02 March 2010 | 6,538 views

High Tech Ticket Scalpers Earn $25 Million Profits

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Today’s news is that a company in the US has been using CAPTCHA breaking technology to run a very profitable ticket scalping operation.

Reports state they netted a $25 Million USD profit over a 6 year period, which is an industry is extremely lucrative especially for a reasonably small operation.

Of course they way in which they did this was extremely unscrupulous, snapping up prime tickets within seconds of them opening then selling them later for much inflated prices.

Federal prosecutors have accused four men of fraudulently obtaining more than 1.5 million concert and sporting-even tickets by hacking the computer systems of multiple vendors.

Over a six-year period, the men employed computer scripts that snapped up tickets to some of the hottest events just a fraction of a second after they went on sale, according to documents filed in US District Court in New Jersey. The scheme, which generated more than $25m in profit, froze out legitimate customers by defeating mechanisms designed to block automated purchases by scalpers.

The 43-count indictment provides a detailed account into the means the men used to fraudulently obtain huge caches of premium tickets to concerts by Bruce Springsteen, Coldplay, and last year’s Sugar Bowl American college football contest. By hacking the sites’ captchas and automatically submitting website forms, they completed purchases in fractions of seconds, securing them front-row seats that were impossible for most fans to obtain.

You know they are going too far when their own employees start warning the bosses they are pushing the ticket prices too high.

As someone who attends concerts I would find this kind of thing extremely annoying and unfair..unless of course it was me running the scam and profiting.

But that’s a different story. Either way, it looks like they have finally been busted and all the details exposed, I’ll be interested to see what the punishment will be as at the end of the day the people losing out are not the artists or the ticket brokers but the actual fans themselves who have been overpaying for premium tickets.

The indictment names four principals of Nevada-based Wiseguy Tickets, which from 2002 until early last year generated more than $121 million in revenue buying tickets and then reselling them at massively inflated prices. Their ability to shut out the rest of market was so consummate that one employee allegedly warned his boss the company might suffer a backlash from ticket brokers and fans alike if it raised prices too high.

“So, whenever you think about pricing, please also think that you are a monopoly not just for your brokers, but for their clients as well – those small clients no longer have the opportunity to score on their own on the web and feel vindicated,” the employee wrote in a 2007 email. “If you do 1 million in tickets in 2007, this means that 1 million people will be displaced from the seats they deserved and further 1 million will pay far more for the seat they are in than they are supposed to.”

To make the hack work, Wiseguys employed OCR, or optical character recognition, technology that automated the process of solving captchas, the challenge and response puzzles designed to ensure a website form is being filled out by a human rather than a script.

The indictment mostly lays charges under wire fraud and unauthorized access, so definitely within the white collar crime arena.

Lowson, the founder of the company has been detained whilst two other were released on bail. The 4th person charged is currently out of the US and is expected to be charged within the coming weeks.

I’ll be watching out for this case as I’m interested to see what kind of punishment is going to be handed out.

Source: The Register



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