all of a pre-existing “work” and add new original copyrightable authorship to that work. (17 U.S.C. § 101) This is where Richard Prince hides.

 How can I protect myself from becoming someone’s Derivative Work?

The new Guernsey Image Right is established simply by existing and registering that particular existence.

Image rights can be asserted when a person’s identity and associated images linked to that person have been commercially appropriated or exploited by another without their permission. They are related to the distinctive expressions, characteristics or attributes of, or associated with, a personality made available to public perception (Adrian, 2013). Image rights are an integral part of artistic expression and a product of not only celebrities, but ordinary people. The value of image rights is such that they are already being actively managed and traded, despite the lack of clear legal recognition and the lack of clarity as to the extent of the rights. Image rights are commercially valuable and build upon the international standards for intellectual property discussed earlier.

According to s 2(1) of the Guernsey Image Rights Ordinance (GIRO), “A registered personality is a property right obtained by the registration of a personality in the Register in accordance with the provisions of this Ordinance”. “Personality” refers to the personality of the following types of person or subject, which is described in the Image Rights Ordinance as the “personnage”. Section 1(1) IRO describes a “personnage” as follows:

  1. a natural person,
  2. a legal person,
  3. two or more natural persons or legal persons who are or who are publicly perceived to be
  4. intrinsically linked and who together have a joint personality (‘joint personality’),
  5. two or more natural persons or legal persons who are or who are publicly perceived to be linked in common purpose and who together form a collective group or team (‘group’), or
  6. a fictional character of a human or non-human (‘fictional character’), whose personality—
  • is registered under this Ordinance (and is accordingly a ‘registered personality’ for the purposes of this Ordinance), or
  • is the subject of an application to be so registered.”

“Personality” is defined in s 1(2) IRO as “the personality of the person, two or more persons or character referred to in subsections (1)(a) to (e)”. Section 1(5) IRO defines a “natural person” as a human being who “(a) is alive, or (b) has died within the period of 100 years preceding the date of filing the application for the registration of the personality”. So, Robert Downey Jr or the author, Angela Adrian, would be considered natural persons, likewise so would the deceased Charlie Chaplin or the author’s deceased father.

“Image rights” are defined in s5(1) IRO as “exclusive rights in the images associated with or registered against the registered personality”. Section 3(1) IRO defines “image” as:

    1. the name of a personnage or any other name by which a personnage is known,
    2. the voice, signature, likeness, appearance, silhouette, feature, face, expressions (verbal or facial),gestures, mannerisms, and any other distinctive characteristic or personal attribute of a personnage, or
    3. any photograph, illustration, image, picture, moving image or electronic or other representation(‘picture’) of a personnage and of no other person, except to the extent that the other person is not identified or singled out in or in connection with the use of the picture.

Note that there is no requirement to register specific images associated with the registered personality beyond the personality’s name itself. However, for there to be a benefit in registering and for easier enforcement, specific images are useful. A registered image is presumed to be distinctive and of value, which are requirements for infringement, whereas these qualities must be specifically proven in order to enforce rights in an unregistered image (Adrian, 2013).

Private intellectual property rights in your digital persona and digital goods are a simple result of changes in economic value that stem from the development of new technology and the opening of new markets. As one victim of Richard Prince pointed out: “In some ways I feel powerless in this situation because I am a young woman. It is difficult for me to reclaim what is mine,” Collins said. “Just because a woman puts an image out publicly on her own forum, a man of power taking women’s photos and creating a profit off of it is in no way ‘fair game.’” It is time to change the game.


  • Adrian, A (2013) Mickey Mouse wants to live forever: The Guernsey Image Rights Ordinance may allow that, 35 European Intellectual Property Review 7.
  • Jaszi, P (1988) Who cares who wrote “Shakespeare”? 37 Am. Univ Law Rev 617.
  • Tehranian, J (2011) Parchment, Pixels, & Personhood: User Rights and the IP (Identity Politics) or IP (Intellectual Property), 82 U. Colo. L. Rev. 1.

Silk Road

On the 26 May 2015 Ross Ulbricht was sentenced to a life in prison without parole. His crime of seven felonies, including trafficking drugs on the internet, narcotics-trafficking conspiracy, running a continuing criminal enterprise, computer hacking, and money laundering.

The Guardian illustrates how Silk Road was something new, something big and something innovative.

