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Virtual Money Presents Real Legal Problems

Introducing a virtual currency in an online game or social Web site isn't simply a way to print money without paper.

Virtual money has real value and companies that operate online games, having recognized that selling nothing for something can create a profitable revenue stream, are rushing to cash-in on the imaginary economy.

The signs are everywhere. On February 25, social monetization company gWallet introduced the gWallet Brand Bar, an interactive banner ad that appears at the top of browser-based game screens to make interactions involving virtual currency easier. Gurbaksh Chahal, CEO and founder of gWallet, called virtual currency "a thriving industry."

On February 18, Facebook and PayPal said that PayPal had become a payment option for Facebook Credits, the virtual currency used in a rising number of Facebook games.

"Today more than 500,000 applications exist on Facebook, and the virtual goods within those applications (particularly games) have become an increasingly valuable part of the user experience," explained Deborah Liu, a product marketer on the Facebook Developer Network team, in a blog post last week week. "By providing a single, cross-application currency, our goal is to making transactions simpler for users, leading to a higher conversion rate for developers."

Facebook has been testing Facebook Credits with a select number of large developers, including Crowdstar, Playdom, Playfish, RockYou, 6waves, and Zynga. It plans to invite additional developers into its program in the months ahead.

On February 9, Offerpal Media, a virtual currency distributor, introduced "Offerpal Tasks," a way for consumers to collect virtual currency for online games and social networks in exchange for the completion of Amazon Mechanical Turk jobs.

Dax Hansen, a partner in law firm Perkins Coie's Electronic Financial Services practice, observes that "points," "coins," "bucks," and other forms of virtual currency are becoming commonplace at online gaming sites, social media sites, and among retailers and other businesses.

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