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Chinese iTunes credit card scam cost Three Kingdoms dev Hoolai Games $300,000 in one month

Chinese iTunes credit card scam cost Three Kingdoms dev Hoolai Games $300,000 in one month
More information has come to light on the credit card scam that's been pushing Chinese apps up the App Store rankings in both the US and the UK.

Following claims by one of the studios catch up in the scandal that it has no connection to the sting – fraudulent credit cards used to purchase in-game items that are then sold on to players at a discounted price – Three Kingdoms developer Hoolai Games has also come forward.

Talking to Inside Mobile Apps, the company claims that, at its peak in November 2011, the scam was costing the firm $300,000 in lost revenue a month.

Counting the cost

"We are truly sorry about what happened to these people," said Hoolai Games' Xiang Lin, making reference to iTunes members whose credit card details had been stolen as part of the con.

"Our game is not yet even launched in English or Spanish [languages] but we do want to keep the door open there. We hope that US audiences and the media can understand the truth."

Lin claims, after launching Three Kingdoms on the App Store in September, the studio look set to pick up $600,000 in revenue just one month later.

In the end, however, Hoolai received just half that figure from Apple, with the rest written off by the fraudulent virtual currency purchases.

Rankings rouse suspicion

The extent of the damage is illustrated by just how high Three Kingdoms was able to rise up the App Store's top grossing rankings outside of China, peaking at #3 in the UK back in December and #3 in the US in early February.

These chart surges were the result of credit card details in both regions being used to fund the fraudulent purchases – a practice that Hoolai Games claims came about because App Store restrictions in China at the time meant it was only possible to make in-app purchases either using a credit card or an iTunes gift card.

Because of the lack of credit card in the region, many players bought the game's virtual items cheaply from auction site Taobao, with the credit card scammers benefiting as a result.

"When one of our players finds a backdoor, they'll try to charge a very, very huge amount of money over a short period of time," added company president Jian Huang.

No fight

Hoolai claims the practice has subsided since such payment restrictions were lifted in the region – which is just as well, given Huang states the studio has been utterly powerless to fight the practice.

The company states it has no way of distinguishing between legtimate purchases and players who have picked up IAPs through iTunes accounts tied to the fraudulent credit cards.

"We don't have detailed payment transaction records, so we have no way to identify which players are the bad ones," Huang said.

"We've tried to build algorithms to identify strange payments. But mostly, everything must be done manually and by guessing rather than proof."

[source: Inside Mobile Apps]

With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.

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