E-bay and Sony removing PS3 auctions -- ethics vs. legality [update 1]
by Nick Doerr 
{ Oct 12th 2006 at 2:00PM }
Yes, this will be an attempt to educate you. No, it won't be painful. Let's first talk about what is ethical and what is legal. By the end, you may or may not agree, but the conclusion is that buying a system and re-selling it on eBay is, indeed, illegal and unethical. Let's first look at the act of buying a PS3 and turning around with the full intent to sell it at a much higher price. Note, it is your intent to sell it at a higher price. This is called scalping (think of the people who by popular football game tickets and tries to sell them for a very high price outside of the stadium) and scalping is illegal.
Secondly, the act is unethical (more subjective, but think about the definition of ethical) because it is not honorable nor moral to buy a system with the full intent of making a profit off of someone who is desperately trying to get a hold of the system (maybe their job hinges on getting the system for some odd reason).
With these perspectives in mind, can we blame eBay and Sony for taking down PS3 auctions? We say no. In fact, I support the move. In a perfect world, the people who truly want the system for personal enjoyment should be able to get it without having to pay a foolish amount. No, they aren't being told to pay that higher amount, but what other choice do they have if they want to get it for little Timmy for Christmas, or so they can properly report and review new games that come out? Commence counterpoints or applause. Applause is nicer, though.
[update: it should be clarified that the auctions being removed account mainly for the violations of the Terms of Service on eBay -- not so much "for the heck of it"... and there's no personal agenda here (no mention was made of the three people in line in front of a certain person who made it clear they only intended on reselling on eBay), just an interesting perspective on "American capitalism" vs. "Moral views". Thanks for all the responses! They're all great.]
Reader Comments (Page 1 of 2)
Bob @ Oct 12th 2006 2:13PM
so...you don't want to buy my ps3?
trisha @ Oct 12th 2006 2:18PM
true scalping tickets outside the event is illegal, but reselling tickets over ebay and other sites is not. certain states like new york and illinois only allow a certain percentage of profit to be made depending on the face value of the tickets, but reselling for a higher price is allowed.
Inspired @ Oct 12th 2006 2:18PM
I won't be illegal or unethical. I will start my bid at 1 penny, with no reserve. Happy now? sheesh.
Will @ Oct 12th 2006 2:18PM
But isn't scalping legal in some states? I know Washington struck it down as being illegal, but I thought it was permissible elsewhere.
And if scalping is illegal, it certainly didn't stop price gouging for the 360.
Hito @ Oct 12th 2006 2:20PM
/applaud Sony
@#$% those greedy bastards
Andir2.0 @ Oct 12th 2006 2:25PM
Agree, thanks for supporting the PS3 sales figures and not so much your pocketbook!
Gamey McGee @ Oct 12th 2006 2:48PM
AWESOME.
To all the GameStop employees and other scalpers who thought they'd pull a fast buck on eBay, may I be the first to laugh. It's about time this kind of thing was stopped. I was astounding to see how many people were rationalizing their criminal behavior.
To those who equate this to ticket re-sale on ebay, the margin is very minimal to cover shipping and a small handling profit. If that were to apply to pre-sale items, too (it doesn't) you'd still only be able to sell it for essentially break even.
mgs0lid @ Oct 12th 2006 2:50PM
so I dissagree the people who bid as high as they want are the problem... but is it illegal, no im starting my price at the full price I bought it at including tax im not the one who is setting extreamly high prices the buyers are. If some one bids 1000$ that does not force the other buyers to bid higher but to move on to another auction.
Hirsbrunner @ Oct 12th 2006 2:50PM
Great news! I'm actually impressed by this.
Screw all the sorry punks who were going to Ebay their PS3s.
Ha! Ha!
Foppe @ Oct 12th 2006 2:52PM
Unethical, yes. Illegal, no.
"In a perfect world, the people who truly want the system for personal enjoyment should be able to get it without having to pay a foolish amount."
In a perfect world, Sony would have 5 million units for launch in Japan, 5 million units for launch in USA and 5 million units for launch in Europe. In a perfect world, Europe would get it the same month as USA.
In a perfect world, a PS3 would not cost more than a Xbox 360.
Do we live in a perfect world? No.
