US House and Senate lawmakers are hoping to ease the stress of holiday shopping with legislation outlawing retail-scraping “Grinch bots” that often clear the digital shelves of popular items before anyone has a crack at them.
Grinch bots have been a problem in the retail space for years and even beyond the Christmas season, snapping up everything from concert tickets to new video games the second they are available for purchase. Scalpers look to clear out limited inventories, and then flip the items for higher prices on third-party sites.
Daniel Gor, Bot Defender Product Manager at PerimeterX, expands on how these annoying retail exploitation tools function: “The most sophisticated buyers are leveraging a hidden but fascinating ecosystem of technology tools and platforms to stack the deck in their favor … When the most sought-after items drop online in a flash sale, two-thirds of the purchases can be malicious bots. Bots harm regular online shoppers by jacking up the prices. They also hurt the brands who dislike seeing their offerings go for such high prices on secondary markets and who want to ensure fairness and a good online experience for their customers.”
Congress Makes Second Attempt at Outlawing Grinch bots
One of the reasons that Grinch bots are so pernicious is that what they are doing is not strictly illegal. It does violate the store policies of many major retailers, who have added technology in an attempt to stop the practice. But the Grinch bots seem to always be a step ahead of retail security. Some lawmakers feel that outlawing both the practice and the sale of goods obtained by it is the only way to rein it in.
Democrat members of the House and Senate attempted to ban Grinch bots once before, during the Black Friday sales of 2018. The bill did not end up making it to a vote. Congress has passed legislation of this nature in the past with a 2016 bill, the Better Online Ticket Sales Act, but that applies strictly to the selling of concert and event tickets by bots.
This new attempt, the Grinch Bots Act, is sponsored by a collection of Democrats: Senators Richard Blumenthal (CT), Charles Schumer (NY) and Ben Ray Luján (NM) along with House Representative Paul Tonko (NY). The full specifics of the bill are not yet available, but there is little legal precedent to draw from as retail bots are legal for the most part around the world.
Though the name of the bill implies an attempt to save Christmas for retail shoppers, it would be extremely unlikely that passage of the bill and any enforcement actions would be able to take place before the end of the year. The practical purpose of the bill is likely not to stop holiday Grinch bots specifically, but to address the bigger ongoing picture of retail botting and flipping over a much longer period.
The issue is one familiar to particular segments of shoppers. Video game enthusiasts have been dealing with shortages of hardware from Nintendo, Sony and Microsoft for over a year now. Grinch bots are also a very common source of complaint in the “sneakerhead” space, hobbyists that collect vintage shoes such as Air Jordans. But the most acute pain is being felt in the ongoing shortage of higher-end GPUs for computers. Quality video cards have been inflated in price for some time due to the demand for them by cryptocurrency miners, with average price tags pushing a 100% increase over manufacturer suggested retail price for well over a year now.
Grinch bots not easy to stop
Another complication with Grinch bots is that many are being operated beyond the reach of US jurisdiction, rendering US laws against them somewhat pointless. Legal pressure would have to be applied to the outlets that the operators of Grinch bots use to flip their merchandise instead, primarily Amazon and eBay in the US.
The existing BOTS Act of 2016 demonstrates this futility. It is enforced by the Federal Trade Commission (FTC), but the agency did not prosecute anyone with it until early 2021 and it has thus far only been used to pursue several major resellers that are dealing in millions of dollars of illicit ticket sales.
And while online sales platforms tend to have policies prohibiting the use of Grinch bots to make purchases, they are sometimes so full of legal loopholes that the perpetrators do not even need to use security circumvention measures to go on their automated buying sprees. For example, eBay will only enforce its “price gouging” terms on sellers if the item is considered an “essential.” This leaves plenty of room for sellers of electronics, sneakers and toys to operate. Amazon has policies against using bots to influence search results and customer traffic, but its rules about the use of automated Grinch bots appear to be much more loose (it’s certainly no trouble to find third-party sellers on the platform offering hot items at inflated prices).
The Grinch Bots Act is also unlikely to be a priority item with Congress facing multiple serious conflicts that could drag out for some time. Complicated by the contentious infrastructure bill, Congress only just voted to extend funding (and avoid a government shutdown) on December 3. But that battle now shifts to an attempt to raise the debt ceiling to accommodate new spending, which will likely play out until mid-December.