I've recently noticed a certain site have its traffic increase exponentially but it does nothing more than scrape the web of images for almost every keyword. The site creates a thumbnail and does mention the original sites home page url but the link to the original site passes through a 302 redirect first. A "show original version" button launches a popup window where the original is hotlinked from the original site.

The problem is not specific to one search engine, I found it in all 3 major engines, but I'll use Google to illustrate the problem.

2,530,000 images indexed, 100% of those are for the large version of it's thumbnails and 100% of those are hotlinked meaning they are on the original sites and not on this site at all.

Traffic: according to public 3rd party traffic reporting sites that can't be considered accurate the site has gone from receiving under 500 pageviews per day to over 8 million per day over the span of 2 months and is on pace to break 10 million this month.

Rankings: multiple images on page 1 of all 3 major engines image serps for a good majority of keywords.

I'd like to think this site will vanish as quickly as it appeared but I've been thinking that for nearly two months now and reading about others who have complained about it (several threads are even in Googles forums).

It's a problem, many millions of visitors didn't get to see the real sites behind those images.