Is it Sony´s fault or the ebay sellers fault that we do not live in a perfect world? I guess you know the answer...
"No, they aren't being told to pay that higher amount, but what other choice do they have if they want to get it for little Timmy for Christmas, or so they can properly report and review new games that come out?"
Little Timmy is a brat that needs to learn how the world really works instead of living in a fantasy world.
Just tell the truth to him, that Sony raped us again by not releasing enough systems so he have to wait until after Christmas. If he complains, tell him that he will either wait or get no PS3 at all.
Report and review new games... if you have a big enough magazine or website, Sony will send you a system.
Wait, you was talking about a blog for unpaid people? Well I guess that it´s just right that they have as big chance getting a unit as the rest of us. Or do you prefer that Sony only sell launch units to people that have a website that they can write "I tested this new game, it was cool"?
Do not bid on units on ebay at all and they will eventually get a low price, just so they can get rid of the extra 8 units they bought.
BrokenDesign @ Oct 12th 2006 3:01PM
It may or may not be illegal, but it certainly is unethical. Auctioning off something on eBay for the sake of parting with it when it's been your possession for so many years and trying to get a good profit off of it is one thing. It's another thing altogether to intentionally rip people off (regardless of whether or not they'll pay the price, those people are complete idiots) and gain a huge profit by getting all the PS3 (or other product) units you can to sell for as much money as you can possibly make from these desperate people who actually WANT the console. I've heard reports of managers selling all stock to employees before customers, also unethical, and employees who purchase several units of an already sparse stock to sell on eBay and they don't even want a PS3 at all anyway.
Besides, all these people are doing is showing Sony how much people are willing to pay for the console they find to be too cheap anyway. Just think of how many people are going to go after you profiteers when Sony decides people have been paying over $1000 for them on eBay so they must be willing to pay that same amount retail and raise the price.
Rob @ Oct 12th 2006 2:56PM
2 things:
1. are you saying that they SHOULD remove ps3 auctions or has sony and/or ebay said they WILL? If the latter, where?
2. I don't think it is immoral to sell a ps3 on ebay for a profit. Hey if I went at sat at Best Buy for 10 hours to be able to buy one and someone else didn't and they want a PS3 soon after launch they should have the option of paying me for my services of sitting in line for them. Would it be immoral for me to take money from a person to sit in line for them?
Foppe @ Oct 12th 2006 2:56PM
"6. Agree, thanks for supporting the PS3 sales figures and not so much your pocketbook!"
The sales figures are not changed if they sell their newly bought system on ebay. The unit is already sold, and the buyer could not find one in the store. The seller is just a middle hand.
Foppe @ Oct 12th 2006 3:12PM
It shall be fun to see what model they get.
Only because you was first in line when you preordered does not mean that you will get the better PS3 model...
Rob @ Oct 12th 2006 3:20PM
See I actually want a PS3 in addition to selling one. However, I am a poor college student and while I can pony up the money for 2 PS3's I cannot afford to spend the money one 1 without someway to make some of it back. Selling one on ebay was going to be my way of affording the PS3. And like I said before, the extra price these people are paying is more for the service of the seller going and spending his time sitting in front of a store to get the PS3 in the first place.
I Hate Ebay Schmucks @ Oct 12th 2006 3:23PM
it's just the American way these days. you know, buy up as many of something as possible so everyone else can't get it then rape them for profit instead of just getting a better education/job in order to make more $ the legit ethical way.
Turken @ Oct 12th 2006 3:32PM
I'll have to agree with Foppe on this one... although I think Aesop said it first and best with his fable about the Fox and the Grapes. Looks like a blogger is sad because he didn't get to pre-order a PS3 because people who were interested in reselling ps3's on ebay got up out of bed earlier and stood in line longer. Boo-hoo. Nobody says you have to buy one off ebay.
And the premise of this blog post is inaccurate at best. ebay did not remove the auction postings because sony asked. Nor did they remove them because the auctions are inherently unethical or illegal. Ebay removed the auctions because the listings violated the TOS agreement. Selling something on ebay for profit is not unethical. Selling something that you don't actually have and may not get, is unethical, and that's why ebay won't allow it. Once the units actually get delivered, there is no problem legally or ethically with selling a ps3.
