Grey Market & Chargeback Shenanigans

rpmcmurphy

An entertaining look at the grey market and chargebacks - https://www.reddit.com/r/starcitizen/comments/43wx9b/cig_pulling_account_funds_from_backers_to_pay_for/

Bear in mind that for a long time this was semi-endorsed by CIG, it got them more backers, it got them more income.
But now that refunds or chagebacks are taking place they are not happy and are looking to recoup their lost money from people who don't even have the ships anymore. What a clusterf**k.

The best bit is from the customer service guy (Will Leverett) he admits that the person they are seeking recompense from was defrauded but they're going to go after him for the money anyway, instead of contesting the chargeback...

 

Erillion

And here is what the comments section from the link above has to say about it  ;-)   :

"As grey market trader:

We all know the risks.

This entire story has a distinct BS smell to it.

CIG will melt the ships that were purchases with stolen cards / charge backs. They won't ask you if you have cash to pay for them. They'll just go poof.

The people who have those ships would lose them not him.

I know because it has happened before on https://www.reddit.com/r/Starcitizen_trades/

Either you or your friend is not telling the truth."

Have fun

rpmcmurphy

Keep reading. That comment came well before any logs and the like were posted.

SpottyGekko

Always amusing to see how much effort some people are willing to put into something on behalf of their "friend" who was somehow "wronged".

I imagine that "friend" was getting some kind of benefit from acting as a broker for random people on the internet. He was happy enough to pocket the benefits, but any downside is apperentlyCIG's problem. Yeah, riiiight...

rpmcmurphy

I thought the friends doing all of that on his behalf was rather funny and clearly someone was getting something out of it. Whether that was tips, excess funds, youtube subs/likes or whatever. But it doesn't change that CIG are going after a guy who doesn't own the ship, he was an intermediary. Because he melted and gifted the ships back he's somehow become liable for someone elses chargeback, that doesn't seem right at all.

Suppose I bought for a grocery voucher for $10, I give it to you and you spend it, I then do a chargeback on the voucher and the grocery store comes to you looking to get their money instead of me, that's not how these things are meant to work.

Vrika

CIG is acting really stupidly. If that scammer did a chargeback in 2013 then they should have reacted to it in 2013. They should let Grishord keep the packages because they failed to react in timely manner.

If they had reacted back in 2013 when the chargebacks were made it would be a different matter.

Azaron_Nightblade

Meh, it's the whole reason I tend to stay away from the whole grey market crap except for the occasional game time card. It's simply not worth the hassle when it -does- go bad.

Horusra

rpmcmurphy said:

I thought the friends doing all of that on his behalf was rather funny and clearly someone was getting something out of it. Whether that was tips, excess funds, youtube subs/likes or whatever. But it doesn't change that CIG are going after a guy who doesn't own the ship, he was an intermediary. Because he melted and gifted the ships back he's somehow become liable for someone elses chargeback, that doesn't seem right at all.

Suppose I bought for a grocery voucher for $10, I give it to you and you spend it, I then do a chargeback on the voucher and the grocery store comes to you looking to get their money instead of me, that's not how these things are meant to work.

At the end of the day who has the products bought with the voucher?  Liability rests with both parties but if you use the voucher the person you got it from could put the blame on you in a heartbeat saying they told you not to use it.

Adjuvant1

At the end of the day, CIG created the scenario for these transaction to take place and is ultimately responsible. They've created an "alternate currency" which is being exchanged, interchangeably, with genuine currency, through their own mechanism, and refusing to absorb the repercussions. At best it's horrible pr, at worst it's borderline illegal.

rpmcmurphy

Horusra said:

At the end of the day who has the products bought with the voucher?  Liability rests with both parties but if you use the voucher the person you got it from could put the blame on you in a heartbeat saying they told you not to use it.

But the person spending the voucher did so in good faith, there was a contract between the store and that person that both parties agreed to. It's the one trying to get the money back that is looking to exploit the syetem.

