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E-bay and Sony removing PS3 auctions -- ethics vs. legality [update 1]

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.]

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Reader Comments

(Page 1)

1. so...you don't want to buy my ps3?

Posted at 2:13PM on Oct 12th 2006 by Bob

2. I won't be illegal or unethical. I will start my bid at 1 penny, with no reserve. Happy now? sheesh.

Posted at 2:18PM on Oct 12th 2006 by Inspired

3. 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.

Posted at 2:18PM on Oct 12th 2006 by trisha

4. 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.

Posted at 2:18PM on Oct 12th 2006 by Will

5. /applaud Sony
@#$% those greedy bastards

Posted at 2:20PM on Oct 12th 2006 by Hito

6. Agree, thanks for supporting the PS3 sales figures and not so much your pocketbook!

Posted at 2:25PM on Oct 12th 2006 by Andir2.0

7. 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.

Posted at 2:48PM on Oct 12th 2006 by Gamey McGee

8. 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.

Posted at 2:50PM on Oct 12th 2006 by mgs0lid

9. Great news! I'm actually impressed by this.

Screw all the sorry punks who were going to Ebay their PS3s.

Ha! Ha!

Posted at 2:50PM on Oct 12th 2006 by Hirsbrunner

10. 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.

Posted at 2:52PM on Oct 12th 2006 by Foppe

11. "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.

Posted at 2:56PM on Oct 12th 2006 by Foppe

12. 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?

Posted at 2:56PM on Oct 12th 2006 by Rob

13. 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.

Posted at 3:01PM on Oct 12th 2006 by BrokenDesign

14. 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...

Posted at 3:12PM on Oct 12th 2006 by Foppe

15. 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.

Posted at 3:20PM on Oct 12th 2006 by Rob

16. 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.

Posted at 3:23PM on Oct 12th 2006 by I Hate Ebay Schmucks

17. 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?

Posted at 3:31PM on Oct 12th 2006 by Chris

18. 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.

Posted at 3:32PM on Oct 12th 2006 by Turken

19. 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.

Posted at 3:40PM on Oct 12th 2006 by Rob

20. 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.

Posted at 3:43PM on Oct 12th 2006 by Henry Chinaski

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