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house Bill H.R. 7160

Should ‘Grinch Bots’ Be Illegal?

Argument in favor

By helping resellers buy hot commodities such as in-demand toys and shoes before customers can buy them, so-called “grinch bots” help resellers make it impossible for customers to buy in-demand items at retail prices. This forces customers to bay resellers’ exorbitant prices, squeezing middle-class customers and families.

George's Opinion
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12/24/2018
At some point we need to make a stand against algorithmic driven transactions, be it online retail or stock markets. I have no issue with real people trying to speculate using their own time, but algorithms will soon drive everything and our ability to make decisions will become very limited.
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12/24/2018
Thanks to the availability of research data, the magnitude of this annual problem is finally visible to the average consumer. If there is anything that We the People should have a voice in, scams like this are top of the list. The free market is not “free” when it is manipulated by market participants to advance their own selfish interests over the fair market value of products.
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Linda's Opinion
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12/23/2018
It is pretty much doing the exact same thing that ticket scalpers do. They buy up all the tickets for the good seats and resell them for exorbitant prices either online or in the parking lot of the arena. End result? The people who actually want to see the show get screwed. These grinch bots are doing the same thing. Basically the little people are getting screwed.
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Argument opposed

Resellers are the modern equivalent of commodities speculators, purchasing items at volume under the assumption that they’re undervalued or will become more valuable in future. Such people play a vital role in the economy, helping stabilize prices over time. There’s no need to crack down on reselling or bot usage as practices.

SneakyPete's Opinion
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12/24/2018
NO WAY, MY FRENDS, NO WAY........ Resellers are the modern equivalent of commodities speculators, purchasing items at volume under the assumption that they’re undervalued or will become more valuable in future. Such people play a vital role in the economy, helping stabilize prices over time. There’s no need to crack down on reselling or bot usage as practices. SneakyPete...... 📦📦📦📦. 12*24*18.....
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DEGUp's Opinion
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12/24/2018
Sounds like a problem between consumers and companies. Government should stay out of it.
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TuckerWantsLiberty's Opinion
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12/24/2018
It's not immoral to buy low and sell high, so long as the exchanges are all voluntary. If there's room for a bot to do that in between what a retailer is seeking and what a consumer is paying, then the retailer wasn't pricing close enough to consumer demand. It means less value reserved for the consumer, which stinks if you're the consumer, but no right of yours has been violated.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
    IntroducedNovember 16th, 2018

What is House Bill H.R. 7160?

This bill — the Stopping Grinch Bots Act — would make it illegal for a person to defeat or sidestep website security measures or access control systems designed to enforce purchasing limits on online merchandise. It’d also make it illegal to knowingly resell any inventory obtained through such circumvention. The use of grinch bots would be defined as an “unfair or deceptive practice”, under which unfair practices related to event ticketing purchasing by bots are currently regulated. If this bill were enacted, the Federal Trade Commission (FTC) would be responsible for enforcing violations of this law.

Impact

Online shoppers; resellers; bots; ecommerce; online retailers; Amazon; eBay; FTC: and the Federal Trade Commission Act.

Cost of House Bill H.R. 7160

A CBO cost estimate is unavailable.

More Information

In-DepthRep. Paul Tonko (D-NY) introduced this bill to crack down on the use of grinch bots to snatch up large batches of toys in order to resell them to parents at unfair, inflated prices:

“The American people should be able to spend the holidays with their loved ones, not forced to camp out at store openings or race against an automated buying algorithm just to get an affordable gift for their kids. Letting these grinch bots continue to rig the retail market and squeeze consumers doesn’t just hurt families during the holidays, it hurts small business owners, entrepreneurs, innovative product creators and all legitimate retailers throughout the year. We have a duty to stand up for these folks, and not allow this kind of market manipulation to go unchecked.”

Sen. Tom Udall (D-NM), who helped introduce a Senate companion bill to this legislation, says grinch bots add unnecessary stress to the holidays:

“We can’t let ‘Grinch bots’ steal our hard-earned money—or the holidays. Each holiday season, New Mexicans work day in and day out, saving up and looking for the best deals to surprise friends and family with thoughtful gifts. But when resellers use automated ‘Grinch bots’ to cheat the system, they can snatch up beloved toys and highly discounted items to sell at outrageously inflated markups—all with a few keystrokes. Holiday shopping can be stressful enough without having to compete with an army of ‘Grinch bots’ that don’t even have to sneak down the chimney to steal presents. Our legislation would help protect consumers from getting squeezed by scammers and ensure these ‘Grinch bots’ don’t spoil the holidays for our loved ones. This year, let’s hope Congress’s heart will grow three sizes so we can come together to stop Grinch bots from stealing the holidays.”

Sen. Chuck Schumer, one of the cosponsors of the Senate version of this bill, argues that grinch bots hurt the middle class:

“Grinch bots cannot be allowed to steal Christmas, or dollars, from the wallets of countless consumers. Middle class folks save up — a little here, a little there — working to afford the hottest gifts of the season for their kids but ever-changing technology and its challenges are making that very difficult. It’s time we help restore an even playing field by blocking the bots.”

