The Economist Diaries

Skype, Fraud and Following The Money

2011-04-14T18:59:00.015+02:00

I have a Skype account. I use this account to make landline calls. As such, I have a pre-paid balance with Skype.

Yesterday, I had five euros in my account. Today, I have four cents.

Looking at the call history, a series of fraudulent landline calls were placed, exhausting the account. (The call history CSV is given at the end of the article.)

I contacted Skype customer support.

Hi. I've just logged in today for the first time and my credit is at 0.04 euros. It was at about 5 euros yesterday. Looking at my call history, I see a large number of fraudulent calls made yesterday. I've changed my password. Can you refund the account, please. When I get a few minutes, I'll send a list of which calls were fraudulent.

The reply from Skype;

To ensure that you are the only one who can access your account, we advise you to change your password as soon as possible.

[snip password change URL]

Once you have changed your password and managed to access your account, please contact us again including in your email all previous correspondence with us that's relevant to your case and we will unblock your account. Remember to include your Skype Name.

Based on the information you provided, we have initiated an investigation on the matter.

Skype cannot refund any money you might have lost due to this incident. Every user has to take care of their security systems on private computers. (Bold mine, author.)

To prevent unauthorized use, we advise you to keep your password confidential and not to give it to any third party.

Now, there are two issues here.

Firstly, Skype have asserted that I am responsible for these fraudulent calls, due to lax security on my system, and as such they will not refund.

These calls happened while my laptop was in England, being repaired. The thing is, I took the SSD out before sending it off.

(I have another Skype at work - inside a gated office building. I was at work all day while these calls occurred. I have a final Skype at home, on the server; inside my apartment, inside a gated building. Unless a thief broke in, selected my apartment out of the sixty or so here, used five credits worth of Skype and snuck out, no one used my Skypes.)

That leaves password loss. There's a simple answer to that, for I have never, not once, told anyone my Skype password.

Skype don't know this, because they haven't asked; they've just told me that these fraudelent calls happened because of my lax security.

But this brings us to the second issue...

I said fraudulent calls. But maybe they're not. There were a lot of calls but many were instant hangups and were uncharged. It doesn't look exactly like fraud - you'd just expect a series of normal calls. Maybe there's a bug in Skype's system.

You do not, especially when a customers money has gone missing, assume that what he said to you in an email is indeed exactly and correctly the problem and then tell him you don't refund at all for that problem!

Skype are assuming the problem is fraud, because I said it was, and they're assuming the problem is my lax security, because they said it was.

Frankly, it looks like all they're interested in is not refunding any money.

Skype operates a pre-paid service and all pre-paid services benefits financially from fraud. This is different to, say, a bank. When a bank is defrauded, it typically has lost money; the bank isn't happy (fewer assets) and the customer isn't happy (can't meet rent). When Skype is defrauded, Skype is happy - more business, extra profit.

A search on Google finds as its second hit this page on techeye.com;

Skype disappoints us, disappointingly

The author has had the same experience, except that he had auto-recharge active and so lost more than the balance in his account. He made enough noise that the part of his losses in excess of his original Skype balance were refunded, but not the missing original balance in his account.

My advice; if you have to risk having money in your Skype account, keep your balance as low as possible and, of course, keep auto-recharge off.

--

This is the call history CSV;

