In an elaborate scheme that ran from January 2008 to June 2009, a group of 11 scammers raked in hundreds of thousands of dollars by purchasing their own music on iTunes and Amazon and collecting on the royalties, costing the companies somewhere between £750,000 and £1m, or $1.2 to $1.6 million.
The Telegraph reported on March 21 that the scammers, led by one Craig Anderson, 24, uploaded their music onto iTunes and Amazon through third-party digital music distributors like TuneCore, CD Baby, and SongCast.
According to the BBC, the scam gang then attempted to keep their hustle under wraps by limiting each of their downloaded purchases to £10, or about $16, which they made with stolen credit card information on 24 identical laptops.
In addition, they tried to conceal where their downloads were coming from with software called "Hide My IP," writes The Telegraph.
Despite these precautions, Denver White (also known as DJ Denver), 26, one of the musicians commissioned by the scam gang to take part in the swindle, was the reason the whole thing came crashing down.
According to Digital Trends, 20 or more tracks from White, fellow musician James Batchelor (also known as ReggiMental) and other virtually unknown artists were racking up so many downloads that it caught an eye at iTunes.
"Somebody at iTunes noticed that a complete unknown from Wolverhampton called DJ Denver, also known as Denver White, operating entirely on his own, rather than through a record company and without any marketing that anybody could see, was selling so much on iTunes that his name featured in the volume sales charts," said prosecutor Helen Malcolm, as reported by The Telegraph. "He was selling so much and earning so much in the way of royalties he was selling at a rate you would expect from the likes of Madonna."
After the fraud had been revealed and the credit card accounts connected to the royalty payments had been frozen, The Daily Mail reported that Craig Anderson contacted TuneCore about his money -- and it was then that Anderson, White, and the rest were found out and brought in.
The Express and Star reported on March 28 that White claimed he was tricked by the group's leader and has since been cleared of charges of conspiracy to defraud.
The rest of the scam gang, however, was not so lucky. According to the BBC, Anderson's jail sentence of four year and 8 months was handed out last April, but due to a court order could not be reported until now. The other nine conspirators received different sentences ranging from community service to a term of two years.
Though this particular criminal group has been caught and charged, iTunes's problems with scammers is far from finished. A recent investigation published by The Global Mail found that many iTunes users have reported hacked or compromised accounts, leaving the victims with empty gift cards, random PayPal charges and no more store credit.
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