Barry Brownstein, professor emeritus of economics and leadership at the University of Baltimore, argues that grinch bots are a non-issue, and not worth regulating. Drawing a parallel between resellers and commodities speculators, Brownstein argues that resellers may play a valuable role in stabilizing toy prices:

“Speculators, such as the fictitious Randolph and Mortimer Duke in Trading Places, are often reviled. What few people understand is the role that speculators play in stabilizing prices. If it wasn’t for speculators, the supermarket price of a loaf of bread would occasionally swing wildly. Suppose speculation was banned. Now suppose there was a drought in wheat producing states. With a smaller wheat harvest, the price of wheat would spike, and so would the price of your loaf of bread. Thankfully, speculation is legal. Expecting a higher price, due to drought, speculators buy contracts for future deliveries of wheat. Their actions bid up the price of the new wheat crop, before its harvest. Then if the drought arrives and the supply of wheat drops, the speculator will sell those futures contracts. In the process, the sales of futures smooth out price fluctuations by transferring supply to a period of relatively lower supply.”

There are no House cosponsors of this bill. A companion bill in the Senate, co-sponsored by Sens. Tom Udall (D-NM), Richard Blumenthal (D-CT), and Chuck Schumer (D-NY), was introduced at the same time as this bill.


Of NoteSo-called “grinch bots” are bots used by resellers, particularly during the holiday shopping season, to purchase popular items online. They can often buy out an entire inventory before any humans get a chance to place an order. Then, the resellers resell the items they’ve bot at inflated prices. In totality, this dynamic makes it nearly impossible for customers to purchase certain hot toys online or in stores at retail prices, forcing them to pay significant markups to obtain these popular gifts.


Covering this phenomenon last year, The Atlantic described an unfair fight between parents seeking to buy toys for their kids and profit-motivated bot operators:

“Every holiday season has its must-have gizmo, like Cabbage Patch Kids or Tickle Me Elmo. This year’s sensation is the Fingerling, a plastic five-inch-tall baby monkey. Many years ago, in the days when malls ruled the world, adoring mothers and fathers fearing the wrath of a wanting child would storm into stores and shove each other across aisles to grab a toy like the Fingerling. These days, however, the battle royale over popular toys has shifted online, where the dangers are more exotic than a mother’s flying elbow. The new holiday showdown pits humans against software. It’s not a fair fight. A fleet of bots—software programs that can automate activities like search, chat, and online ordering—have been dispatched by anonymous online scalpers to buy up the most popular children’s toys on the internet. These bots overwhelm retail sites with bulk orders from multiple IP addresses and autofill payment and address information faster than humanly possible. Hence, the apt nickname: Grinch bots. Fingerlings are currently sold out at the websites of Toys “R” Us, Walmart, and Target. Where did the toys go? To sites like Amazon and eBay, where the bots’ owners are listing the $15 playthings for $1,000, or more. (It’s not clear who these people are, but they evidently possess programming chops, yet no soul.) Cyber scalpers have used the same methods to deplete online retailers of other toys, like Barbie Hello Dreamhouse and L.O.L. Surprise! Doll, which they can resell at exorbitant prices."

The Atlantic observed that retailers and reselling platforms alike have not taken proactive measure to prevent this phenomenon:

“Retailers have failed to block the bots, and platforms have refused to stop the sellers. For example, eBay has claimed that there’s little it can do to halt the legal exchange of toys. ‘As an open marketplace, eBay is a global indicator of trends in which supply and demand dictate the pricing of items,’ the company said in a statement. ‘As long as the item is legal to sell and complies with our policies, it can be sold on eBay.’ The Grinch bots are not technically stealing or defrauding. They are practicing a form of legally sanctioned ransom.”

Sen. Schumer summarizes the situation, “When it comes to speed-of-purchase of hot holiday gifts, your average consumer is bringing a knife to a gun fight.” Sen. Schumer’s office found highly inflated prices for 2017’s hottest toys, attributable to grinch bots’ influence:

  • Fingerling ($14.99 retail), out of stock at Toys-R-Us, Walmart, and Target, sold on Amazon and eBay for as much as $1,000 each — an increase of 6,571% over retail

  • NES Classic Edition (retail $79.99), out of stock at BestBuy, Game Stop, and Target, sold on Amazon and eBay for as much as $13,000 — an increase of 16,152% over its retail price

  • L.O.L. Surprise! Dolls ($9.99 retail), out of stock at Toys-R-Us, Target, and Walmart, were available on Amazon and eBay for as much as $500 each – a 4,905 percent increase over their retail price.

  • Barbie Hello Dreamhouse ($300 retail), out of stock at Toys-R-Us, sold on Amazon and eBay for as much as $1,500 — a 400 percent increase over its retail price.

During Black Friday and Cyber Monday 2017, bot usage spiked 20% on both days. Security researchers also note that bots designed to buy rare sneakers are a persistent issue, as developers will create AI to buy shoes from companies like Nike and Adidas as quickly as possible. In March, researchers from Akamai saw that a botnet was sending over 473 million requests to purchase sneakers in a single day.