Horusra

In this case people were trading ships it seems knowing the other person was doing a charge back.  By accepting the ship they are then liable for the cost of the virtual good or return.  If the item is in a non returnable state the person that made it that way is liable.  

If you bought a stolen ring, not knowing it is stolen, when the police come you have to return the ring or the value of said ring.

Turrican187

Erillion said:

And here is what the comments section from the link above has to say about it  ;-)   :

"As grey market trader:

We all know the risks.

This entire story has a distinct BS smell to it.

CIG will melt the ships that were purchases with stolen cards / charge backs. They won't ask you if you have cash to pay for them. They'll just go poof.

The people who have those ships would lose them not him.

I know because it has happened before on https://www.reddit.com/r/Starcitizen_trades/

Either you or your friend is not telling the truth."

Have fun

LTI laundering is not grey market, there is no external payment happening. CS should be able to follow the transaction post the first hop (in other games they are doing this and it is a hell of a work [EQLive had 7 ways to have an item disappear]).

When they are using the grey market then the ship is going poof.

Adjuvant1

Horusra said:

In this case people were trading ships it seems knowing the other person was doing a charge back.  By accepting the ship they are then liable for the cost of the virtual good or return.  If the item is in a non returnable state the person that made it that way is liable.  

If you bought a stolen ring, not knowing it is stolen, when the police come you have to return the ring or the value of said ring.

You're completely skipping the aspect of CIG's management of the situation. If I "buy pawn shop voucher", another person buys "pawn shop voucher", and then the pawn shop oversees transaction of "my purchase of other guy's pawn shop voucher", then "pawn shop" is liable, not me.

edit: Because I didn't exchange any "real goods or currency". I exchanged a "value of something" based solely on the "value attributed by pawn shop".

further edit: It's "fake currency", unregulated, and created, valued, solely by the entity. It has no actual value whether it's in my hands or someone else's hands, and to imply it does have "actual value", as an object as a ring or actual currency, means you must submit to regulation. If somehow it's lost, or if the value depreciates, that's not on me, you or anyone else but that entity.

rpmcmurphy

Horusra said:

In this case people were trading ships it seems knowing the other person was doing a charge back.  By accepting the ship they are then liable for the cost of the virtual good or return.  If the item is in a non returnable state the person that made it that way is liable.  

If you bought a stolen ring, not knowing it is stolen, when the police come you have to return the ring or the value of said ring.

I don't think there's any proof that they knew chargebacks would be occurring, that would be a criminal matter if that was the case.
CIG were content to allow a loophole to remain open where you could get LTI on ships that didn't have it anymore, through the use of this widely used trading/melting/returning scheme.

CIG are looking for money from someone who doesn't have the ship, they probably handled it for less than 24 hours, they didn't purchase it nor did they get a refund for it and yet they are being asked to stump up for the cost of it. Where does this rabbit hole end?

Adjuvant1

It ends right where it started. Nothing of intrinsic value was created, nothing of intrinsic value was lost. If CIG confiscate said "unreal currency", that is bad pr for their mismanagement. If CIG argues legality, their currency has no regulation, thus no standard.

Horusra

Adjuvant1 said:

Horusra said:

In this case people were trading ships it seems knowing the other person was doing a charge back.  By accepting the ship they are then liable for the cost of the virtual good or return.  If the item is in a non returnable state the person that made it that way is liable.  

If you bought a stolen ring, not knowing it is stolen, when the police come you have to return the ring or the value of said ring.

You're completely skipping the aspect of CIG's management of the situation. If I "buy pawn shop voucher", another person buys "pawn shop voucher", and then the pawn shop oversees transaction of "my purchase of other guy's pawn shop voucher", then "pawn shop" is liable, not me.

edit: Because I didn't exchange any "real goods or currency". I exchanged a "value of something" based solely on the "value attributed by pawn shop".

further edit: It's "fake currency", unregulated, and created, valued, solely by the entity. It has no actual value whether it's in my hands or someone else's hands, and to imply it does have "actual value", as an object as a ring or actual currency, means you must submit to regulation. If somehow it's lost, or if the value depreciates, that's not on me, you or anyone else but that entity.