“But Silk Road, founded in 2011, was something else. Using the Tor encryption service and with prices in Bitcoin, it promised a new level of safety – both from law enforcement and from scam artists. Vendors were rated by users, as they are on sites like Ebay; vendors that failed to deliver got bad reviews, so users knew to steer clear.”
Silk Road is another example of how Bitcoins can be used for illegal purposes. Silk Road was an online market place which allowed Bitcoins to be used for the purchase and selling of drugs and other illegal goods (Lee 2013). The founder of Silk Road is Ross Ulbricht, 29, and was a former  physics and engineering student from Austin, Texas. However on the 1 October 2013 the FBI found him sitting in the library in San Francisco carrying out illegal trades on the internet. The FBI raid was the culmination of a yearlong investigation into the website which sold drugs and other illegal items. Ulbricht, who was also known on Silk Road as Dread Pirate Walking, had operated the illegal business from his home or local café for over a year. He carried out most of the trades himself and amassed a fortune which was held in Bitcoins (The Guardian 2013). Although some of his wealth is still unaccounted for it is estimated that he is worth $34.5m and he was making $20,000 a day on commissions.  The FBI held onto the Bitcoins stemming from the business until the end trial and then they hope to liquidate the Bitcoins. However Ulbrichts personal fortune is still unavailable to authorities (Hill 2013b).Ulbricht was also charged with the ordering up to six  ‘hits’ on people who had stood in the way of his enterprise (Flitter 2013). In November 2013 he was denied bail during his case.

His case can be found at:U.S. v. Ulbricht, U.S. District Court, Southern District of New York, No. 13-mj-2328.

Many are now asking whether the sentence life without parole is too harsh a sentence or is it perhaps a benchmark laid down so others who may follow in Ulbrichts footsteps will have to take heed of? Time will tell but what is certain is that there will be other Silk Roads and Ulbrichts who will use technology and legal loopholes to expand their criminal empire.

Communities within Virtual Worlds

There are a lot of different perspectives in relation to virtual worlds and how, or, if, real world laws apply to them. The first thing to understand is what is a virtual world? A virtual world is a 3D platform where people congregate to mix socially, or, for business and/ or education. Since the advent of the internet in 1950’s, our perception and reality of how we communicate with others has changed (Bell 2008). Virtual worlds typify this change in our altered means of communicating. Virtual worlds are used by people to communicate on a social, educational or business level with others. The idea of a virtual world or a ‘metaverse’ first came about in the novel by Neal Stephenson’s “Snow Crash”. There is no real agreement as to what ‘virtual world’s’ means. Bell (2008: 2) propounds several different approaches to defining virtual worlds. For example a virtual world can be:

“a spatially based depiction of a persistent virtual environment, which can be experienced by numerous participants at once who are represented within the space by avatars” (Koster, 2004)

“a persistent, computer-generated environment through which a user can interact with a huge number of other users”, (Cornelius, 2011: p. 97)

“a virtual world [as] crafted placed inside computers that are designed to accommodate large numbers of people”. (Castranova, 2004; 43)

These definitions go some way as to outlining what a virtual world is, in other words there must be persistence; there must be a computer related mechanism for the world to exist within, there must be a place where numerous people can meet and interact with each other. Bell (2008;2) combines these definitions and states that a virtual world is “a synchronous, persistent network of people, represented by avatars, facilitated by networked computers”. Given that the internet and interactions that take place online are becoming commonplace there is an importance to understand the legal dimensions of this new space. As Ornberg states “in the society of today more and more activities take place on the internet and in the computer” (2003, p.1).

We can therefore see that a virtual world is a place where real people can enter via the medium of a computer and communicate with others. What has emerged through virtual worlds, are virtual communities, and it is here where criminology, sociology and law disciplines and scholars take an interest. A virtual world is often seen as something that is unreal and which does not reflect the traditional approaches to life, but on closer examination a virtual world does, more often than not, form close synergies with the real world.

Within the virtual world communities are often formed and these communities are promulgated by the presence, co-presence and identity people feel when they are in a virtual world. Within virtual world research, presence and identity have been discussed prolifically (Bowmann & McMahan 2008; Bulu, 2012; Doyle 2009; Nowak 2001; Sheridan 1992; Witner & Singer 1998). Yet it is the make-up of these communities which make the virtual world real. Within the communities people enter represented as avatars. As Boellstorff (2008: 129) suggests, “avatars make virtual worlds, real, not actual: They are a position from where the self-encounters the virtual”. These avatars are 3D pictorial representation of how we as human want to be portrayed. You can customise your avatar and make it look just how you want. Here is a picture of my Second Life avatar.

