Something to think about

Is Gaming Console Scalping Illegal?

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Microsoft’s Xbox Series S/X and Sony’s PlayStation 5 launched in a much different world from their predecessors. In the past, if you wanted to pick up a console at launch, you could probably head to your local store and buy it that way.

Due to the recent pandemic, both Microsoft and Sony decided to launch the bulk of their stock online. This means that if you wanted to pick it up, you needed to have access to the internet.

This gave scalpers the opportunity to mass-buy next-gen consoles and then sell them for an inflated price.

Unfortunately, console scalping is NOT illegal in the United States.

What Is Scalping? Who Is a Scalper?

Scalper is a person who buys a product that’s high in demand and in limited quantity to resell it at a higher price. It’s a money-making tactic where an individual, or more often a group, buys multiple items.

Scalping unfortunately isn’t exclusive only to gaming consoles. Event tickets, GPUs, CPUs, trainers and many more.

Xbox Series X and Playstation 5

Next-gen Console Preorders

Scalping isn’t just an issue with launch day, there are scalpers that work in preorders too.

Next-gen Xbox preorders began worldwide on September 22, 2020 in selected retailer stores (Amazon, Target, Best Buy, Newegg, Walmart, Gamestop, etc. in the US). Series X retailed for $499, while series S retailed for $299. As is custom, there were limited consoles available for preorder but the process was clear to everyone.

Sony, however, faced a lot of backlash due to lack of transparency and communication about preordering Playstation 5 on their store. Their preorder system was invitation only, “based on previous interests and PlayStation activities” (from their FAQ). Nobody really knew what these interests and activities are. Even more so, the invitation wasn’t a guarantee that you would be able to preorder Playstation 5.

Preorders for this console went live on September 18, 2020 (on the main Playstation store, retailers released preorders earlier) and everything was sold out within minutes.

Playstation 5 scalper on Facebook Market

Next-gen Console Launch Day 2020

Xbox Series X (and Series S) was released on November 10, 2020 and Sony Playstation 5 on November 12, 2020.

Those who didn’t get to preorder had to wait until launch day. Now, for many people, this wouldn’t be a problem. Book a day off work. Sit with the console in your shopping cart in the hope that it lets you check out.

The problem?

Online-only sales made it a whole lot easier for scalpers to get their hands on consoles. All they needed to do with set up a sophisticated piece of software (much like the software used to purchase concert tickets), and attempt to purchase dozens of consoles at a time using bots.

This resulted in consoles shooting up online for up to 4x their retail value. With no stock left (and no massive restocks predicted until April 2021), it meant that people that really, really wanted a console had no choice but to part with their hard-earned cash and give it to a scalper.

A UK based Playstation 5 scalper group was able to get their hands on 3 500 consoles and they stated that they have no regrets.

So, the big question is…

Is Game Console Scalping Illegal?

No. At least not in the United States.

You may have heard of anti-scalping laws. Around 20 states in the US do have anti-scalping laws. However, all of those laws have been written specifically for event tickets.

By these laws, you can scalp pretty much anything else that you want, but the second you scalp an event ticket, the justice system is going to come down on you like a sack of bricks! It doesn’t stop people doing it, but it’s still illegal (in most places).

Gaming console scalping isn’t illegal. People are free to buy something and resell it at whatever price they want. It’s your right once you own a piece of property. It would almost certainly be unconstitutional to prevent people from reselling their property, right?

Please do not buy a console from a scalper.

The whole issue with gaming console scalping isn’t so much whether it’s illegal or not. It’s about the morals of the whole thing. There are people out there that really, really, want a game console. However, someone decides that they are only willing to part with one for 4-5x the price he paid for it.

There are ethical issues there, and online eCommerce companies really did try to crack down on it all, but it just wasn’t enough.

Turns out when you sell a product exclusively online, particularly one that has such a high amount of demand, there is absolutely no way that you will be able to fight all scalpers.

Scalpers on eBay

Will Console Scalping Ever Be Illegal?

I highly, highly doubt it.

Gaming console scalping is a whole different beast to scalping tickets for events.

Events are pretty much one-time events. If you don’t buy a ticket the first go around, then you are pretty much never going to be able to see the event. Not unless you take out a second mortgage to pay for a scalped ticket. 

Obviously, the main reason why laws were introduced probably wasn’t to benefit the people missing out on concert tickets, but probably companies like Ticketmaster. However, we will let that part slide. The anti-scalping laws still had a positive impact on the industry.

This leads us back to game consoles. If you miss out on one, you can always pick one up in the future when production has been ramped up again. Eventually, everybody who wants one of the new game consoles will be able to purchase one, and they will not have to pay scalper prices to get their hands on it. These people may have to wait many, many months to get one, but it will eventually be possible.

This is the same for pretty much every item that is scalped. They aren’t completely limited. You will pretty much always get what you want if you are willing to wait long enough. Lawmakers introducing brand-new laws for something that only happens once every 5-7 years (in the case of game consoles) would be a complete waste of their time.

Not to mention the fact that they will be creating a law that restricts what people can do with their own property. This opens up a whole other can of worms.

How Can We Stop Console Scalping?

Sadly we, as consumers, can’t.

I could tell you that you can go out there and not buy from scalpers. This would be the obvious answer, right? Well, if you aren’t buying from scalpers, somebody else will. We can never prevent scalping for something like a game console. The market is just too big.

You can do your bit and hold off, though. Make the market a little bit smaller. It won’t be long before you get your hands on your shiny, new game console!

Could Stores Stop Console Scalping?

Well, tehnically they could. But sale is a sale to them, so they might not care.

People have been calling for captchas but it’s known that bots can solve captchas quite easily. If stores implement more sophisticated technology, the bots will evolve right next to it to beat it.

In my opinion, stores should implement a human verification, only sell one per person after they verify their ID. However that may pose some privacy concerns.

Marketplaces

Scalpers usually use marketplaces like Facebook, eBay and Craigslist among others. These platforms are not easy to regulate on a mass scale. They could apply keyword filters which don’t allow users to sell a certain item for more than the retail price in the first year or so.

Such thing will be impossible on Craigslist and probably even Facebook but I think eBay could make that work if they wanted.

Why Do People Buy From Scalpers?

There’s a lot to unpack there. First we have to ask, why are people so intent on buying new console on launch day?

Well, the answer is simple – FOMO (Fear Of Missing Out). The manufacturers use exclusivity and scarcity (even temporary) to make people feel bad about being “left out”.

It’s human nature to want to be included.

If you’d like me to write about FOMO and video games, please let me know in the comments. 🙂

The other reason is just as simple – the consoles launched just in time for Christmas and parents want to make their kids happy, especially during this pandemic. While it’s best to have a conversation with your child to make them understand why having a console for Christmas might not be possible, some parents get very desperate and are willing to cash out double or triple the retail value.

Conclusion

Well, the only thing I can say is, don’t buy from scalpers. Yes, you (or your kid) might have a console for Christmas but it’s not worth the extra money. Both Microsoft and Sony will keep on manufacturing new next-gen consoles for the next five years at least. It’s not a one time event, so don’t give your hard-earned money to a scalper.


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