Value is based on the seller.  Virtual Goods have value that you agree to or do not buy them.  

I do not understand your pawn shop analogy.

Horusra

rpmcmurphy said:

Horusra said:

In this case people were trading ships it seems knowing the other person was doing a charge back.  By accepting the ship they are then liable for the cost of the virtual good or return.  If the item is in a non returnable state the person that made it that way is liable.  

If you bought a stolen ring, not knowing it is stolen, when the police come you have to return the ring or the value of said ring.

I don't think there's any proof that they knew chargebacks would be occurring, that would be a criminal matter if that was the case.
CIG were content to allow a loophole to remain open where you could get LTI on ships that didn't have it anymore, through the use of this widely used trading/melting/returning scheme.

CIG are looking for money from someone who doesn't have the ship, they probably handled it for less than 24 hours, they didn't purchase it nor did they get a refund for it and yet they are being asked to stump up for the cost of it. Where does this rabbit hole end?

In the link the guy said people would send him ships.  They would do a chargeback and he would send the ship back.

Adjuvant1

Horusra said:

Value is based on the seller.  Virtual Goods have value that you agree to or do not buy them.  

No, they don't, and this is why, for the last 10 years, legislation has been being passed to moderate such exchanges, as with online gambling. These bits and bytes have zero intrinsic value, I challenge you to establish they do. Don't argue bitcoin, that's an entirely different scenario than game-cash.

Horusra

Reading the first paragraph he was exploiting flaw in a system.  Openly advertising it.  Again no sympathy he was the middle man destroying the virtual products for others gain.  He should produce the products or the listed value of the products.

Adjuvant1

Horusra said:

Reading the first paragraph he was exploiting flaw in a system.  Openly advertising it. 

Yes.

Horusra said:

He should produce the products or the listed value of the products.

No. Nothing of value was lost. He is not legally obligated unless CIG wants to submit to regulation and establish a standard.

Horusra

R vs Ashley Mitchell disagrees if said virtual item is bought with real money.  The items that can be exchanged or bought with real money have value.  In the case above an employee of a poker site transfered virtual poker chips that could be bought with money.  The virtual chips were accessed a value cause they could be bought or cashed out for money.

Adjuvant1

Horusra said:

R vs Ashley Mitchell disagrees if said virtual item is bought with real money.  The items that can be exchanged or bought with real money have value.  In the case above an employee of a poker site transfered virtual poker chips that could be bought with money.  The virtual chips were accessed a value cause they could be bought or cashed out for money.

Need citation. Not seeing any such case. Thanks.

Rusque

lol grey market participants get what they deserve. It's not called the grey market cause it's legit, you buy/sell at your own risk. I think SC is pretty scummy as is, but they're in the right here and someone needs to cough up $500.

rpmcmurphy

Horusra said:

In the link the guy said people would send him ships.  They would do a chargeback and he would send the ship back.

Melting != chargeback

The paragraph states "... in 2013 when early backers were getting some ships cheaper than anyone else he was being gifted ships by people. He would melt the ship and send it back 24 hours later which would apply LTI and on some packages leave a small credit overage."

CIG were more than okay with this going on, the only thing they requested was for people to not talk about it on the official forums.

SpottyGekko

Unless there's more to this than has been "revealed" by Grishord & Friends, then it's most likely an over-zealous CS employee that has overstepped their authority.

I see no evidence of this being a widespread issue, which makes it more than likely that it's a "special case". It will be interesting to see what CIG's response is.

Adjuvant1

SpottyGekko said:

Unless there's more to this than has been "revealed" by Grishord & Friends, then it's most likely an over-zealous CS employee that has overstepped their authority.

I see no evidence of this being a widespread issue, which makes it more than likely that it's a "special case". It will be interesting to see what CIG's response is.

It has been widespread and CIG already had a measured response in "limiting melt tokens".