LONDON — A criminal investigation into suspected fraud has been launched into UK collective management organization PPL after the organization discovered “suspicious activity” in a small number of member accounts.
PPL said one staff member had been fired following an internal investigation it conducted several months earlier this year. The alleged crime is now being investigated by the Metropolitan Police, the CMO said in a brief statement.
“We recently became aware of suspicious activity on a small number of member accounts. We immediately conducted an internal investigation and an employee has been terminated,” a spokesperson said on Thursday (December 19). The organization said it was “working with the limited number of affected members to correct accounts.”
PPL is the second largest of the UK's two main collecting societies and licenses recorded music on behalf of record labels and artists to UK radio and television stations, as well as its use in bars, nightclubs, shops and offices.
Last year, the 90-year-old organization — which has more than 110 neighboring rights deals with international CMOs, including SoundExchange and the Alliance of Artists and Recording Companies (AARC) in the United States — took in £285 million ($356 million), its highest annual total . In 2023, PPL paid out £247 million ($309 million) to nearly 165,000 artists and recording rights holders.
Record industry sources say Bulletin board that the suspected embezzlement is believed to have involved a person or persons posing as recording artists who were not registered members of PPL and then fraudulently claiming rights on their behalf.
Bulletin board understands that PPL discovered the scheme when the real artists tried to sign up as members earlier this year. Sources say the fraudulent royalty claims are believed to have taken place over a number of years, possibly as far back as 2016, with fraudulent transactions believed to total around £500,000 ($625,000).
PPL said it was unable to comment on the case while a criminal investigation is underway and declined to answer questions about when it discovered the suspicious activity, the time frame of the alleged breach or whether the affected member accounts are related to members UK artists or CMO partners overseas. . The Metropolitan Police have been approached by Bulletin board for details.
The criminal investigation into suspected embezzlement at PPL comes as the music business battles on multiple fronts against fraudulent activity and rampant copyright infringement on a global scale.
In November, Universal Music Group (UMG), ABKCO and Concord Music Group filed a lawsuit against Believe and its distribution company TuneCore, accusing them of “massive continuous infringement” of their recordings, seeking $500 million in damages (Believe denies the allegations). A month earlier, TikTok cited “fraud” issues as the reason it pulled out of its license renewal with Merlin, a digital licensing coalition representing thousands of indie labels and distributors.
There have also been several high-profile cases against people accused of defrauding streaming platforms, rights holders and collection companies in recent years.
In 2022, two men in Phoenix, Arizona pleaded guilty to claiming $23 million worth of YouTube royalties from unknown Latin musicians such as Julio Iglesias, Anuel AA, and Daddy Yankee, despite having no actual ties to those artists.
Most recently, a musician from North Carolina was charged by federal prosecutors in September in the first federal case of streaming fraud. Prosecutors allege Michael Smith used two distributors to upload “hundreds of thousands” of AI-generated tracks and then used bots to stream them, making more than $10 million since 2017.
To try to curb the rise in fraudulent activity, the music business is ramping up its efforts to stop illegal rights group money laundering.
Last year, a coalition of digital music companies, including distributors such as TuneCore, Distrokid and CD Baby, as well as streaming platforms Spotify and Amazon Music, launched the 'Music Fights Fraud' task force. Over the past 12 months, Spotify and Deezer have additionally changed their rights systems to include financial penalties for music distributors and record labels associated with fraudulent activity.