If I were to follow the original logic that selling something on ebay for a quick profit is unethical, just because someone who wants it can't afford it, then by that standard it would be unethical/illegal to sell a LOT of things on ebay... like antiques, or real estate, or collectables, or any other object that appreciates in value.
the ONLY thing that could be considered unethical in the gamestop PS3 pre-order debacle is for someone who has an unfair advantage (that is employees or close friends) that allows them to buy and resell a pre-order without having to wait in line like everyone else. But according to the author's previous blog entry, he was simply person #17 in line. Maybe next time he will get out of bed earlier.
Chris @ Oct 12th 2006 3:31PM
so, if a PS3 on ebay is priced at 2000.00 the extra 1400.00 is a fee for standing in line for a few hours? get real. this is ripping someone off pure and simple.
that does sound like a great job though, well over $100.00/hr for doing nothing more than standing or sitting in a chair for a few hours. where do I sign up?
Rob @ Oct 12th 2006 3:40PM
If the PS3 sells for 2000 then yes apparently not getting up in standing in line was worth that $1400 to that buyer. Have you ever heard of a concierge service? They are paid to just do things for another person who is too lazy or unable to do it themselves and has the money to pay someone else to do it. BTW concierge service charge a lot of money too. And if someone had the presence of mind to think ahead they could probably pay an established concierge service to stand in line for them.
BTW to sign up for the job be at your local best buy 12-24 hours before they open on launch day.
Henry Chinaski @ Oct 12th 2006 3:43PM
Listen up, whining crying fanboy bytches....
There's nothing ILLEGAL or UNETHICAL about auctioning off your legally purchased PS3 at a higher cost. Why?
1) Chances are you aren't the ONLY person selling a PS3. Therefore, there's no reason why someone is unable to purchase a PS3 elsewhere. If you had the ONLY outlet for PS3s and jacked the prices, you might be considered for anti-trust or anti-monopoly violations. But that's not the case. Whether or not a prospective purchaser can buy one at retail price due to lack of availability is irrelevant.
2) There's nothing unethical about "buying near and selling dear". It's capitalism, folks. It's also economics. Supply and demand will dictate the price that the market can bear. If little Timmy can't possibly live without a PS3 under his treet on 25 December, then his mom better have a fat wallet. Anyone remember their parents fighting over Cabbage Patch dolls in the 80s? You want PS3s for everyone at a fixed price? Vote Communist in the next election.
3) The fanboyz should be pissed at SECA not each other. It's like the farmer feeding his horses. The horses fight amongst themselve for the oats and bite each other in the process. Instead, they should be getting together to fight and bite the farmer. Blame SONY for the decreased supply and increased demand. They make their money REGARDLESS of how much a PS3 is sold for. By limiting supply they are creating demand and artificially stimulating interest in their product.
I'm getting two and still trying to decide whether to sell one or both. Rest assured that they won't be sold at or below retail. If some soccer mom wants one she's gonna fork over a couple Benz payments to get it. If a teenager want one, s/she's gonna have to work overtime at TacoBell or pick up an extra paper-route. Sony and EBay can team up to minimize price gouging, but they wont ELIMINATE it.
Keil Joy @ Oct 12th 2006 4:02PM
Good call, Ebay and Sony! Finally, ethics rares it's invisible head in the market place. I don't like the idea of the PS3 being used to rip people off anyway. It's bad enough that the console is being sold at such a high price without someone trying to cash in on it's limited availability- not to mention taking advantage of some dimwit who's got more bucks than brains.
Foppe @ Oct 12th 2006 3:47PM
Let´s take a guess on how many ebay-PS3 that goes to Europe. My guess is 60% of the ones that can send the unit worldwide.
Jason @ Oct 12th 2006 4:05PM
To me it's unfair that someone who DIDN'T get up early and wait in line believes they are entitled to the same system *at launch* when they knew that supplies would be extremely limited.
Charging someone $1600 (or whatever) extra for what essentially comes down to waiting in line for them is not ripping them off. They know what they're spending and they choose to spend it. ANYONE who buys the PS3 off of Ebay for $2000 knows that it would be $600 in the store - but they're choosing the spend the extra money to get it sooner rather than later.
