Playstation 5 scalpers are mad that people don’t like them, according to recent interviews they had with Forbes writer Janhoi McGregor, and it’s hilarious. The writer recently spoke to several British scalpers who were trying to recover their public image, probably in light of recent efforts from UK legislators to ban scalping, which gives us not only only a rare look inside the scalper mindset, but also a look into how they operate.
Scalping has been a thorn in the side of anyone looking to buy consumer tech throughout 2020 and into 2021, from the RTX 3000 series to Ryzen 5000 chips to the Playstation 5. The problem’s only gotten worse as the pandemic has closed down brick and mortar stores and forced shoppers to a purely online ecosystem, where they have to contend with bots that can buy faster than any person. We’ve spoken with cybersecurity experts before about the problems scalping poses for consumers and the threat it poses to dollar value in the larger economy, but scalpers themselves have a simple retort: “What makes us so different from Walmart?”
These sentiments come from a recent Forbes story where writer Janhoi McGregor sought to get the scalpers’ side of the story. And while McGregor’s sources gave him some pretty amusing rationalizations, they also pulled back the curtain a bit on how they actually operate.
“There seems to be A LOT of bad press on this incredibly valuable industry and I do not feel that it is justified,” a scalper named Jordan told McGregor. Jordan is the co-founder of a private scalping group (also called a “cook group”) known as The Lab. “All we are acting as is a middleman for limited quantity items.”
We do have to question the effectiveness of saying “I’m just a middleman” as a defense. Middlemen aren’t exactly known for their likability.
Jokes aside, Jordan attempted to justify scalping to McGregor by comparing scalpers to grocery stores. “Essentially every business resells their products,” he said. “Tesco, for example, buys milk from farmers for 26p or so per liter. No one ever seems to complain to the extent as they are currently doing towards ourselves.”
To be fair, Tesco also buys in bulk that’s not economical for individuals and handles shipping and stocking of more reasonably sized products for the consumer, whereas scalpers buy products that are already marked up for individual purchase and add no extra convenience or value for their customers. While there’s certainly valid criticisms to be levied against current market setups, it would feel wrong if we didn't point out that adding an unnecessary extra layer of middlemen is hardly analogous to what supermarkets do.
Or, as one gamer told McGregor about Jordan’s analogy, “He is deluded. He doesn’t get he’s another layer of profiteering in his own Tesco analogy. He’s not Robin Hood.”
But we’re not here to debunk scalper justifications, as easy and entertaining as it is. You can probably do that yourself. What’s perhaps most interesting in McGregor’s article is what scalpers had to say about the methods they use to run their “businesses.”
For instance, one of Jordan’s partners, named Regan, told McGregor about a bot he uses to mass purchase Supreme’s highly-demanded clothing. Called Volex, the bot can check out items in 2.3 seconds and bypass 3D Secure, which is a legally mandated security check for online purchases in the UK that verifies whether a shopper is the legitimate owner of their card.
Normally, 3D Secure redirects buyers to another site owned by their bank. But Velox avoids this through methods that Regan wasn’t willing to share.
McGregor talked to web security consultant Edward Spencer, who said that the scalpers are probably using pre-paid cards from outside the EU, and suggested that shops could probably thwart it by rejecting all non-3D Secure transactions.
Of course, this only applies to European purchases, which is why McGregor also spoke to a scalper going by Alex who attempted to build his own PS5 purchasing bot. Alex’s bot was a website scraper that automated checkout. Alex said that while his bot was faster than a human, it still wasn’t fast enough to compete with the bots like Volex that cook groups sell for thousands of dollars. That’s because while his bot interacted with the website, other scalping bots interact directly with severs.
“For Walmart, there was an open API for their stock,” Alex told McGregor. “Some of these bots could add a PS5 to their shopping cart, and then they could purchase it from there.”
These kinds of bots can even let scalpers buy stock before it officially becomes available, as happened with Argos the day before it started officially selling PS5s. While the store eventually shut down the loophole, the end message here is that, without oversight, scalpers will always find a way.
That kind of innovation usually requires plenty of resources, which is why many of McGregor’s sources “operate as a business, in some cases with full time staff.”
