Loaning out money inside second live, is that legal ?

[LittleMe Jewell]

Except, if I'm reading this all correctly (despite the working of the actual OP), the perpetrators did not offer him interest or any sort of investment terms.  They offered him a loan - granted a Loan Shark loan, but still, he is the one agreeing to pay interest.  Offering a loan is not the same as offering banking services where you will "receive" interest.  I'm not sure if that is actually a problem or not.

 

[Selene Gregoire]

1 hour ago, LittleMe Jewell said:

Except, if I'm reading this all correctly (despite the working of the actual OP), the perpetrators did not offer him interest or any sort of investment terms.  They offered him a loan - granted a Loan Shark loan, but still, he is the one agreeing to pay interest.  Offering a loan is not the same as offering banking services where you will "receive" interest.  I'm not sure if that is actually a problem or not.

 

A loan is a bank service. Most banks in the US offer a varity of loans from homes to cars to remodeling to just everyday expenses. And with a 60% interest rate that the person charged, it falls under the banking policy.

[Amina Sopwith]

If there's a loophole, it might be because this shark didn't use an "object" to carry out the transaction (as far as we know) and presumably did it via immediate personal transfers (which presumably the Lab can't restrict in the same way, for obvious reasons). But if the purpose of that part of the TOS is to prevent unregulated lending with interest - and it certainly seems to be - then I shouldn't imagine that'll get the lender any sympathy with the Lab. It states that people who do this should prepare to lose their money and have "nothing to show for their investment". 

Your friend also has the NC "contract" to prove that this wasn't intended as a gift, but as a loan.

Edited April 28, 2019 by Amina Sopwith

[Selene Gregoire]

1 hour ago, Amina Sopwith said:

If there's a loophole, it might be because this shark didn't use an "object" to carry out the transaction (as far as we know) and presumably did it via immediate personal transfers (which presumably the Lab can't restrict in the same way, for obvious reasons). But if the purpose of that part of the TOS is to prevent unregulated lending with interest - and it certainly seems to be - then I shouldn't imagine that'll get the lender any sympathy with the Lab. It states that people who do this should prepare to lose their money and have "nothing to show for their investment". 

Notecards and avatars can be considered objects. Technically, an avatar is an object. Notecards could be considered as such since it was used as a contract of sorts.

The person doing the lending is the one at risk with LL. Although it is possible the person receiving the load may also be suspended for 24 hours if they've never been suspended before but I don't think LL would punish them any further than they already have been.

Quote

Those who continue to offer these services may be sanctioned with suspension, termination of accounts, and loss of land.

 

[ItHadToComeToThis]

Il put this in the simplest way possible. Your friend could simply block the person and all associates and walk away and not worry one single bit. I mean realistically what's going to happen. The only person who is going to loose out in these situations are the people doing the lending. I'm fairly sure your friend wasn't stupid enough to give someone their RL contact details and even if they had what exactly are they going to do. Spend hundreds if not thousands travelling to collect $130.

Linden Lab won't particularly punish your friend they tend to not get involved in in world monetary disputes between residents unless there is evidence of financial fraud taking place or said monetary issue goes against the regulations or lack there of that cause these services to be banned in the first place and even then it's only the lender who will be at fault. We had banks in SL years ago that lent money and allowed people to deposit savings and it pretty much went one of two ways :

1. No one paid back the loans

2. The "bank" ran off with all the savings

Thats the problem with the virtual world. You could "loan" me 20,000 Lindens and have me sign a "notecard contract" and i can pretty much tell you immediately after to stick your contract where the sun doesn't shine and sail off into the distance taking your Lindens with me. 

However if your friend is that worried my suggestion is this..

Pay back the $80 and tell the "loan shark" to go stuff his interest and proceed to blocking them. As I said what are they really going to do, glare at their monitor and gnaw the edges off their keyboard..

[Amina Sopwith]

7 minutes ago, ItHadToComeToThis said:

 The only person who is going to loose out in these situations are the people doing the lending.

Well, quite. A business model in which you lend people Lindens, impose stupid repayment terms and just trust that they'll repay you as requested on honour or by silly threats that can't come to anything RL given that you can't even be sure who or where they are, and the RL amounts involved are paltry. You'd have to be quite hard of thinking not to see where that could go wrong.

[ItHadToComeToThis]

4 minutes ago, Amina Sopwith said:

Well, quite. A business model in which you lend people Lindens, impose stupid repayment terms and just trust that they'll repay you as requested on honour or by silly threats that can't come to anything RL given that you can't even be sure who or where they are, and the RL amounts involved are paltry. You'd have to be quite hard of thinking not to see where that could go wrong.

