A sophisticated music royalty fraud against ITunes

Internet fraudsters were part of a plot which involved using stolen credit card information in order to buy a number of songs off iTunes and Amazon, generating approximately £1 million in fake royalty payments. This scam carried on until iTunes noticed some anomalies and realised that it was paying a number of ‘unknown artists’ the

Home » Fraud » A sophisticated music royalty fraud against ITunes

Internet fraudsters were part of a plot which involved using stolen credit card information in order to buy a number of songs off iTunes and Amazon, generating approximately £1 million in fake royalty payments.

This scam carried on until iTunes noticed some anomalies and realised that it was paying a number of ‘unknown artists’ the same rate of royalties it would pay someone like Madonna. A court recently convicted the group of 10 men and 1 woman, many with suspended prison sentences and community service hours.

The scam worked because artists who want to make their music available to the public only need to pay a flat fee to a music distributor, and then upload their songs onto iTunes or Amazon. Any sales from those records then generate royalties which are transferred straight into the artists’ bank accounts. The credit card information used was from cloned credit cards. As each purchase was under £10, it went unnoticed by the media giant until around a year after the scam began, when it realised it was paying out huge royalties to unknown artists located in the Wolverhampton area.

The big music/media giants have constantly been in battles with uploaders in the past, fighting online piracy, which is costing the music industry billions of pounds. It now seems they have to be on the lookout for a different type of scam, and have policies in place that will be able to recognise this type of fraud and deal with it quickly (not take over a year to discover it).

The problem is that with every good policy the media giants have in place to encourage unknown artists to produce and showcase their work, you will always find those few who will attempt to take advantage of the system and use it for their own illicit benefit. It therefore becomes a fine line between wanting to develop new talent and yet prevent those that can take advantage of these systems. Companies like iTunes and Amazon should develop programmes and policies which enable artists to develop and use the companies to expand and become known, but in a way that prevents others from committing fraud with the system. What we don’t want to see happen is for these large companies to then use fraud cases like this one as justifications as to why they can no longer make policy decisions or fund programmes which are designed for new talent.

Some critics may say the decision of the court in relation to these offenders was too light a sentencing, thereby not being a real deterrent for future fraudsters who are attempting to commit similar offences. In order to prevent people from conspiring to commit fraud, and from attempting to illicitly profit from the music and media industry, it is important to impose more stringent, tougher sentencing on those who get caught. This is the only way that the courts will be seen to be taking a heavy hand to these offenders, and the only chance the music and media industry has of preventing these fraudsters from causing them and genuine artists great losses. Many think that it does not matter whether fraudsters scam the large music companies, as they get paid more than enough money anyway. But these people need to recognise that these fraudsters are taking away money from real artists who have worked hard to get where they are today as well.

Click here to visit our general fraud help page.

Fraud

Haven't found what you need yet?

Why not search the whole site?

Contact Us

Comments are closed.

Archives