So, perhaps at least one aspect of Jordan’s Tesco analogy holds water. Going back to justifications, Jordan also told McGregor how his group donates to charity and is just trying to “help people make some extra money for themselves,” though Regan was more blunt...and honest.
“Your average person who just wants one of the consoles to use struggles to get close. A lot of these sites have very minimal or easy to bypass bot protection. They often release stocks at stupid times or without any form of schedule...The only people who will have known about those restocks will have been people with monitors inside of cook groups.”
These concerns match some of what we heard when we spoke to cybersecurity experts like Larry Bates, which is interesting to hear coming from the other side. It’s also enlightening, as it provides some concrete steps governments and stores can take to prevent scalping, which up to this point has proven legally difficult as it runs the risk of interfering with the right to sell one’s own property.
In the meantime, we assume that if the UK’s anti-scalping bill does pass, we’ll get even more choice quotes from scalpers about how, actually, they’re the real heroes here.
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Michelle Ehrhardt is an editor at Tom's Hardware. She's been following tech since her family got a Gateway running Windows 95, and is now on her third custom-built system. Her work has been published in publications like Paste, The Atlantic, and Kill Screen, just to name a few. She also holds a master's degree in game design from NYU.
i don't think scalpers are any different than doctor Seuss's Grinch. i hate them and wish they would just stop.Reply
Glad to see the idiot brigade has chimed in with this article. No, scalpers are not "heroes", but they do provide a valuable service for consumers. But emotions trump logic in modern-day society.Reply
In a free market economy, scalping can only exist in one case, and one case only -- when prices are being held artificially low. This usually happens when the government interferes in some way -- today, though, it's happening because companies like Sony, Microsoft, and NVidia are afraid of being accused of "profiteering" from the pandemic. So they continue to hold prices below their proper level, with many people willing to pay two or three times as much for a product as they're charging. What do they think is going to happen?
The "anti-scalping" laws, regulations, and website-security checks being proposed to stop it are even more hilarious. Scalping was endemic in the former Soviet Union, and they couldn't stop it with sentences of hard labor in Siberian gulags. You think any of these measures will be more successful?
Raise prices, or increase supply. Nothing else will work. Period.
Other methods will work, they just won't like what happens to them.Endymio said:Raise prices, or increase supply. Nothing else will work. Period.
Scalping of devices like this happened long before this pandemic.Endymio said:it's happening because companies like Sony, Microsoft, and NVidia are afraid of being accused of "profiteering" from the pandemic.
On a bed of money? Probably not that hard.Admin said:PS5 Scalpers Explain How They Can Sleep at Night : Read more
Agreed. I remember the Playstation 2 was being scalped at launch and selling several times more than MSRP and that was 20 yrs ago. It’s become more of a problem because more people are at home and have more idle time on their hands. So it becomes a matter of patience.USAFRet said:Scalping of devices like this happened long before this pandemic.
Sure, on initial launch of a hotly-anticipated product-- especially when it's timed to drop just before Christmas. (as in your links)USAFRet said:Scalping of devices like this happened long before this pandemic.
But that only lasts a month ... it's not the long-term phenomena we're seeing now. And again, it's an intentional act by the manufacturer to set a price they know is significantly below what people will be willing to pay.
In my e-mail last night: "You weren’t selected in the Newegg Shuffle". No surprise there.Reply
Now I will just have to suffer with a 3700X, and not enjoy 5950X goodness.
I am not sure how I am going to sleep at night.
"timed to drop just before Christmas"Reply
As in....mid september 2020, just before the run up to the magical Black Friday.
Add in Coronoa....
"Intentional act"? So you're saying they should have priced it 1.5 -2x more than it was?
How would that help?
It would help in the manner that all floating prices help -- they equalize supply with demand, ensuring that everyone who wishes to buy a product, can. No shortages, no oversupply. Econ 101.USAFRet said:"Intentional act"? So you're saying they should have priced it 1.5 -2x more than it was?
How would that help?
And no, I didn't say that a price increase of "1.5 -2x" would be necessary. Though scalpers are charging that much, they do so on a small fraction of the total supply, and they have additional overhead costs as well. If the manufacturer themselves raised prices, I doubt more than a 25-30% increase would be required.