A couple months ago I was looking for a copy of Phoenix Wright for my DS in stores, but it was sold out all over. But on Ebay, it was selling for $60 - for a $30 game! That's a 100% mark up! Where were people then?
Getting a PS3 at retail cost with limited quantities will be difficult, but not impossible. If you want one, odds are you can get one if you are willing to wait in line for a long time. Others will choose to pay a high premium price rather than wait in line in the cold. That's their choice, and neither that nor selling it is illegal or unethical. It's the market economy.
As for Sony wanting to stop this from happening - maybe you all should be mad at them. They are the ones launching the system with so few numbers. They could have just as easily held off until next year to launch with millions in hand, but they chose to launch with a limited supply TO GET PRE-CHRISTMAS SALES. For money.
Sneak @ Oct 12th 2006 4:00PM
$2K for a console? Only if it can destroy a planet or take me back in time when consoles didn't cost an arm and a leg.
The Fifth @ Oct 12th 2006 4:06PM
What about the people who arn't able to get to the gamestops or eb games 10 hrs before launch. Should the peole who don't even want a ps3 get 1 before them?
Or how about those who were 8th in line and their eb got 7 they still sat in line for hours on hours (hinting at some1 specific there)
How about this scenario:
You go to a fair and see that all the kids love cotton candy. So you go and buy it all up. Then you say to the kids: If you want cotton candy then you gotta pay me $200. O yeah, and if you try and go to the next vendor, he'll be out too cause my friends went and bought him out too. You can tell these slightly more naive kids about the rules of economics and how its just capitalism, but does that justify what you did?
How about the kids who worked hard the entire summer to get enough money for this cotton candy just to have it bought by you. Yeah, tell them that they should have shown up earlier and they wouldn't have to pay this extravagent sum. The only problem is the fair starts during school. Or they had to wait for a ride from their parents because they can't buy a car themselves. Or they were visiting their dying grandparents in the hospital while you were scheming to swindle their last few pennies of inheritance away from them.
O yeah, you ever remember reading those "Not for resale" signs and thinking "Why do they even have those tags on there. Its for people like you who are willing to destroy the innocence and youth of America to make a few dollars. If thats not unethical and illegal I don't know what is.
Ebay Seller @ Oct 12th 2006 4:07PM
here, here, I preordered 8. I had to bribe my way through it though by slipping the clerks extra $ in order to bump people along the way but who cares. I may pay a few friends like 50.00 a piece to wait in line for even more on release day too. I'm going to try for atleast 6-8 more on release day on top of my 8 that I have preordered. I'll be damned if I don't make enough to buy myself a new car and have extra left over for whatever.
Foppe @ Oct 12th 2006 4:10PM
So when are you going to give us a REAL source that Sony is behind the removed PS3´s from ebay instead of just giving us a link to another blogger?
Or if I start a blog writing that Sony will have a secret Europe-launch next week as a big suprise, you will write a article about the secret European launch next week?
Foppe @ Oct 12th 2006 4:13PM
#25.
"Its for people like you who are willing to destroy the innocence and youth of America to make a few dollars. If thats not unethical and illegal I don't know what is."
Strange, around here we call it "The American way"...
Jason @ Oct 12th 2006 4:16PM
"Its for people like you who are willing to destroy the innocence and youth of America to make a few dollars."
Whaaaat?!
Poor youth of America! They couldn't get a PS3 at launch! They had to wait a few weeks, if they could even afford the retail price tag! Poor, poor things!
Anyone who equates buying a PS3 at launch and selling it to a willing buyer for a profit as being the same as stealing cotton candy from kids at a fair is seriously messed up.
Simon @ Oct 12th 2006 4:18PM
"it is not honorable nor moral to buy a system with the full intent of making a profit off of someone who is desperately trying to get a hold of the system"
Couldn't agree more... retail stores, who buy units with the full intention of just turning around and selling them for a profit are scum. I mean, they don't even play them or anything... just take delivery then put them on their shop floors with an inflated price tag!
DOWN WITH COMMERCE!
Rob @ Oct 12th 2006 4:17PM
Heheh...glad I live in PHX, AZ no waiting in the cold for me! more like waiting in the cool. Heck, me and some friends will go down there set up a hookah and chill for 12 hours...hey did it at a sleepout for the homeless why not to make money too?
