By Lisa Richwine and Yinka Adegoke

LOS ANGELES/NEW YORK |
Thu Sep 1, 2011 8:28pm EDT

LONDON – A teenager accused of acting as a spokesman for computer hacking groups that targeted Sony, Rupert Murdoch-owned newspapers and a British crime agency was freed on bail Monday as he awaits trial.

Jake Davis, who was arrested last week at home on Scotland's remote Shetland Islands by the police e-crime unit, is accused of mounting a cyberattack on Britain's Serious Organized Crime Agency and other offenses linked to the Luz Security and Anonymous hacking collectives.

The charge relates to a distributed denial of service attack, in which websites are flooded with traffic to make them crash.

Prosecutor Rav Chodha said Davis, 18, also was involved in an attack against Sony Corp. in which customers' bank details were accessed, and attacks on a website of Britain's National Health Service and sites belonging to the Murdoch-owned Sun and Times newspapers.

Davis used the online nickname Topiary and acted as a spokesman for the two hacker groups, police said.

During the appearance at London's City of Westminster Magistrates' Court. Davis spoke only to confirm his name and personal details. Judge Howard Riddle ordered him released on bail until a court appearance Aug. 30.

He is not allowed to use the Internet and must wear an electronic tag, observe an overnight curfew and live at his mother's home in central England.

LulzSec shot to prominence in May with attacks on U.S. broadcaster PBS, whose website it defaced by posting a bogus story claiming that the late rapper Tupac Shakur had been discovered alive in New Zealand.

The group is a spin-off of Anonymous, an amorphous collection of Internet enthusiasts, pranksters and activists whose targets have included the Church of Scientology, the music industry, and financial companies such as Visa and MasterCard.

Davis' arrest is one of a spate by law enforcement agencies in Europe and the United States trying to put a stop to Anonymous and its offshoots.

Last month the FBI, British and Dutch officials carried out 21 arrests, many of them related to the group's attacks on Internet payment provider PayPal Inc., which has been targeted over its refusal to process donations to WikiLeaks.

Last month another British teenager, 19-year-old Ryan Cleary, was charged with attacks on the Serious Organized Crime Agency and various British music sites.

SAN FRANCISCO – Groupon's online coupons save people cash, but they're not always great deals for merchants. Some businesses complain that bargain hunters rarely return after scoring a cheap meal or massage.

A new site called LevelUp believes it has a way for restaurants, nail salons and other local businesses to keep people coming back. To drum up repeat business, the company offers consumers a series of three deals, each better than the one before.

Online deal sites abound, but LevelUp hopes to stand out by giving people an initial offer that's on par with competitors' — and following that up with even better deals. After three visits, LevelUp figures that customers will be familiar with the merchant enough to return, even without discounts.

It's still too early to say whether enough consumers will be willing to pay full price_ a key factor that will determine whether LevelUp becomes a serious threat to Groupon or remains one of hundreds of wannabes.

Groupon created a new marketing phenomenon catering to people's hunger for bargains. It offers the chance to purchase discounts targeted to a person's city and preferences. For example, someone might pay $20 for a $40 gift certificate to a spa, restaurant, car wash or yoga studio.

The Chicago-based company's upcoming initial public offering of stock is expected to be in high demand, even though it lost $413 million last year on revenue of $713 million.

The harsh reality of the online coupon business is that the concept of offering customers deep discounts is easy to replicate. All you need is a sales team to craft deals with merchants, and an email service for blasting those offers to people who sign up on a website.

But rivals have difficulty breaking through because market leader Groupon already has 83 million people subscribing to its daily offers by email, and second-place LivingSocial has 39 million. By contrast, LevelUp has just 100,000 subscribers.

Small businesses often prefer to partner with a service that can reach more potential customers, even though LevelUp is trying to sweeten the deal for merchants by taking no commission on the first of the three offers.

Others are trying to distinguish themselves by targeting niche audiences, such as nerds or moms, or people with specific interests, such as fitness or food.