Exactly. Couldn't have put it better myself. The only result here is said loan shark becoming a broke loan shark 😅

[Pamela Galli]

I can’t take it anymore:

 

“Is loaning money in Second Life allowed by LL?”

[Jules Catlyn]

16 minutes ago, Pamela Galli said:

I can’t take it anymore:

 

“Is loaning money in Second Life allowed by LL?”

Offers Pamela a choice between coffee or Ibuprofen. You can have both as well.!  

[Cindy Evanier]

4 minutes ago, Jules Catlyn said:

Offers Pamela a choice between coffee or Ibuprofen. You can have both as well.!  

Does she have to pay interest on that?

[Selene Gregoire]

2 hours ago, Amina Sopwith said:

Well, quite. A business model in which you lend people Lindens, impose stupid repayment terms and just trust that they'll repay you as requested on honour or by silly threats that can't come to anything RL given that you can't even be sure who or where they are, and the RL amounts involved are paltry. You'd have to be quite hard of thinking not to see where that could go wrong.

For some $100 US isn't even chump change. For someone like me, that's two weeks worth of food. No left overs either.

[Amina Sopwith]

6 minutes ago, Selene Gregoire said:

For some $100 US isn't even chump change. For someone like me, that's two weeks worth of food. No left overs either.

I'm not suggesting it's not a lot of money to some individuals, but to solicitors and those who instruct them, it most certainly is not worth getting embroiled in an international legal dispute. 

[Whirly Fizzle]

I have a fair idea who this "load shark" is.
There were a couple of posts from a "loan shark" on the forum recently advertising his business.
The forum mods (lindens)  removed both forum posts pretty swiftly.

I doubt very much if your friend would be in any trouble from the Lindens for taking out this loan.  However the loan shark could very well get his account suspended or banned if it comes to the attention of LL that they are still operating their loan shark business.

[So Whimsy]

3 hours ago, Jules Catlyn said:

Maybe he should also re-evaluate his expenses in SL if he can't afford certain things. 

You must be very lucky to never just have something random happen that leaves you with less money than you thought you would have by the time rent is due.

I live in a 2 room apartment. One month my washing machine broke down and on my limited budget I had to ask family to help me cover rent. According to your logic I should downgrade and live in a shoebox.

Maybe something happened in that persons RL that made their hobby money for that month dwindle. Sh*t happens.

[Jules Catlyn]

1 minute ago, Syn Anatine said:

You must be very lucky to never just have something random happen that leaves you with less money than you thought you would have by the time rent is due.

I live in a 2 room apartment. One month my washing machine broke down and on my limited budget I had to ask family to help me cover rent. According to your logic I should downgrade and live in a shoebox.

Maybe something happened in that persons RL that made their hobby money for that month dwindle. Sh*t happens.

I lost my house/home in 2015 when the bank took it and sold it for peanuts leaving me with a big debt i am still trying to recover from. Yes i know financial troubles very well and had to give up a lot to get back on my feet including SL spending. I still stand by my statement. When you hit dire straits something has to give and if that's a hobby, so be it. If you do not want your hobby to suffer you have to plan ahead, make arrangements. I can see why people borrow money for rent in RL because it is basically a necessity to have a roof over your head. I don't see that urgency in Second Life. But this is my personal opinion and not the gospel by any means.

[So Whimsy]

13 hours ago, Jules Catlyn said:

I lost my house/home in 2015 when the bank took it and sold it for peanuts leaving me with a big debt i am still trying to recover from. Yes i know financial troubles very well and had to give up a lot to get back on my feet including SL spending. I still stand by my statement. When you hit dire straits something has to give and if that's a hobby, so be it. If you do not want your hobby to suffer you have to plan ahead, make arrangements. I can see why people borrow money for rent in RL because it is basically a necessity to have a roof over your head. I don't see that urgency in Second Life. But this is my personal opinion and not the gospel by any means.

So you are saying because the person couldn't pay their tier one time for whichever reason, they should re-evaluate their hobby?

[Resi Pfeffer]

1 hour ago, Syn Anatine said:

So you are saying because the person couldn't pay their tier one time for whichever reason, they should re-evaluate their hobby?

Thats what i do constantly. If my car breaks down and needs a expensive repair, i will most likely order a pizza instead of a carpaccio, accompanied with a salmon filet when entering a italian restaurant afterwards.

