Is Scalping an Ethical Way to Make Extra Money?

by David@MoneyNing.com · 12 comments


There was a time not too long ago when I would tell you that buying a product when it was low in stock and reselling it for a higher price is a good way to make some extra cash. I still remember back in the day when I saw people lining up for iPhones overnight and then reselling them. In fact, people were even selling their spot in the line to newcomers who were shocked by the long lines when they got to the store. I just thought it was good honest work. You were willing to camp out in the line days before in the cold and getting compensated for it. That’s just getting compensated for willing to put in the effort.

Recently, my quest to get a Playstation 5 (PS5) made me question my view of this money-making technique. You see, there’s a huge shortage of the new gaming consoles and people are blaming the issue on scalpers. Thanks to technology, these people can quickly buy up all the stock whenever stores sell them online, and then they can resell the ones they get their hands on. What’s become ridiculous is that there is now software you can rent (yes, rent!) that automatically checks online store pages and will help you secure a product for reselling.

My friend used to buy two or three of the same gaming consoles whenever they come out. He used to say that he’s just using the profits from the resell to pay for his console. I never thought it was bad at all. He put in the work and is rewarded. I may not have done the same thing, but it wasn’t illegal.

Nowadays, I doubt he’ll so openly talk about scalping because the practice is frowned upon in the console world. You can simply look at the comments on social media postings of any restock alert or Reddit to see all the hate you’ll get whenever someone tries to talk about the availability of the latest gaming consoles.

All of this begs the question – is scalping ethical?

Do I Only Think It’s Unethical Because It Affects Me?

Like I said already, I never really saw a problem with someone trying to resell something at a higher price before. But now that I’ve read all this hate on scalpers and my struggles with buying a PS5, I can see how the practice can feel scummy. I’m starting to doubt my old view of the whole practice.

On the other hand, isn’t scalping sort of like investing? My uncle owns a wine cellar full of highly prized wines. He’s bought them years ago when the prices were high but relatively much more reasonable. Now that those wine vintages are in shorter supply, the prices keep going up. He actually drinks them but he can certainly start selling them for a profit. Ditto with my other friend who collects Lego sets. He buys them when they come onto the market, and now they are worth much more because they are no longer available for purchase. He collects them but he does sell some from time to time.

I don’t think anyone would hate on my uncle or my friend if both were to start selling their entire collection. We might even admire their business savvy. Yet, they are making money exactly the same way scalpers do. They buy the stock when it’s available and then resells them for a higher profit later when the stock is low.

Let me give you another example. If your nephew told you he entered those random draws for a limited-edition sneaker from Nike and then resold it for a profit, would you immediately think of criticizing him about whether that’s ethical or would you congratulate the kiddo for being smart and earning some lunch money? I know the reaction around my house would be overwhelmingly positive.

So, is scalping only unethical when it affects me?

Scalpers Aren’t the Only Ones to Blame

To be honest, I put more blame on the retailers and Sony than the scalpers on the shortage issue. I understand that Sony is doing everything it can to increase stock. That’s not my beef at all. The problem is that these major companies seem to be happy to see news that there’s a shortage because it’s free marketing. For Sony, it sells them more consoles. For retailers, it gets customers to keep going back to their online store to check on availability.

You sometimes hear of how major retailers are spending all these resources to combat scalpers, but they can easily fix the issue in an instant. All the big retailers have to do is to ask customers who are interested in buying the gaming console to put down a small security deposit to hold their place in line. Then, they can just email the customer to log in and pay for the rest when it’s their turn. If they don’t respond in, say, 24 hours, then they get bumped off until the next restock. They can limit the unit to one per credit card, or even one per government ID. What I’m proposing isn’t a perfect system, but it’ll vastly and instantly improve the problem significantly.

It isn’t done or even attempted though. You have to wonder why.

Is Scalping Just Another Way of Making Money?

In some states, ticket scalping is illegal but only in very specific circumstances. It’s perfectly legal to buy and sell tickets online at places like StubHub, but it’s illegal to resell them on the grounds of the event.

Reselling PS5s, wine, Lego sets, collectible sneakers on the other hand are perfectly legal.

But is it unethical?

It’s a tough question to answer for me personally. While I’ve never resold something for a profit (at least not that I can remember and definitely never systematically,) I never really thought of the practice as a problem. I see how these scalpers are making it very inconvenient for me to secure a PS5 for myself, but this is far from the only time someone making a profit is indirectly causing inconvenience for me. This is simply supply and demand and I happen to be hopelessly stuck on the demand side of this equation.

But then I see all the hate and it makes me wonder. It doesn’t help that you sometimes hear about how ridiculous prices can actually be. My friend just shared on social media today that the admission to a concert in Hong Kong this year is being bid up to $230,000HKD (roughly $30,000 USD) a seat.

INCREDIBLE is the word I would use if I want to sound positive and polite about it. There are many other words I can think of that’s not appropriate to write on here.

What do you think? Is scalping unethical? Or is it just another way of making extra money?

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current Verizon FiOS promotion codes and promos to see if you can save more money every month from now on.

{ read the comments below or add one }

  • EdG says:

    If you store an item for years and then sell it later price I think you should earn something for the storage of it, so a higher price is fair. The problem with the PS5 is that it is bought and sold immediately to someone who is “gaming” the system via software. I agree the retailers are to blame because they are not limiting purchases. We’re having a run on gasoline right now on the East coast that could be somewhat solved by limiting a purchase to X(5?) gallons. But the retailers don’t care, the make the same money any way and limiting purchases just gives them more work to do. What they should do is raise prices a bit to cover their extra work, seems fair to me.

    • David@MoneyNing.com says:

      Are you on the east coast? Just how bad is the shortage? I keep seeing news about the gas shortage and pictures of cars lining up for miles pop up in my head. It can’t be that bad yet since otherwise, I would see all those photos online already.

      But if it’s not a lineup, then what do they actually mean by shortages for the average consumer other than seeing a higher price per gallon?

      • EdG says:

        Yep, east coast. But the shortages were very short and due to people panicking. I just got back from a trip and gas was not a problem in Delaware. I read the south was hit bad, Atlanta for example, due to panicking and limited supply. I suspect it’s all over by now. But this was a warning what could happen without sufficient security.

        • David@MoneyNing.com says:

          Good to hear that the craziness has died down. Sometimes the media can really blow things out of proportion!

  • Omar says:

    I’m literally waiting in a queue at Sony Direct for a PS5 right now while I’m reading this. Wish me luck!

    • Omar says:

      Update: 25 minutes wait to get into the queue and now the site says there’s a “more than one hour” wait.

      haha we’ll see what happens…

  • Samson T says:

    I can’t seem to find stock either. At this point, I’m going to become a Xbox convert if I score an Xbox X first. The out of stock situation and needing to be glued to the online store to get a console is just ridiculous.

    • David@MoneyNing.com says:

      That’s interesting. I keep hearing good things about the system. I might have switched already if it wasn’t for my friends who all have PS4/PS5s since the Xbox Gamepass is so good.

  • Joe on the Move says:

    I just spent 90 minutes trying to score a ps5 bundle at Gamestop to no avail this morning. I say burn all the scalpers. It should totally be illegal!

    • David@MoneyNing.com says:

      Heh. Sometimes I wonder what the stock situation will be if there were no scalpers at all.

Leave a Comment