My virtual world persona
My virtual world persona

Once an avatar is within the virtual world then they can mix with others and form groups and forge relationships. This forms the basis of being ‘present’ within the virtual world. To be present, virtually, within a virtual world allows the world to come to life and to allow the avatar/ person to engage in experiences.  As Tu (2002) states, “social presence is a vital element in influencing online interaction” (Fabro & Garrison, 1998; McIsaac & Gunawardena, 1996; Rourke, Anderson, Garrison, & Archer, 1999). Without feeling this social presence within a virtual world it does not allow total immersion within the environment.  Social presence and co-presence is where an avatar interacts with another avatar or groups of avatars and has the feeling that someone else is there and present (Nowak, 2001).

The question is therefore if there are groups of people interacting with each other on a platform that is facilitated by the real world can the world be without any influence of law? If there is an influence of law how will it be used and which laws can be used? There is academic evidence to suggest that there are communities within virtual worlds and that these are real and present. Within any communities there will be crimes committed and these crimes often go unpunished.


Bell, M. W. ‘Towards a definition of virtual worlds’, Journal of Virtual World Research, Vol. 1. No. 1. July 2008, ISSN: 1941-8477.

Boellstroff, T. (2008) ‘Coming of age in second life: An anthologist explores the virtual human, Princeton, Princeton University Press.

Bowmann, D. A.  & McMahan, R. P. (2008) ‘Virtual reality: How much immersion is enough’, IEEE Computer, 40(7), 36-43.

Bulu, S. T. ‘Place presence, social presence, co-presence, and satisfaction in virtual worlds’,  58 2012,  154-161.

Castronova, E. (2004) The right to play, 49, New York Law School Review, 185.

Doyle, D. ‘The body of the avatar: rethinking the mind-body relationship in virtual worlds’, Journal of gaming and Virtual worlds, 2009 Vol 1, No. 2. Pp. 131-141.

Fabro, K. G., & Garrison, D. R. (1998). Computer conferencing and higher-order learning. Indian Journal of Open Learning, 7, 41-53.

Koster, R. A virtual world by any other name? (Msg 21) Message posted to http://terranova.blogs.com/terra_nova/2004/06/a_virtual_world.html (2004) January 2007.

McIsaac, M. S., & Gunawardena, C. N. (1996). Distance education. In D. Jonassen (Ed.), Handbook for research on educational communications and technology (pp. 403-437). New York: Scholastic Press.

Nowak, K. (2001, May) ‘Defining and differentiating co-presence, social presence and presence as transportation. Paper presented at the 4th International workshop on presence. Philadelphia, PA.

Ornberg, T. (2003) Linguistic presence on the Internet: Communication, worldview and presence in online virtual environments. Unpublished master’s thesis, University of Umea. Retrieved 4 October 2014 http://admin.humlab.umu.se/files/pdf/therese_duppsats.pdf

Rourke, L., Anderson, T., Garrison, D., & Archer, W. (1999). Assessing social presencein asynchronous text-based computer conferencing. Journal of Distance Education, 14(2). Retrieved 4 October 2014, fromhttp://cade.athabascau.ca/vol14.2/rourke_et_al.html

Sheridan, T. B. (1992) ‘Musings on telepresence and virtual presence. Presence, Teleoperators and Virtual Environments, 1, 120-126.

Tu, C.H. (2002). The impact of text-based CMC on online social presence. The Journal of Interactive Online Learning, Volume 1, Number 2, Fall, pp 1-24.

Witner, B. G. & Singer, M. J. (1998) ‘Measuring presences in virtual environments: a presence questionnaire. Presence: Teleoperators and Virtual Environments, 7(3), 225-240.

Hello world!

Welcome to the Cyber Law and Regulation blog where issues relating to cyber law will be discussed. The blog is written by different contributors who are all active researchers in the area of cyber law and IT law. You can find out who we are via the contributors tab at the top of the page. You can also find out about our research too.

It is hoped that this platform will promote and foster active discussions in these topical areas and encourage international links with other researchers.

We look forward to sharing our thoughts and ideas about cyber law and regulation with you.

Happy Blogging


You can also find me in Second Life – ClareChambersJones