Kim Dotcom was known for a love of fraud, excess and waste, as suggested by this graphic:

Here is the original image, not far off from the graphic above. License plates on his numerous luxury cars used terms like MAFIA, GOD and POLICE.

Obviously he had a reputation for megalomania and making things seem much more impressive than reality, including boasting about his own skill and intelligence.

“I’m smarter than Bill Gates,” he said.

He may as well have said he was more dangerous than Bill Gates. His insider trading and embezzlement in Germany, which did significant damage to the industry, led some to criticize the authorities for a lack of serious enforcement.

…the few nights in a Thai jail turned out to be the worst of it, as fears of prison in Germany were unfounded—he was sentenced to 20 months probation and slapped with a €100,000 fine. In 2003, he pleaded guilty to embezzlement charges over the Monkey “loan” and received another two years of probation.

After the law’s repeated lashes with a wet noodle, Schmitz left Germany and moved to Hong Kong to start the next level of Mega-insanity.

Now a video of the raid by 76 police of his 25,000-sq-ft mansion has been released by the NZ authorities.

Some critics of the raid, including Kim Dotcom himself, center on the idea that security precautions to locate and seize the self-titled MAFIA, GOD and POLICE were excessive and wasteful.

Recently there was some controversy over the need for voice quality improvements in mobile telephony. The Verge had choice quotes from market experts such as these:

• “There’s not a great deal of objective data out there that indicates that people will pay more for that voice quality”
• “…is that market opportunity worth all of the work and effort to get there?”
• “I’m not sure that’s where many of the operators will place their money right now.”

Perhaps they weren’t thinking about authentication and fraud.

The New Zealand Inland Revenue launched voice authentication last November.

It’s called voice ID and it allows us to recognise who you are – just by your voice. Because each person has a unique voice pattern, once you are enrolled all you need to do is speak your IR number when you call and we will know that it is you.

[…]

Enrolling for voice ID is easy and will only take 2 minutes. Just call 0800 257 843 and make sure you have your IRD number handy. It will work best if you call us from somewhere quiet.

The “somewhere quiet” part has proved to be a challenge. Stuff says the service has quickly gained popularity but has uncovered issues in sound quality.

More than 400,000 people have registered to use an Inland Revenue system that checks their voice to confirm their identity, since that became possible in November.

[…]

Social Development Ministry regional commissioner Gagau Annandale Stone said last year that the biggest challenge had been when clients called on mobile phones, because those phones’ poorer quality and background noise made checks less reliable. About 38 per cent of calls to its contract centre were from mobiles.

Authentication checks less reliable? Sounds like a market for more reliability. Stuff mentions that HD Voice could solve that issue for NZ just as South Korea becomes the first country in the world to announce availability.

In line with its previous efforts, SK Telecom will be launching HD Voice on August 8, 2012, the world’s first high definition voice call service over LTE that can dramatically push up audio quality. HD Voice uses Adapted Multi-Rate Wide Band (AMR-WB) codec, which offers much upgraded 3G speech coding, and 23.85 Kbps transmission bandwidth, 2.2 times wider than that of 3G voice call, thereby transmitting the previously-inaudible low and high sound waves, and improving voice quality by 40% compared to that of 3G.

Note that SK Telecom is offering HD quality to customers at the same rate per second as 3G service. The software for HD will be bundled into new Samsung Galaxy S III mobiles and existing ones can get an upgrade.

The South Korean telecom also has completed nearly 100% coverage of the nationwide population with their LTE rollout and started Voice over LTE (VoLTE). Running a VoLTE network instead of circuit-switched voice will also improve sound quality.

Suddenly I miss my Helio phone (cutting-edge tech deployed by SK Telecom into the US market).

Now it seems even NZ will see HD Voice before it reaches the quality-doubting US market. Several years ago Orange posted a video simulating the difference with HD Voice:

Barracuda Labs (BLabs) has posted a statistical summary about Twitter accounts that pay money for followers. They call it an underground economy.

In short, they setup a Twitter account and paid for followers to find others who did the same. They then recorded this correlation as data on “fake” accounts.

• There were 72,212 unique fake accounts identified
• 61% of these fake accounts are less than 3 months old (since April 16th, 2012)
• Average age of these fake accounts is 19 weeks or about 5 months
• 55% of fake accounts have ~2000 followings
• The average number of following for a fake account is 1,799

One issue I see with this summary is the lack of a thorough definition of what constitutes a fake account. They only say the following:

(created by dealers for selling followings or tweets business)

Is an account fake because it is not a one-to-one ratio with a user? Is it fake because it is created for business purposes? Their brief sentence, which we are forced to use as a definition, seems to contradict a BLabs Facebook fake profile infographic one-liner.

…the sole purpose of this fake profile is to entice you into into befriending them.

Sole purpose? What if there is also a business purpose, like with Twitter accounts?

A definition of fake needs to be clarified. And on that note an interesting question is whether BLabs could define as fake the account they setup for research.

Why am I reminded of the Three Laws of Robotics?

There also is no statement of why BLabs consider this an underground economy other than to say in their conclusion that it is a violation of Twitter’s ToS.

Finally, creating fake Twitter accounts and buying/selling followers is against Twitter’s ToS, and gradually erodes the overall value of the social network. Twitter keeps on detecting fake accounts and followings, and suspending them in last few years. However, if they do not move faster and smarter, these fake accounts will continue to be created, blended into the massive Twitter population, bringing bigger and bigger impact.

And the impact is? Eroded value of a social network? At the start of the BLabs post it seemed to say that they were out to protect their customers. Yet their analysis of impact suggests only a weakened Twitter.

They are right about the Twitter ToS, which includes the Twitter Help Center Rules. The section on Spam and Abuse is quite clear.

Username Squatting: You may not engage in username squatting…creating accounts for the purpose of selling those accounts

[…]

Selling user names: You may not buy or sell Twitter usernames

[…]

Your account may be suspended for Terms of Service violations if any of the above is true.

The Twitter profile economy thus could be a grey market activity (legal but an unauthorized/unintended use of goods) unless BLabs investigators are able to prove that all those selling accounts are in violation of actual legal statutes.

The California EDD offers this definition, which emphasizes a lack of government oversight and regulation.

“Underground economy” is a term that refers to those individuals and businesses that deal in cash and/or use other schemes to conceal their activities and their true tax liability from government licensing, regulatory, and taxing agencies. Underground economy is also referred to as tax evasion, tax fraud, cash pay, tax gap, payments under-the-table, and off-the-books.

The BLabs data is very informative and interesting but lacks thorough analysis. A clear definition and more detailed report on the economics would help support their final conclusion. I can agree with their accusation against Romney but only if I agree with some open and uncomfortable assumptions.

…we believe most of these recent followers of Romney are not from a general Twitter population but most likely from a paid Twitter follower service.

Romney is probably buying his popularity and Twitter is taking their time to shutdown accounts that violate their ToS. We have confirmation of what we would already know to be highly likely. We do not have proof of illegal activity or an underground economy.

Ultimately it is easy to find fraud and tell Twitter there is a problem without carefully defining it. It is much harder to profile a threat in order to tell them exactly how to detect and prevent fraud without alienating real users.

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Update 8/14: Alex Hutton tweeted about Status People’s faker tool. I used it on Romney’s account; it samples up to 500 accounts and offers the following results:

@MittRomney Faker Scores
Fake 12%
Inactive 30%
Good 58%

To be fair, although this is like Gawker’s report last year (based on PeekYou analysis) that 92% of Gingrich’s followers are fake, PeekYou’s CEO put it like this:

Using algorithms to determine whether an online presence is real or fake is obviously more art than science