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Like them or loathe them, virtual  worlds such as Second Life have become part of our real lives in the 21st century and with them come the problems of real life, including legal complications.

At the recent Australasian Consumer Law Roundtable, hosted by UWA , keynote speaker Dr Christine Riefa from UK's Brunel University, inspired an enthusiastic but open-ended discussion about protecting consumers in virtual environments.

"Much of it comes down to whether Second Life (SL) is a game or not," Dr Riefa said. "Many of those who ‘play' say it is not a game, it is a virtual existence.

"If we play Monopoly, we abide by the rules. What rules govern what happens in SL? People use real money to buy Linden dollars to use in SL. How are the transactions in SL (which can result in real profits once you change your Linden dollars back to your real currency) regulated?" she asked.

"Can we say: ‘It is only a game and intended as an exercise in fantasy', so that normal rules don't apply? This may encourage extreme behaviour that translates into real financial damages. Do consumer laws apply? How can we enforce such rules in a virtual world? What are the dispute resolution mechanisms?"

Dr Riefa won a Fulbright Scholarship to go to the US for a semester to start looking at the consumer problems of SL.

"I'm not solving world hunger here. It may seem trivial, but if transactions are done on a grand scale, people who ‘play' SL stand to make or lose a lot of money. It is estimated that within the next 15 years, virtual economies will be somewhere between $7 and $12 billion."

She said Europe had very good laws to protect consumers. "For example, if I buy a jumper online and when it arrives, I decide it is not the colour I wanted, I have seven days in which to return it and I get my money back. If I buy a jumper for my avatar in SL, how can I send it back if it doesn't exist?

"Second Life was set up by a company called Linden. To take part, you agree to Linden's conditions, which are to create an avatar of yourself. You control the avatar, which is different from earlier computer games, in which the computer controlled the persona you chose.

"You don't need to buy land or houses or clothes for your avatar, but people tend to mimic their lives in SL, so they want these things.

"They buy Linden dollars, which fluctuate, like all currencies, but you get around 7,000 Linden dollars for about $US23.

"If the ‘game' shuts down, there is no access to your virtual wealth. There are no certificates of title when you buy land in SL. There is anecdotal evidence of predatory lending at high interest rates. You buy land in SL which is on loan to you until you pay it off. If the lender does not transfer the correct computer code for you to unlock and have access to that land, to whom do you complain?"

Dr Riefa said there had already been one case in the US, which was settled out of court, involving somebody buying land in SL through an error in the auction system. Linden decided it was illegal and closed the person's account, leaving him $8,000 out of pocket.

"We don't know the details of the case as it was settled, but it raises the question: Do we apply the laws of the State or the laws of the game?"

She said another case was fake products being offered for sale in SL . "There are imitation Gucci watches for your avatars, which are not authorised by Gucci. If a shop in real life was selling these, Gucci could seize them and sue the retailer. They can't do anything about it in SL , even though somebody is making money from using the Gucci trademark and designs."

About five years ago, a woman in China became the first real life millionaire from transactions in SL. "She bought land, developed it, built houses and sold them to other people in SL," Dr Riefa said, "I understand she now employs about 70 people to run her SL business."

She said that while the people and the money involved in SL were real, the consumables were intangible, so it was difficult to apply consumer law.

"There are more questions than answers. Specialists in property law, criminal law and intellectual property are already looking at it. I'm hoping to attract funding to keep studying the consumer law angle.

"In the meantime, it is a fascinating subject for my students!"

Published in UWA News , 1 November 2010