There is precedent for regulating bots: In 2016, President Barack Obama signed the Better Online Ticket Sales Act (BOTS Act) to ban “ticket bots” that intentionally bypass security measures on online ticketing websites to unfairly outprice individual fans. This bill applies the BOTS Acts’ structure to e-commerce sites to ban bots bypassing security measures on online retail sites.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / William_Potter)

AKA

Stopping Grinch Bots Act of 2018

Official Title

To prohibit the circumvention of control measures used by Internet retailers to ensure equitable consumer access to products, and for other purposes.

    At some point we need to make a stand against algorithmic driven transactions, be it online retail or stock markets. I have no issue with real people trying to speculate using their own time, but algorithms will soon drive everything and our ability to make decisions will become very limited.
    Like (83)
    Follow
    Share
    NO WAY, MY FRENDS, NO WAY........ Resellers are the modern equivalent of commodities speculators, purchasing items at volume under the assumption that they’re undervalued or will become more valuable in future. Such people play a vital role in the economy, helping stabilize prices over time. There’s no need to crack down on reselling or bot usage as practices. SneakyPete...... 📦📦📦📦. 12*24*18.....
    Like (18)
    Follow
    Share
    Thanks to the availability of research data, the magnitude of this annual problem is finally visible to the average consumer. If there is anything that We the People should have a voice in, scams like this are top of the list. The free market is not “free” when it is manipulated by market participants to advance their own selfish interests over the fair market value of products.
    Like (49)
    Follow
    Share
    It is pretty much doing the exact same thing that ticket scalpers do. They buy up all the tickets for the good seats and resell them for exorbitant prices either online or in the parking lot of the arena. End result? The people who actually want to see the show get screwed. These grinch bots are doing the same thing. Basically the little people are getting screwed.
    Like (32)
    Follow
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    The scammers and resellers shouldn’t make more money than a person who originally sells a product they created.
    Like (22)
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    Some things are more important than the almighty dollar. If you think screwing average Americans is acceptable in order to make a buck you may have sociopathic tendencies. Apparently today it has become necessary to regulate these things so the ever growing number of narcissists do not use the increased abilities of technology to abuse the rest of us. Find the morals that make us human and stop this abuse as well as the egregious abuses that our corrupt government is now inflicting on the most vulnerable.
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    I’m sick and tired of people saying the government should stay out of it, that the free market will take care of everything, that people should purchase a different item, etc. I’m all for a market oriented economy but the idea that a free market will solve everything is nonsense. The market is not a perfect mechanism because it involves people and people are far from perfect. People all too often don’t act rationally and a free market, to work perfectly, depends upon people acting rationally. The idea that an item is underpriced and these people are speculating is nonsense. What these people are doing are scooping up a limited supply that is already priced fairly and at market value and artificially limiting the supply to drive up the price well above its real value. The idea that the government has no place is utterly without logical foundation. The government can be a market force that balances the scale back to where it should be by preventing parties from unfairly throwing things out of balance and proacting instead of reacting when it’s too late to properly act. However, I’m well aware of government overreach and that the government can over react. However, this is a case that something should be done in order to make sure the system doesn’t go out of whack.
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    Sounds like a problem between consumers and companies. Government should stay out of it.
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    I don't necessarily see anything wrong with speculation. If someone buys a toy in July they think might be a hit in December, they're betting on the market the same way investors in any other product do. But I do think bots should be taken out of the equation. Websites have security measures for a reason and any entity that can bypass them shouldn't be allowed to do so.
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    It's not immoral to buy low and sell high, so long as the exchanges are all voluntary. If there's room for a bot to do that in between what a retailer is seeking and what a consumer is paying, then the retailer wasn't pricing close enough to consumer demand. It means less value reserved for the consumer, which stinks if you're the consumer, but no right of yours has been violated.
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    Voting no on this allows an unsustainable, crooked, parasitic version of capitalism to continue. Simple. Vote yes for the good of people and to the detriment of the oligarchs and kleptocrats who control this country.
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    Scalpers reselling hot new items ruin shopping for many people and do nothing good for anyone but themselves.
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    Shut the creeps down!
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    Making money honestly is supposed to be the American way. Corruption throughout the political and economic arenas is a hallmark of third-world countries and erodes trust, which is actually bad for GDP.
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    You do realize that Congress was established for the benefit of the people. Not as some branch of corporate legislative protection. The Constitution begins We the people, not “we the corporations... “ Maybe you should focus on the immediate needs of the people, like those currently NOT GETTING PAID BECAUSE YOU ALL CANNOT FUND THE GOVERNMENT EFFECTIVELY OR EFFICIENTLY.
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    Algorithmic transactions allow advantage to those who own or control systems that do it. Another cause of inequality that we can’t fight or defeat individually. Quite frankly, I’m getting tired of algorithms controlling everything.
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    Algorithmic transactions need to be regulated
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    We need this, plus comprehensive privacy policy please.
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    I support any law that undermines cyber criminals.
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    Retail competition is normal getting in the way of interstate commerce is bad for the economy and everything else
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