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Stop cyber business built on stolen property

In the early 1990’s, before Rudy Giuliani was elected mayor, squeegee hustlers, crack dealers and shady “street vendors” operated with impunity on the streets of New York City.  The national media ran numerous stories about crack cocaine, and they were fascinated with the squeegee racket (for 10 bucks, drivers waiting at stop lights could get their windshields washed and NOT have their antennas ripped off their cars).

But the media did not devote as much attention to the street vendors who sold luxury knock-offs ranging from the laughable to those that made you look twice.  Savvy shoppers knew where to find a bargain Rolex amidst the sea of Folexes. How about a genuine Tiffany necklace? No need to pay for the mark-up of the little blue box when an enterprising vendor had an authentic silver chain for sale at a bargain basement price.

{mosads}Appealing? Sure. If you could get past the nagging feeling that the new watch on your arm had likely been swiped from someone else’s the previous day.  Or that the Tiffany jewelry destined for your girlfriend had probably been snatched from a purse in Midtown during the lunch hour.  Luring customers in with low prices and high-quality product, these vendors established a revolving inventory without concern for the law or the rights of aggrieved property owners.

Two decades later, almost the exact same thing is happening. Only this time, deal seekers don’t have to leave their offices or apartments to satisfy their itch. With a few clicks, the wonders of the Internet can put stolen property in their possession, allowing instant gratification with relative anonymity. Hit movies, the latest in premium television, music, video games, electronic books, and even personal pictures can be yours, thanks to websites known as cyberlockers.

These virtual street vendors are the shady counterparts to DropBox and Amazon Cloud Drive; they all allow access to stored files, but cyberlockers incent and compensate users who upload illegal content, all while counting some of the largest corporations in the world as key partners.  

The base of the cyberlocker business is stolen content.  Modern day pirates upload ripped-off versions of original content to websites which are operated by crime syndicates in the seediest parts of the world.  Deal hunters typically pay a fee to access these sites to peruse an array of stolen content.  Take, for instance, doritosfan99 who recently ripped off the season finale of Game of Thrones, and uploaded it to a website that looks the other way when pirates upload their loot. According to a new study by Digital Citizens Alliance (DCA), these cyberlockers are very lax when it comes to policing their content.  The cyberlocker Hotfile received over eight million notifications about infringing content, yet it terminated only 43 of the sellers on its site.

The bridge between the consumer and the stolen content is the cyberlocker.  These sites see millions of visitors each day and pay nothing for the movies, books and songs they hawk.  With virtually no overhead, cyberlockers enjoy huge profit margins – usually north of 80 percent – and rake in money from subscription services … and advertising

That’s right, some of the largest corporations in the world advertise on these sites.  Slick ads from major national brands appear in cyberlockers similar to your favorite on-line news service.  One particularly popular cyberlocker just realized an annual profit of over $8 million.  The DCA estimates that the 30 most popular cyberlockers today generate around $100 million in revenues.

So, how does this illicit trade actually operate?  There are no mules in cyberspace to swap crumpled bills for coveted items.  But mules are not needed when two of the largest payment processors on the planet, Visa and MasterCard, are ready to assist.  These two card companies are the only payment options on 29 of the 30 cyberlockers analyzed by the DCA.

When so many individuals are willing to buy ill-gotten booty, who can blame Visa for ignoring its own anti-piracy policies in order to get a cut of the profits?  

Of course, Visa and MasterCard should know better.  And they should terminate their relationships with the cyberlockers.  It’s the right thing to do legally, and it’s the right thing to do to protect the financial data of their own customers.  Their continued participation also adds to confusion; many unsuspecting clients of cyberlockers are actually unaware that the content is stolen, but the powerful Visa and MasterCard brands provide false legitimacy to the site.

Getting a “deal” on a Rolex in Times Square, slipping a CD into your backpack, streaming bootleg movies all have the same premise:  what’s yours is mine.  The EPA, the regulatory state and greedy city councils have followed this approach for years.  If we are to restore our badly abused Constitutional rights to private property, we must first restore a culture that repudiates property theft.  Ending cyberlockers is a good place to start.

Schneider is executive director of The American Conservative Union.


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