STUDY: USERS OF PIRATED SUBSCRIPTION SERVICES FACE HIGH LEVELS OF FRAUD
Digital Citizens Alliance report found that 72% of those who used a credit card to sign up for a pirated TV, movie or gaming streaming service reported fraud
Internet users that use a credit card to sign up for illegal piracy streaming services to gain access to movies, TV shows, and games face a serious risk of having their card used to run up charges they didn’t authorize, according to a new Digital Citizens Alliance investigation.
“Our latest report is further proof that piracy operators will go to any length to turn a profit off of consumers with an appetite for content, even those who are willing to pay for it,” said Tom Galvin, executive director of the Digital Citizens Alliance. “Combined with our previous research highlighting the risks associated with free piracy apps and services, the situation becomes even clearer. The pursuit of pirated content is an inherently risky behavior that threatens consumers' devices, wallets, and privacy.”
The report titled, “Giving Piracy Operators Credit,” includes an investigation into how a Digital Citizens investigator’s credit card was targeted for $1,495 in illicit purchases and a separate survey that highlights a number of larger issues relating to pirated content.
The survey found widespread use of pirated content with one in three Americans admitting to watching pirated content.
The survey also found that 72% of Americans who said they used a credit card to purchase a piracy subscription service reported having an issue with credit card fraud over the last year.
To test whether credit card fraud was tied to piracy subscription services, Digital Citizens signed up for 20 piracy subscription services. Investigators signed for the services from February through April of 2023 using a new Capital One QuickSilver credit card that was used solely for this project.
The sites charged a set monthly subscription fee ranging from $5.99 to $40 and within two weeks, the fraudulent charges began, the group said.
The purchases were purportedly for grocery delivery, women’s apparel, computer software, a cash advance, and a large mystery charge of $850 that, fortunately, wasn’t processed. The charges appear to originate from China, Singapore, Hong Kong, and Lithuania.
Specific charges include:
- February 22, 2023 - Eleven days after signing up for the first piracy streaming services - two charges of $17.21 each occurred listed as “GB Pay affectioni.” Affectioni appears to be a women's apparel store in Qingdao City, China. GP Pay is a mobile payment service.
- February 23, 2023 - Just a day later, a cash advance of $14.99 (along with an additional $3 fee) was made using the Wollito crypto platform. The credit card statement states that the purchase originated in Vilnius, Lithuania. No other information is available.
- March 22, 2023 - A $16.60 purchase at a clothing store based in Hong Kong. The name on the charge was “clothingyoyo,” which corresponds to the Clothing Yoyo outlet based in Sheung Wan, Hong Kong.
- March 31, 2023 - A $16.68 purchase for “thedailygroceries.” The charge originated in Jiaxing Shi in China. Although the name indicates its food-related, the website, thedailygroceries.com, which appears to correspond to the charge, sells jewelry such as necklaces and bracelets along with handbags.
- April 30, 2023 - Two attempts for larger purchases of $899 and $150 occur. The nature of the purchases is not known because Capital One alerted the cardholder for approval, which was not given.
- May 1, 2023 - The first of two larger purchases occur at a Singapore-based apparel store called Pazzion for $118.53.
- May 9, 2023 - A second purchase at Pazzion is processed for $244.78. According to its website, Pazzion sells apparel such as shoes, handbags, bracelets, and other accessories.
In addition to the investigation of the 20 piracy subscription services, Digital Citizens commissioned a research survey to better understand the risks of piracy websites and apps. The survey asked 2,330 Americans how they get their entertainment.
Key findings include:
- Over the past year, roughly 1 in 3 Americans reported watching pirated content at least once. Some relied on pirated content after canceling other legitimate streaming options or cable or satellite services.
- About 1 in 10 who reported watching pirated content said they had purchased a subscription using a credit card to do so.
- Seventy-two percent of Americans who said they used a credit card to purchase a piracy subscription service also reported having an issue with credit card fraud over the last year. Only 18 percent of those who said they don’t visit pirate sites reported a similar issue.
- Americans who visited piracy sites and apps were four times (44 percent to 10 percent) more likely to report being a victim of identity theft.
- Americans who visited piracy sites and apps were five times (46 percent to 9 percent) more likely to report having an issue with malware in the last year.
The report also delved into a number of possible solutions to the problems and argued that the proliferation of piracy services into Americans’ homes – and the damage they do – requires concerted action by federal and state governments, the credit card companies that piracy operators rely on, and consumers themselves.
Efforts to combat piracy should include:
- Payment processors terminating relationships with known piracy operators.
- The FTC warns Americans about online risks that can expose them to financial fraud and malware.
- Law enforcement using the tools they were given in 2020 to launch criminal investigations against piracy operators.
- Consumer protection groups continuing to warn Americans about the risks.