Why Scalpers are bad for consumers (2024)

Graphic by Bell Jackson

Scalpers are an unfortunate byproduct of the free market, and the introduction of sites like eBay has made the practice easier. Scalping is buying aproduct, typicallyin bulk, and reselling itfor prices higher than the initial retail price.If enough individuals do this, it creates scarcity and any consumer interested in the product could now be paying much more than necessary while the scalper makes a profit. This practice is awful for consumers and unfortunately not enough has been done to stop it.

Perhaps the most common practice you may be familiar with is ticket scalping, in which people buy up tickets to an in-demand concert or ballgame and sell them at higher prices to desperate fans. Fortunately, in 2016, the federal government passed the Better Online Ticket Sales Act, which made ticket scalping with bots illegal. Despite the positive precedent, this only regulates a specific instance of scalping.

The pandemic intensified things further by encouraging a transition to an online market. This made things much easier for scalpers to use bots to purchase large quantities of products quickly. These bots are automated programs some scalpers use in order to purchase products in the fraction of the time it would take your average consumer to make a purchase.A prime example of this recently was the scalping of gaming consoles and PCparts.

Back on Dec. 2, Michael Driscoll, an Oracle Data Engineer at USG Corp., analyzed the scalping market on eBay and posted his findings on Dev.to. He found that “scalpers have made $82 million in sales, $39 million in profit since September” off a list of 14 products. When it came to thePlayStation5 for instance, he found that the “Disc version is going for 300% MSRP, and the Digital for 200%.”

In an interview withPCWorldDriscoll said, “I don’t personally mind the person who flipped their consoles because they had one.”

He believes that’s the nature of the secondhand market. However, where he has a problem is when someone is“buyingout Best Buy’s entire stock or has a bot just buying them right away to flip hundreds or dozens online.”

Personally, I share his sentiment. The scale is what really affects things. What he said also brings up the issue of distinguishing scalping from the secondhand market. You want to try and prevent these sorts of things from happening without regulating the secondhand market too much, which would also harm consumers. Therefore, I believe a way currently to handle this issue is with public awareness and pushing for companies to self-regulate.

In order to limit online scalping, companies could limit the amount of product you can purchase when it is in stock. This could help prevent the bulk purchases scalpers use for scarcity. It would also help tremendously if companies would set up countermeasures to try and prevent bots from making purchases.

This is a strategy Walmart has already attempted, with some success.On Nov. 25, they reportedly blocked 20 million bot attempts within 30 minutes that were trying to purchasePlayStation5 systems. Although, according to Walmart information security officer Jerry Geisler it was “a fraction of what our systems deal with continually.”

You might wonder, what can I do about the issue? Well, awarenessis an important component to fighting back scalpers since it can be used to alert companies to the issue and to persuade consumers to stop purchasing from scalpers. Scalpers exist due to the high demand for products.

So, if consumers exercise self-control and are patient for restocks it will diminish the amount of scalping.

If these strategies do not work, then hopefully the governmentwill eventually intervene now that the BOTS Act of 2016 has set a precedent against scalping involving bots.