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Customers Creating Fake Amazon Pages To Get Cheap Electronics At Walmart
turkeydance writes People are reportedly creating fake Amazon pages to show fake prices on electronics and other items. In the most heavily publicized cases, Walmart was reportedly duped into selling $400 PlayStation 4 consoles for under $100. From the article: "The company announced on Nov. 13 that it would price-match select online retailers, including Amazon.com. However, any Amazon member with a registered selling account can create authentic looking pages and list items 'for sale' online. Consumers need only take a screen capture of the page and show it to a cashier at checkout in order to request the price match."
I used to work a second job at Walmart, in the electronics department. At least once a month I would get somebody trying to buy a game system with a bogus coupon. Most of them were $100 off of a Nintendo DS.
This is great news, glad some savvy consumers "abused the system." Price-matching guarantees, far from being made to help the consumer, are actually economic game theory made to preserve a store's sales. Example:
1. You are shopping for an item in a store, but discover that it is priced better elsewhere. If the store has no price match, you will leave and obtain the item elsewhere. The store loses sales because it is not as economically efficient as its competitors, and goes out of business. The free market marches on and we all feel good.
2. You shop in a store, and discover that the item is priced better elsewhere, but the store offers a "price match." You take it, thinking ha! I just got the item for the real "lowest price," and didn't even have to leave!
But what happens in #2? Oligopoly through game theory. Every retailer has a "price-match" policy, and they all know each others' prices. No retailer will drastically drop the price, because they know that they can divide and conquer by just keeping the prices the same. Why would you drop your price if you knew if those customers who knew better can get it at your competitor?
Meanwhile, while YOU may have gotten the lowest market price through the price match, less savvy consumers pay the higher "sticker" price. If #1 had been allowed to play out, the overpriced seller would have gone out of business, leaving only the superior merchant. EVERY consumer would then benefit from the lowest price, because the inefficient merchant would be gone, replaced by others.
Conclusion: These price-matching schemes are anti-competitive, and some customers took advantage of it. While they might not have known it, they are prime examples of using arbitrage to uncover bad policies and mispricing by the market. If I walked up to a cashier and said "can I buy that Playstation for $90?" they would say no. But if I say "your competitor is selling it for $90, give me a Playstation!" how is that any different? They can still say no, but they don't because their management is desparate to keep you in their store.
There was a story a few years ago about Best Buy rigging their in-store computers to show a higher price than their website to the public. It was a shadow system that looked like the external site, but gave different prices. Its purpose was to trick people who look something up online, see the price, go to the store, find it at a different price, and complain. The salesman would pull it up on their "website" like the customer says they did, show the customer that they were mistaken, the marked price is the price it shows, and the customer was faced with either walking out or accepting the higher price. Smartphones were the fall of this practice since customers no longer had to use the Best Buy systems to look things up. They could whip out their iPhone/Android/BlackBerry/(cringe)Windows and look it up for themselves. When some of these people questioned the sales person's answer and independently verified the info on the spot, which didn't match, all hell broke loose.
Create Web page with deeply discounted console.
Buy 3, or more PS/4 From Walmart.
Sell one for the advertised price--making it not fraud.
Sell another for 3x the price you advertised the first one at.
Keep one for yourself.
Profit!
In the stock market its called short selling.
They took a $10 off coupon and added a zero?
(My understanding is that coupons have barcodes to actually check the validity of the offer in a database or something.)
Nope, manufactured their own coupon. It's not hard to do, it used to be a frequent thing on the various underbellies of the internet. And I'm not talking about chans, a bit deeper. The barcode scan is looking to see if it's valid, again--easy to make it work as well. One of the big ones back in '08/09 was for baby formula, people use it to cut other drugs--and would use mules to buy the stuff from walmart, costco, walgreens, etc usually at $200-800 at a time.
Om, nomnomnom...