British Gang Nets £500,000 in iTunes Royalties Scam

Newly released court documents detail the story of a group of people who scammed digital music service iTunes out of hundreds of thousands of pounds. The BBC reports that the 11-strong gang earned over £500,000 (more than $800,000) by purchasing their own music from iTunes with stolen credit cards. The gang was sentenced last year but the story has been protected by court order until now.

According to the BBC, the scheme was carried out with 24 laptops purchased by the group's ringleader. The gang then enlisted the help of others who used the details of thousands of stolen credit cards to purchase the group's music on iTunes. The scam ran for 18 months in total, from January 2008 to June 2009, and the gang limited transactions to £10 in an attempt to avoid attracting unwanted attention.

However, it seems the group didn't consider the fact that many, many small transactions can add up to a fairly substantial total. The BBC reports that the group was busted when iTunes realised it was paying out Madonna levels of royalties to unknown musicians in Wolverhampton, in the West Midlands. It's estimated that though the scam generated £500,000, it resulted in losses of between £750,000 and £1m for iTunes and Amazon (between $1.2 million and $1.5 million). 

Five members of the gang were given community service, while one was sent to a young offenders institution. The remaining five were given jail sentences of varying lengths. Ringleader Craig Anderson was sentenced to four years and eight months, while the rest were sentenced to two years each.

Further Reading

BBC: iTunes scam gang netted 'Madonna-level' royalties

_{Follow @JaneMcEntegart on Twitter.}