Jason @ Oct 12th 2006 4:20PM
One other thing - if I went to a fair and bought up all of the cotton candy to resell it for $200 each, you know what would happen?
No one would buy it.
You see, no one thinks cotton candy is worth $200. But some people do think that the PS3 at launch without waiting in line is worth $2000.
You know how the initial price for that beloved cotton candy at the fair was set? BY FINDING OUT WHAT PEOPLE WERE WILLING TO PAY FOR IT. People have an upper limit on what they'll pay for cotton candy. They also have an upper limit on what they'll pay for a PS3.
One last thing - if you're a kid in school, you probably shouldn't be spending $700 on a game system anyway.
The Fifth @ Oct 12th 2006 4:29PM
"13. Compliance with the Law; Resale Sales and U.S. Government Sales Not Intended. You agree to comply with all applicable laws and regulations of the various states and of the United States and other countries that relate to the Products or this Agreement.
You agree and represent that you are buying for your own internal use only, and not for resale. "
Hows that for illegal?
Ebay Seller @ Oct 12th 2006 4:33PM
lets see, $2000.00 per PS3, add atleast $100.00 per box for shipping($150.00 if they want it insured) multiply by atleast 8(hopefully more like 16) and that makes for one good 'ole ebay buyer raping good time.
Phil @ Oct 12th 2006 4:35PM
Mmmm. I love cotton candy.
To all the whining 7th graders in this comment thread, guess what? I showed up at Gamestop 30 minutes before it opened, and I got one. In fact, I was not even going to buy one until a friend called me and said it might be worth checking the line at the local Gamestop.
You know what? I could care less about the PS3. I don't want one. But I know other people do. And you know what happens when there is demand for something? People step forward and supply it. And the suppliers usually make money in the process - if they are smart.
Kids, that's how our economy works. You'll probably learn that in 9th grade, so you might have to trust me for now.
You can have my PS3, just look for it on eBay in a few weeks. I think I'll no-reserve it and see what the market says it's worth.
Rob @ Oct 12th 2006 4:37PM
Ok i'll even admit ebay seller that's a little f'ed up, i'm reselling one to pay for mine. I can't believe your only going to pay your friends $50 bucks when you may make over $1400. You're just a heartless bastard...but hey everyone's got their hustle.
Jason @ Oct 12th 2006 4:41PM
@The Fifth,
Quoting a terms and conditions agreement does not make something legal or illegal.
If it's illegal to sell a PS3, then it's illegal to sell ANY game or system, so I guess Gamestop themselves and many who shop there break the law on a daily basis selling video games.
In gact, the line you quoted is a very standard license enclosure as it's designed to protect the manufacturer from having liability when someone buys and sells something without their direct knowledge. Basically, it amounts to a hold-harmless clause.
Keil Joy @ Oct 12th 2006 4:44PM
" Charging someone $1600 (or whatever) extra for what essentially comes down to waiting in line for them is not ripping them off. "
On one hand, i agree. People should be allowed to be dumb enough to give you their money. But on the other hand, buying PS3s with the sole intentions of reselling it to buyers at an inflated price is scalping; I don't care how you slice it, that's not capitalism. that's a hustle! take into account all the people who only got up early so that they could secure themselves a huge profit for later. That alone can cut off the availability of the console from many would-be buyers. I'd rather sell something that i created to someone who's going to take advantage of it's intended use.. as opposed to someone who's only going to use it to take advantage of others.
IhaveTONSofPS3s @ Oct 12th 2006 4:58PM
ROFL..... ebay removed the ps3 auctions b/c it violated terms of service (since they couldnt deliver it in 30 days). In a week- ebay will be buzzing. Nice scare tactic though- "ebay teaming up with sony". Sony is even allowing retailers in Japan to have "open" pricing- seems like everyone will be making money. By the way I have owned every game system since I was little, and I always got screwed over by the big bad game companies who would barely support their product- Im looking for a little payback. I also donate hard to find items to schools to raise money- are these schools that raise money unethical???lol
thewatchlist @ Oct 14th 2006 8:03PM
Other than inside your head, where are eBay and Sony pulling these auctions?
