I've been speaking to a bunch of people about this over the last couple of days about this attack so I thought I'd collate some info on how it works, what we know and what the possible sources of the attack may be.
A strange rash of virtual iPhone kidnappings in Australia recently spread to the United States, and boy, are they strange. Hackers appear to be using Find My iPhone to lock iOS devices remotely, and then demanding a ransom to unlock them. Said ransom is payable through PayPal. You should not pay it.