Will Grinch Bots Steal Your Christmas?

US Senators are trying to outflaw powerful automated programs that are making goods scarce and driving up prices 

James Gard 23 December, 2021 | 8:49AM
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Inflatable Grinch

Consumers are a demanding bunch but they have been getting used to shortages of items like petrol and games consoles since the pandemic started in 2020.

Whether this is a temporary glitch or part of the “new normal” is as lively a debate as that surrounding “transitory” inflation. Shoppers having to wait a bit longer, and pay more, for a washing machine or a new car is an inconvenience at best. But Christmas is a different matter--with a fixed deadline and a less-patient end-consumer, a child expecting big things of Santa Claus could be disappointed.

Every crisis presents opportunities for the mercenary and so it has proved with the profileration of so-called “Grinch Bots” in the Covid-19 era. Are they trying to steal your Christmas? And how can you take them on?

What are Grinch Bots?

It’s a combination of two phrases, one old, one new.

The Grinch was a Dr Seuss character featured in the 1957 book How the Grinch Stole Christmas!, and made into various film adaptations, one famously starring Jim Carrey. 

A “bot”, meanwhile, is shorthand for a “robot”, and they are commonplace in the e-commerce world. On a positive note, “helpful” chatbots pop up when you’re browsing products on a website. On a more negative note, a bot may have outbid you on eBay, or beaten you to those must-have Adele tickets.

How do They Work?

These are sophisticated computer programs using artificial intelligence that are designed to move faster than the human hand clicking “add to basket” and “purchase”.

Super-fast internet connections help give these programs the milisecond edge over the average shopper. And they tend to buy in bulk too.

By the time you’ve laboriously checked “how many traffic lights are here”, a computer has bought that PlayStation 5 from under your nose. The much-loathed “Captcha” technology is designed to thwart bots on some websites, but can end up slowing the real consumer down. Tech security firm Cloudflare detected 300 billion attempts to “add to cart” from bots in 2021 alone.

Are They Grinchy Creatures from the Covid-19 Era?

No, they have been around for a few years. American consumer groups have lobbied to put an “anti-grinch bot” law on the statute books on a number of occasions, and failed.

The latest attempt was put forward by senators who, during the last Black Friday, launched the “Stopping Grinch Bots Act” (see below). The pandemic has clogged up supply chains, making desirable products even scarcer, though. The issue is unlikely to disappear.

How Worried Should We Be?

A contrarian would say this is just a consequence of advancing technology and hyper-competition in e-commerce. Retailers online compete with each other to lower prices, undercut competitors and offer short-term discounts around key periods like Black Friday.

Consumers usually benefit from these trends, so could grinch bots just be the darkside of this revolution? Investment banks have used high-frequencing trading to gain marginal advantages over rivals. And, further back, in 1759 economist Adam Smith came up with the idea of the “invisible hand” of the free markets, with wider society benefiting from individuals acting in a self-interested way.

Paul Tonko (Democrat, New York), who backed the US Anti-Grich Bot Act, is unequivocal in the harm they cause, however.

“These bots don’t just squeeze consumers, they pose a problem for small businesses, local retailers and other entrepreneurs trying to ensure they have the best items in stock for their customers. Our Grinch Bots Act works to level the playing field and prevent scalpers from sucking hardworking parents dry this holiday season. I urge my colleagues to join me in passing this legislation immediately to stop these Grinch bots from stealing the holidays.” 

With inflation roaring back to life, and inequality on the rise too, deliberately-engineered shortages and price rises could become a wider social problem. Ordinary people may not be able to afford consumer goods because the computers have beaten them to it. 

In many countries, selling goods above their retail price is a crime. As the perpetrators tend to dwell in the shadier parts of the internet, the people behind grinch bots are hard to catch and prevent. They may even be involved in credit card fraud, which is rife around holiday season. In the Dr Seuss book, The Grinch eventually comes round to the idea that Christmas is nice. Don't expect the modern versions to be so accommodating.

Do Manufacturers Benefit from Shortages?

Anyone duped by the “only one remaining” ruse will be familiar with the idea that apparent shortages of hot items make them more desirable, and are ultimately a good sales tactic.

But the makers of goods, and the retailers themselves, don’t benefit from the bots’ activities because they’re not getting a cut of the extra money made by the grinch bot. Ultimately, companies would rather sell more units, meeting consumer demand, than frustrate customers so they buy rival products that are in stock (think Xbox versus PlayStation, for example).

How to Defeat the Bots

Retailers have their work cut out defeating bots, and that usually means updating their security software. That's their problem, but what can the ordinary shopper do?

Consumer websites have a range of suggestions for taking on the robots. One is to sign up directly with the maker of a certain product you want, and they can add you to a mailing list for when the product comes back in stock.

The other tip is to use e-commerce apps rather the websites because they tend to be quicker. Some even let you add out-of-stock items to your basket, and will alert you the second it comes back into the warehouse. You could set up a “push” alert to your smartphone so you don’t miss it. Here a pre-registered credit card can speed up the buying process too and may gain you precious seconds.

You can also beat bots at their own game by signing up to social media accounts that give real-time stock levels of sought-after products. A more analogue solution is to call around local retailers asking to be adding to a “ring round” list when something is availble.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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James Gard  is content editor for Morningstar.co.uk