Date;Item;Destination;Type;Rate;Duration;Amount;
"April 13, 2011 15:09";+996559969777;Kyrgyzstan;Call;0.110;06:00;EUR 0.739;
"April 13, 2011 14:58";+79503150268;Russia - Mobile;Call;0.069;07:45;EUR 0.631;
"April 13, 2011 14:46";+79534817734;Russia - Mobile;Call;0.069;04:50;EUR 0.424;
"April 13, 2011 14:45";+779534817734;;Call;0.000;00:00;EUR 0.000;
"April 13, 2011 14:45";+779534817734;;Call;0.000;00:00;EUR 0.000;
"April 13, 2011 14:44";+996559969777;Kyrgyzstan;Call;0.110;00:00;EUR 0.000;
"April 13, 2011 14:44";+996550293008;Kyrgyzstan;Call;0.119;00:00;EUR 0.000;
"April 13, 2011 14:44";+7795534817734;;Call;0.000;00:00;EUR 0.000;
"April 13, 2011 14:44";+7795534817734;;Call;0.000;00:00;EUR 0.000;
"April 13, 2011 14:44";+7795534817734;;Call;0.000;00:00;EUR 0.000;
"April 13, 2011 14:43";+779534817734;;Call;0.000;00:00;EUR 0.000;
"April 13, 2011 14:43";+779534817734;;Call;0.000;00:00;EUR 0.000;
"April 13, 2011 14:42";+99679534817734;Kyrgyzstan;Call;0.110;00:00;EUR 0.000;
"April 13, 2011 14:38";+996550364443;Kyrgyzstan;Call;0.119;02:49;EUR 0.436;
"April 13, 2011 14:38";+996550364443;Kyrgyzstan;Call;0.119;00:00;EUR 0.000;
"April 13, 2011 14:36";+99679534817734;Kyrgyzstan;Call;0.110;00:00;EUR 0.000;
"April 13, 2011 14:35";+996559969777;Kyrgyzstan;Call;0.110;00:00;EUR 0.000;
"April 13, 2011 14:35";+996559969777;Kyrgyzstan;Call;0.110;00:00;EUR 0.000;
"April 13, 2011 14:34";+996559969777;Kyrgyzstan;Call;0.110;00:00;EUR 0.000;
"April 13, 2011 14:34";+7795534817734;;Call;0.000;00:00;EUR 0.000;
"April 13, 2011 14:32";+99679534817734;Kyrgyzstan;Call;0.110;00:00;EUR 0.000;
"April 13, 2011 14:32";+996559969777;Kyrgyzstan;Call;0.110;00:00;EUR 0.000;
"April 13, 2011 14:31";+996550293008;Kyrgyzstan;Call;0.119;00:01;EUR 0.198;
"April 13, 2011 14:31";+996559969777;Kyrgyzstan;Call;0.110;00:00;EUR 0.000;
"April 13, 2011 14:10";+996550293008;Kyrgyzstan;Call;0.119;16:41;EUR 2.102;
"April 12, 2011 08:44";+31000000000;Netherlands;Call;0.019;14:31;EUR 0.324;
"April 6, 2011 12:32";+31000000000;Netherlands;Call;0.019;02:03;EUR 0.096;
"April 6, 2011 11:25";+31000000000;Netherlands;Call;0.019;06:00;EUR 0.172;
"April 6, 2011 11:24";+31000000000;Netherlands;Call;0.019;00:06;EUR 0.058;
"April 5, 2011 10:03";+31000000000;Netherlands;Call;0.019;07:15;EUR 0.191;

I live in Amsterdam. The calls in the first week of April to the Netherlands are mine; I've replaced those numbers with +31000000000.

Scottish Prison Service

2010-11-15T11:50:00.003+01:00

http://www.heraldscotland.com/news/home-news/giving-prisoners-new-tvs-is-good-value-for-money-1.1068125

In short, the Scottish Prison service is buying 1600 flat-screen TVs with built in DVD players. They are provided them to inmates, for their cells.

I don't have comments about this per se, but I had to write something about the comments from the Prison Service spokesman.

“We are still going ahead with it,” said a spokesman. “We charge prisoners for them, so at the end of the day there’s no cost to the taxpayer.

“We actually make money. They probably last five or six years and we get £1 a week [from each prisoner in payment], so it doesn’t take long to recoup the cost of the telly.”

So, Mr. Spokesman, let me get this straight.

You charge prisoners, from the taxpayers money you give them each month, so there's no cost to taxpayers?

What's more, you're actually -making- money, by taking back a pound a week (of the taxpayers money you're giving the prisoners), so that after about two and a half years are up and the unit is 'paid for', it's clear profit all the way?

And we pay your salary!

