Law Would Ban ‘Cyber Grinches’ From Price-Gouging Popular Toys - Forbes

Topline

A group of Democratic lawmakers introduced legislation Monday intending to stop “Cyber Grinches” from snatching popular toys online and reselling them at inflated prices, further exacerbating supply chain shortages ahead of the holiday season.

Key Facts

Majority Leader Chuck Shumer (D-N.Y.), Sens. Richard Blumenthal (D-Conn.) and Ben Ray Luján (D-N.M.) and Rep. Paul Tonko (D-N.Y.) announced the Stop Grinch Bots Act, which aims to crack down on automated software snatching up entire inventories of coveted holiday items, and reselling them at higher prices.

The proposed legislation expands on Schumer, Blumenthal and Tonko’s Better Online Ticket Sales Act, which banned “ticket bots” from bypassing controls to buy tickets for public events like concerts and sports games in 2016, and made it illegal for scalpers to sell tickets acquired by bots.

The Stop Grinch Bots Act would apply this mechanism to all online retail stores and would task the Federal Trade Commission with enforcing the law, if passed.

The bots, which can purchase hundreds of items in a matter of seconds, could make certain toys almost impossible to buy for the average consumer, the lawmakers said in a press release.

Tonko said the legislation will level the playing field for small businesses working to ensure they have the best items in stock, and will “prevent scalpers from sucking hardworking parents dry this holiday season.”

Crucial Quote

“Consumers shouldn’t have to fight armies of bots to buy the products they want from the online retailers they want to do business with,” Susan Grant, director of privacy and consumer protection at Consumer Federation of America, said. “We support outlawing sneaky tactics that shady operators use to corner the market on popular items and then charge consumers excessive prices for them.” Consumer Federation of America was among a number of organizations that voiced support for the legislation, along with Consumer Reports and the National Consumer League.

Tangent

In 2017, Schumer’s office found several popular toys listed for exorbitant prices on resale websites. Nintendo’s NES Classic Edition, which sold for $79.99, was out of stock at retailers like Target, Best Buy and GameStop, according to a press release. However, it was available on eBay and Amazon’s resale platform for over $13,000. A Barbie Hello Dreamhouse, which sold for $300 and sold out at Toys R’ Us, could be purchased for $1,500 on eBay and Amazon. The $14.99 retail price for Fingerlings inflated to nearly $1,000 each on resale platforms, according to Schumer’s office.