Facebook is testing a deals program of its own in five U.S. cities, trying to rival Groupon by tapping Facebook's base of 750 million users worldwide. Google has one, too, rolled out first in Portland, Ore.

LevelUp comes from the folks behind Scvngr (pronounced "scavenger"), a mobile-gaming startup in Cambridge, Mass., created by 22-year-old Princeton dropout Seth Priebatsch.

LevelUp, whose name is gamer-speak for the act of rising to a higher status in a video game, launched in Boston and Philadelphia in March. It plans to expand this summer to major markets such as San Francisco, New York and Chicago, the home turf of market leader Groupon. Most of the businesses it works with are local, but deals have included larger brands, such as Levi's.

Sucharita Mulpuru, a Forrester Research analyst who covers online shopping, says LevelUp will have trouble competing not just because of its size. If LevelUp proves successful, competitors may apply the company's multiple deal model to their own sites. Mulpuru believes Groupon in particular could simply copy LevelUp's idea. In May, it did something similar by offering a half-off card for eight sandwiches at sub chain Quizno's.

But in the tech sphere, it's not unheard of for a tiny newcomer to best an early leader: Google surpassed Web search pioneers AltaVista and Yahoo, and Facebook triumphed over social networking site Myspace (which had itself trounced Friendster).

Much of Priebatsch's confidence comes from his insistence that the current online coupon model, where sites take a big cut of the revenue from each deal, is unsustainable. Groupon, for instance, takes up to half the price of the coupon, so if an Italian restaurant is offering $50 worth of food for $25, the merchant gets just $12.50.

That's a source of many complaints from merchants. They benefit only when a Groupon customer brings lots of friends who pay full price or comes back later to shop without the discount.

LevelUp is trying to persuade skeptical merchants to offer great deals by taking none of the revenue in the first round. After that, LevelUp takes 25 percent. Priebatsch believes that merchants will be more likely to offer bargains that can be used for repeat visits.

The setup also gives LevelUp an incentive to encourage repeat visits because it makes no money otherwise.

"If we can't get customers to level up, we're not doing anything of value," Priebatsch says.

Boston-based burrito chain Boloco offered $10 worth of food for $5 in the first level, $25 worth of food for $10 in the second and $45 worth of food for $15 in the third. Customers can use one level before buying the next.

Sara Steele-Rogers, who leads Boloco's social media and marketing efforts, says that a month after the promotion ended, the chain saw strong sales growth.

It's hard to tell, but the increase may have been due largely to people redeeming their LevelUp vouchers: Of the customers who bought the first deal, 30 percent also bought the second and 26 percent of those who bought the second deal purchased the third, too.

Still, she says, "in terms of encouraging repeat business, that's awesome."

LONDON – Visa said Friday it has closed a donation channel to WikiLeaks after a payment processor briefly accepted money transfers to the anti-secrecy site.

Visa and MasterCard were two of several financial and Internet service companies that severed ties to WikiLeaks following its disclosure of thousands of confidential U.S. documents. WikiLeaks founder Julian Assange claims the 7-month-long blockade has cost his online group millions.

But on Thursday both companies appeared to abruptly change course when WikiLeaks' payment processor, DataCell ehf, announced that donations to the site were again being processed.

That appears to have been an accident, at least as far as Visa Europe Ltd. was concerned. In an email to The Associated Press, the company said that one of its financial partners had "briefly accepted payments on a merchant site linked to WikiLeaks."

"As soon as this came to our attention, action was taken with the suspension of Visa payment acceptance to the site remaining in place," the company said.

It's unclear how many payments were accepted, or even if they were fully processed. DataCell Chief Executive Andreas Fink confirmed to the AP that credit card payments appeared to have halted, but said he couldn't know for sure why.

He added that he wouldn't know how many payments had been successfully made to WikiLeaks until technical staff examined the logs.

MasterCard did not return emails and phone calls seeking comment.

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Online:

DataCell: http://www.datacell.com/

Raphael G. Satter can be reached at: http://twitter.com/razhael