[So Whimsy]

44 minutes ago, Resi Pfeffer said:

Thats what i do constantly. If my car breaks down and needs a expensive repair, i will most likely order a pizza instead of a carpaccio, accompanied with a salmon filet when entering a italian restaurant afterwards.

Guess I am the only one that sets money aside for my hobby and every once in a blue moon something unforeseen happens that goes past what I already set aside for such things. Doesn't mean I have to re-evaluate my finances or my hobby. It just means that I mark that day in the calender with red letters saying 'wtf was THAT!?'

[Polenth Yue]

19 hours ago, KingArwin said:

he got scammed rl, leaving him short on money, temporarely...

So he went ahead to get scammed here too..  

As others have said, the interest of the loan can't be enforced. But this does seem like a bigger issue with the friend rushing into big financial decisions. A policy of waiting a day and running it by friends might be one to suggest. It seems obvious, but not to the person who jumps from one scam to another. Sometimes it needs to be said directly.

[Talligurl]

17 hours ago, Pamela Galli said:

I can’t take it anymore:

 

“Is loaning money in Second Life allowed by LL?”

Why not? I can do whatever I want with my lindens, so if I want to "loan" then to someone that is my right. However it seems to me that what I actually do is give someone lindens, in the hope they give them back, but there is no guarantee. 

[Lindal Kidd]

I think @ItHadToComeToThis has got the best answer so far.

@KingArwin, your friend made two really dumb decisions:  1) taking the "loan" in the first place, and 2) giving out Real Life information.

The loan shark MAY be operating in a loophole in the Terms of Service.  It's debatable (as you can see from the answers here!)  However, he is ALSO doing something very dumb.

Normally, LL does not try to enforce "contracts" in Second Life.  This is because, to even BE a contract, there has to be two parties, both of whom are legally able to enter into a contract.  Because we are all anonymous in SL, we fail this legal test.  However, the loan shark required the lender provide his actual RL name.  The contract, as such, is arguably still unenforceable, because the loan shark did not provide HIS real life name...but it would take a court fight and a lot of money to test this.

Perhaps the loan shark doesn't intend to take it to court, but to stalk and harass the customer in Real Life.  This would be a stupid decision, because such behavior IS illegal and can get you arrested.

Plus, if the loan recipients have any sense, they'd give out fake names and simply never pay back the loan OR the interest.  So our loan shark isn't going to be in business for very long.

My advice to your friend would be: Pay back the principal amount, if he feels that is fair.  Ignore the "interest".  After paying the loan shark, mute him so as not to receive any future communications.  And never, never borrow money in SL again.  He should then go and change ALL his passwords, everywhere.  Change PIN numbers on his bank accounts.  Someone out there has his name; he should take steps to protect the rest of his information.

[Pamela Galli]

3 minutes ago, Talligurl said:

Why not? I can do whatever I want with my lindens, so if I want to "loan" then to someone that is my right. However it seems to me that what I actually do is give someone lindens, in the hope they give them back, but there is no guarantee. 

I was just rewriting the title into standard English.

[ItHadToComeToThis]

18 hours ago, Selene Gregoire said:

For some $100 US isn't even chump change. For someone like me, that's two weeks worth of food. No left overs either.

Right. Iv spent 5+ years surviving on government assistance and only recently returned to work. During that time i hardly had any land in SL as my money was better spent elsewhere.

[Micaela Amore]

So. little update: 
Been asking some people that know more about this.
Because they call them self an investment company and claim the interest rate is an "investment fee" they are not breaking any tos rules.
Its all in the wording apparently.

The good news: 
The only info that was given is a name (that was not even checked by asking for an ID) and that name is so common, good luck finding him real life among the hundreds of others with that name.
I also showed the contract to a legal expert, it will not hold up in court.
She will be offered the money she lent out back, and if she knows what's good for her she takes it, or she risks losing it all.

My bedtime now, thanks to everyone for the answers. 

[Selene Gregoire]

5 hours ago, KingArwin said:

Because they call them self an investment company and claim the interest rate is an "investment fee" they are not breaking any tos rules.

Dude...

Quote

The Second Life Terms of Service prohibit offering interest or any direct return on investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. This applies to inworld investment funds, stock offerings, and banking services and the like.

Next time try talking to LL instead since they are the ones that wrote the policy, not a bunch of people running around on the grid.

Edited April 30, 2019 by Selene Gregoire