12.03.17

SCHUMER REVEALS: AMIDST HOLIDAY SHOPPING HUSTLE, CYBER BOTS ARE EXPANDING REACH & UNFAIRLY SCOOPING UP THE HOTTEST HOLIDAY TOYS BEFORE PARENTS CAN EVEN CLICK ‘BUY’; HARD-TO-FIND TOYS ARE THEN LISTED ON THIRD PARTY SITES FOR HUNDREDS OF DOLLARS; SENATOR PUSHES RETAILERS TO BLOCK THE BOTS

2017 Hot Toy List Includes Dolls Now Only Available On eBay, Nintendo &‘Fingerling Monkeys’ That Were Retailing For Less Than $20, Now Going For As Much As $1,000; Even ‘Barbies’ Have Been Scooped; Bottom Line Is Bots Hurt Consumers & Retailer Push Can Help Stop Them

Schumer Says Retailers Can Lead The Charge Against Toy Bots Because They Control The Platform & The Inventory; Besides, Outrageous Prices Kick Parents—And Kids—Out Of The Market & Hurt Entire Industry

Schumer: Grinch Bots Cannot Be Allowed To Steal Christmas –Or Dollars From The Wallets Of NY’ers

Today, U.S. Senator Charles E. Schumer revealed that the same cyber scalpers responsible for having scooped up tickets to Broadway shows and major concerts have migrated to in-demand holiday toys, scooping up popular holiday gifts, from dolls to gaming equipment, for resell on other websites at outrageous prices. For instance, popular Fingerlings—which typically sell for $14.99—are now being sold on secondary websites for as much as $1,000. Schumer explained that, in years past, bots were used by nefarious scalpers to primarily purchase popular concert tickets. As a result, Congress passed Schumer’s BOTS Act in order to increase fairness for consumers in the ticket-purchasing industry.  However, the law does not apply to other consumer products. So, today, Schumer called on the National Retail Federation and the Retail Industry Leaders Association to block the bots and lead the charge against future efforts to prevent customers from buying toys at fair retail prices.  

Schumer was joined by Chuck Bell, Programs Director of Consumers Union, the policy and mobilization arms of Consumer Reports.

“Grinch bots cannot be allowed to steal Christmas, or dollars, from the wallets of New Yorkers,” said U.S. Senator Charles Schumer. “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. When it comes to purchasing products online, major retailers should put forth policies that will help prevent future Grinch bots from stealing the season’s hottest toys.”   

“Consumer Reports urges retailers and policymakers to work together to develop solutions, so that consumers will be able to shop for toys and other gifts on a level playing field.  We applaud Sen. Chuck Schumer’s proposal for the National Retail Federation to develop best practices to prevent these practices, to keep the software bots from grabbing all the gifts and driving up prices,” said Chuck Bell, Programs Director of Consumers Union.

Schumer explained that “bots” are sophisticated computer programs often used by nefarious scalpers and brokers that plague the online sale of many items. In years past, cyber scalpers primarily used bots to snatch up popular tickets to concerts and live theater productions, leaving fans with no choice but to buy tickets through secondary resale sites at much higher prices. Artists, musicians, theater owners and concert promoters alike led the charge against bots used by online hackers and scalpers in an attempt to improve the ticket-buying experience for customers and guarantee increased transparency for fans. 

Last year, Congress passed the Better Online Ticket Sales (BOTS) Act, co-sponsored by Schumer, which prohibits the unfair and deceptive act of using mechanisms such as bots in order to scoop up tickets before consumers are given a fair chance to buy them. However, the legislation does not include items beyond tickets. 

According to Consumer Reports, bots are now being used to buy and sell popular holiday gifts like toys, gaming equipment and high-end sneakers. According to the report, bots subvert typical consumers through complex programming that guesses a product's ID and locates the product page, which is typically launched just a few hours before the product goes on sale. Bots can scan the Twitter APIs (application programming interfaces) to learn about sales before consumers and can automate the purchase of a product itself. While consumers must choose their size, shipping, and payment details manually, bots can automatically fill out these pages in fractions of a second, allowing them to purchase items in demand much more easily. As a result, regular consumers simply cannot compete with the speed of bots, forcing many to purchase these popular items on secondary resale sites at prices far above the original retail price.

