Colluding does happen online however it happens more in single table tournaments and cash games more than multi table tournaments.
I believe that most collusion is dealt with effectively by the major online poker sites (i havent played much on any others.) Players get flagged and investigated for collusion when they transfer money to each others accounts, play mostly in the same games as another player, when someone emails fulltilt security with a complaint and probably many other different ways im unaware of. Ive also spoken to an ex pokerstars employee i met who told me stars does the same thing.
Twice ive been refunded money by Fulltilt when ive been colluded against, $10 and $3.50. The money just randomly appeared in my account. Fulltilt emailed me to tell me I'd been colluded against however they wouldn't tell me when or by whom.
On a seperate note about a year ago my brother and his housemate 'loosely' colluded (they dont really now how to collude very well or play very well for that matter) in some SNGs on Fulltilt about a year back and had their accounts temporarily locked. They were warned by Fulltilt that if they played in the same tourny (<180 or >2) or colluded again they would have their accounts permanently banned.
Overall from what ive experienced they do a pretty good job at catching colluders.
Poker is a microcosm of all we admire and disdain about capitalism and democracy. Poker can be rough-hewn or polished, warm or cold, charitable and caring, or hard and impersonal, fickle and elusive, but ultimately poker is fair, and right, and just.
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