Lunches, cricket, money and British Universities

2010-10-12T11:50:00.003+02:00

The United Kingdom, today, faces a vast budget deficit; the previous administration, the Labour Government, was spending far more than it took in tax. This extra spending came from borrowing money. Today, we see that Government spending is felt to be politically necessary for election and so the new administration, the Conservative Government, is looking only to balance the books; which means changes such that borrowing, in a reasonable period of time, will come to cease, while taxation will remain unchanged.

This of course means total spending will reduce. This in turn impacts negatively upon the economy, which is fragile at best.

We see here that democracy provides policies which are popular rather than prudent or wise; and in the current mood, everyone seeks as much as they can from Government, sine the Government takes so much in the first place.

Spending from borrowing currently amounts to something like a quarter of the Government budget. Imagine an individual with an annual income of 20,000 euros, who proceeds to borrow 5,000 euros a year. This will be fine for one year, perhaps for two, worrying by three, painful by four; then fatal.

As such, the current administration is planning drastic spending cuts. One of the budgets managed by the State is that for education.

In the UK, education is primarily State funded. The courses themselves, about 80% of the cost of an education, are paid for by the State. Students take a student loan, subsidized by the State with a zero percent interest rate and with easy payback terms, to fund their living costs.

The Government for a decade or so has pursued a policy of pushing as many people into University as possible. This has lead to a massive increase in intake, with no significant increase in the number of degrees awarded; unsuitable students, who would not otherwise have taken a course in the first place, drop out. It has however naturally also led to a massive rise in costs.

As a response to this increase in demand, additional funding was provided to Universities by permitting them to directly charge students a fee. This also had the benefit of acting to deter unsuitable students, otherwise encouraged by the others policies of Government.

This fee was considered by the Labour Government to be unfair, since 'everyone has a right to an education'; as such, charging is unethical, since it acts to intefere with that right. However, a right to an education is of no use if the Universities have no money to provide courses, so accordingly, the fee was implimented, but was limited to fairly low value (up to about 3,000 UKP per year; about a quarter of the cost of a typical course).

The problem now is that the main part of course funding, from the State, is going to be reduced by something like a quarter. There is now a fundamental funding shortfall.

The current proposal (and indeed, it is hard to think of any other) is for students to pay for their courses.

However...

The proposal is in fact identical the current pension system arrangement. Pensions currently work in general on a Pay-As-You-Earn scheme. Those currently employed pay the pensions of the old. In turn, as they age and draw their own pensions, those currently employed rely on future workers to pay. (This approach fails spectacularly when the birth rate drops; something Japan in particular now faces, as the median female age there is soon to exceed the age of menopause).

So, the proposal is that current students pay nothing; that they will pay once they have graduated. Graduates fund the education system for current students.

This approach is consistent with the measuring of fairness by the idea of a right to education. Nobody who wishes to enter education will be detered by the up-front costs of doing so.

However, this approach acts to insulate Universities from the need to provide high quality education. The difficulty is that students are not paying; as such, Univerisites can provide an appalling service - and what can the students do? they do not fund the Universities. They have no power. Power is held by those who provide funding and it is those who are not at Universities who pay.

Historically, with State funding, Universities were insulated. The fee students currently pay acted upon Universities to require quality service; if a student is himself directly paying, even partially, for his course, his satisfaction or otherwise matters, because he can begin to take his money elsewhere.

The new proposal returns Universities to their comfortable state, where funding is entirely provided by anyone except students and where their main performance criteria evaluates the length of their lunches and the cricket scores.

The final irony, of course, is that students do in the end pay for their courses; for they pay once they graduate. It is merely that they do not pay at the time where their payment would provide them with the power to require a quality education from their University.

Furthermore, students also do not pay at the time which would cause them to make a wise choice between their desires, abilities and amount they're prepared to pay; rather, students will naturally have the incentive to require as much payment as possible from graduates, whereas graduates will have the incentive to minimize payments as far as possible.

One cuts generously from the cloth, when one does not pay. Why should graduates pay for the education of others, rather than for their own education?