Schumer said there is no fair way for consumers to purchase their holiday gifts online if they have to compete with bots that are capable of navigating through websites in a matter of seconds, leaving an unfair playing field for those looking to purchase popular gifts at the face value price. Schumer said major retailers must step in and help stop bots from controlling the platform and inventory.

Schumer’s office searched online for some of the year’s top holiday toys: WowWee Fingerlings, Super Nintendo entertainment system NES Classic Edition, the L.O.L. Surprise! Doll and the Barbie Hello Dreamhouse Playset.

·         Fingerlings, which typically sell for $14.99, were out of stock online at Toys-r-us, Walmart, and Target. However, the item was available for sale on Amazon and eBay for as much as $1,000 each.  

·         Super Nintendo entertainment system NES Classic Edition, which sells for $79.99, was out of stock online at BestBuy, Game Stop, and Target. However, the item was available on Amazon and eBay for as much as $13,000.

·         L.O.L. Surprise! Doll, which sells for $9.99, was out of stock online at Toys-r-us, Target and Walmart. However, the item was available on Amazon and eBay for as much as $500.

·         Barbie Hello Dreamhouse, which sells for $300, was out of stock online at Toys-r-us. However, the item was available for sale on Amazon and eBay for as much as $1,500. 

Schumer is asking two of the leading retail trade associations – the National Retail Federation and the Retail Industry Leaders Association – to investigate the prevalence of bots on their members’ websites and help their members institute best practices to subvert these sophisticated computer programs.  By staying one step ahead of the bots, retailers can protect their consumers from abusive sales practices that hurt everyone – buyers and sellers – alike.

Schumer’s letter to the retail groups appears below.

 

Dear Mr. Rhodes and Mr. Shay:

I write today to express my serious concerns with the widespread use of bot technology on retail websites to deprive good-faith consumers of access to products in high demand.  As we approach this holiday season, it is particularly important that consumers have a fair access to popular products on the market.  As such, I am calling on your associations to immediately investigate how these dishonest software programs are being used on your members’ sites and take all available steps to thwart computer systems from cheating America’s consumers.

As the demand for toys like Hatchimals and Nintendo’s NES gaming consoles have increased, so too have the surreptitious techniques bad actors have adopted to more effectively capture the retail market and capitalize off of consumer demand to artificially inflate prices.  Specifically, hackers are now using software robots (“bots”) to purchase popular toys, gaming equipment, and even high-end collectible tennis shoes. Because of the sophistication of these automated tools, the hackers are able to learn about key retail sales, predict the product sales addresses, and purchase mass quantities of product as soon as the site goes live, before ordinary consumers even have a chance to begin a transaction.  The hackers then upsell the products on third party platforms. In some cases, bot operators are using more than 10,000 IP address and 500 credit cards in order to bypass retailer purchase limits. I am deeply concerned that the prevalence of these deceptive techniques creates an unfair environment for consumers who are unable to compete with the lightning speeds of computer robots. 

As America’s most prominent and successful retail sales operations, your members are uniquely positioned to track this deceptive behavior and institute safeguards that could reign in their rampant use. Increased protections to prevent this type of behavior can create the type of consumer trust and confidence needed to ensure consumers are getting a fair deal for the types of products they buy on the market. Without a way to level the playing field, consumers will be left to compete with the robots or succumb to the outrageously high prices of third party sellers. No family should have to experience this, especially during the Christmas season.

I therefore ask you to share with my staff all of the steps your members are currently taking to confront this behavior, and how they plan to prevent bots from infiltrating their payment platforms in the future. Furthermore, I urge you to establish and put in place industry-wide best practice standards to ensure consumers are fully protected from sophisticated computer programs.

I know you share my commitment to protecting consumers, who are your customers and my constituents.  I thank you for your time and look forward to working with you to strengthen consumer protections.


Sincerely,

U.S. Senator Charles Schumer 



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