There are more than 75 up right now? There are ZERO (as in NONE, NADA, ZIP, ZILCH) notices about PS3 auctions in the eBay Community News/Announcements section. Seems highly unlikely they would pull these auctions without making some sort of announcement to their direct customers (Sellers).
Supply and demand drives pricing. Fools or not, the people who want the PS3 on day 1 when it releases will buy them for what they feel is a good value (whether that be double retail or 10 times retail).
Sorry if Santa doesn't bring you what you wanted for Christmas, but that's life...
I find the internet rumors interesting. What people keep forgetting is that it is highly unlikely that eBay or Sony will do anything about these auctions. These auctions build hype (and profits) for eBay and Sony. Even if they did pull the preorder auctions, they WON'T pull the auctions for people who have the systems in hand. Someone with a system in hand will still make BIG $$$ compared to retail.
Ryan Zelon @ Oct 12th 2006 4:55PM
Remember, nobody is selling actual Playstation 3 consoles only preorder slips. Ebay is not going to be able to stop "scalpers" from selling actual consoles when they are available, and why would they? If somebody actually wants to buy a PS3 at that price, let 'em. They're probably rich to begin with. And remember, that first run consoles are full of problems and have a high failure rate.
Foppe @ Oct 12th 2006 5:01PM
"I also donate hard to find items to schools to raise money- are these schools that raise money unethical???"
Only if the kids at that school pays 200$ for some cotton candy :P
Jason @ Oct 12th 2006 5:06PM
Scalping is defined as reselling at a price higher than the established value. I think it can be said that "established value" will be much higher on launch day than at other times due to high demand.
When the Ferrari Enzo came out, it cost $643,330, but only 399 were made. Demand has increased the current sale price from private owner to private owner up to $1.2 million dollars. Is anyone who sells an Enzo for more than $643K scalping, and by the logic of many of you out there, be denied?
Rob @ Oct 12th 2006 5:09PM
I don't know why we are even having a discussion about scalping...Of course its illegal! you can't just run around cutting the top of people's heads off! That's just wrong.
However, selling PS3s...not so much.
Im down @ Oct 12th 2006 5:09PM
If i knew anyone selling a ps3 for $2000 i would key the shit outta their car anf fuck their girlfriend in the ass
The Fifth @ Oct 12th 2006 5:20PM
While i feel it is illegal-some cases unethical- i guess sony is going to practice salutary neglect with this meaning that they are just gonna look the other way which is their perogative. Just to clarify for all those who think im a whiny little 12 year old who didn't get his preorder, im getting a unit at launch. I'm just angry at those who get 10+ units just to make a profit because it hurts Sony fans and hardcore gamers who have only so much money. Granted this "pain" they experience will only last a few weeks-months. To summarize: I don't think i would ever do something like this, however i'm not gonna condemn most of you who are doing this (except for ebay seller- come on, leave some for the soccer moms and other ppl who can't skip work to sit outside for 12 hrs to get 1).
Rob @ Oct 12th 2006 5:26PM
While I think reselling is ok and not inherently unethical I do think its a real dick move to buy more than you can carry, especially through dishonest means (bribing).
Brian @ Oct 12th 2006 5:46PM
We live in a free market society. I plan on going out, freezing my @$$ off and buying two. Then i'll sell them to soccer moms with their husbands' credit cards and make enough money so that I can buy one in the spring. I did the same thing with the 360, and do I feel bad about it? NO!
If you want a ps3 then quit moaning and take advantage of the situation.
It's called capitalism,
Get used to it.
Jason @ Oct 12th 2006 5:46PM
@The Fifth -
Get off your high horse. If a gamer only has so much money, then maybe they shouldn't buy a $700 console.
People - THIS IS A LUXURY PRODUCT. It's not denying medicine to the sick masses or books to the poor schoolkids, or heck, even cotton candy to the carnival children.
It's a gaming system that is being launched in ridculously small numbers at a price that most of the industry agrees is too high.
spaten @ Oct 12th 2006 6:09PM
Thankfully Henry C. said what needed to be said. And it is definitely not illegal everywhere to scalp tickets or anything else for that matter.
I am a 360 fanboy myself and I got it for free via this same method. Of course I could have got stuck with 2 if the Demand was not there to buy the 2nd one. I certainly wouldn't have paid >$1k for a 360 but that is supply and demand for ya.
spaten.