G2A Fraud Is Worse Than Piracy
Some of you may or may not know this, but I’m a huge fan of Undertale. And when I say I’m a huge fan I don’t mean I’m Fandom trash. I mean I played it and super loved it, because of how creative and subversive it was. Point is, in a lot of ways Undertale is a great example of everything thing in modern gaming working together gloriously.
To me the most serious trends are trends that threaten those processes from working well together and giving us more quality games like Undertale. Thus, enters G2A, which is probably the only thing I hate more than Game Stop or EA. Of all the trends in gaming, the G2A model is the most toxic. And shockingly it’s probably the only one that you could make an argument for being worse than piracy. You heard me right. Active software theft is better for gaming then G2A.
I Don’t Condone Piracy!
Before we go on, I should probably mention that I don’t condone software piracy. In the strictest sense, it’s wrong and illegal, and you really shouldn’t do it. Even if there might be a few moral defenses of it people could give. And to be frank, I have no clue what those defenses would be. I just don’t do it myself and would never suggest it. So, I’m not going to try to defend it. What I am saying is that if given the two options of buying from G2A or pirating a game, you are probably a better person in almost every sense of the phrase for pirating said game. You’re actively deterring fraud, contributing more to the games publishers, hurting way fewer people, and that’s all pretty much provable.
Of course, I can already hear people ask, how is this provable? Especially when G2A is a paid service. By which people exchange money for a good, and piracy is taking a product without paying for it. And while this can seem a bit counterintuitive at first, it’s once you fully understand both how the fraud works, and how company finances work that you understand why this is.
How Does G2A work?
So, let’s start with a basic overview of G2A’s business model. How things are supposed to work is that someone has a code for a game. That person then puts the code up on the website and sells it. Some consumer buys it, and the seller gets the money, with a little bit taken off the top from G2A as a transaction Fee. Now to be clear, there’s nothing inherently wrong with this business model.
So What’s the Problem?
The issue with the site as a whole comes from a complete and utter lack of any attempt to ensure sellers have legally obtained the keys and is incredibly lax on punishments for anyone found to be selling bad or stolen keys. It’s a lot like a pawn shop. Yes, the business model of a pawn shop is perfectly legal, but there’s only so many times the police can walk in and find stolen goods on the shelf before it stops being an unfortunate incident and starts being active participation in the crime. Simply put, at this point G2A has let the problem get so out of hand its no longer a glitch, it’s a feature.
So, lets talk about how the theft works. What happens is that rather not nice people illegally obtain credit card numbers. For those who don’t know how credit cards work when it comes to purchases both online and off, it’s kinda odd. Simply put when you buy a product on steam and use your credit card, part of the process is that steam has to confirm the information with the credit card company and then get the said company to give them the money. When the credit card company has received all of the information, confirms the information is correct, and gives steam the money, that’s when the purchase shows up on the account and when you have money taken out of your account. Now, anyone who has purchased a product online can tell you that this seems to happen very very fast and might wonder how all this occurs in such a short span of time. That’s a very good question jimmy.
The answer is that it doesn’t. Realistically this process can take some time. The fact steam and several other retailers gives you your item seemingly instantly is only because a quick check of the credit card information you put in shows that it exists and all security questions are being answered correctly. Which to them means the account is trustworthy for the most part. It’s also pretty typical for companies to be able to communicate with banks pretty quickly to just ask if the card has funds. This is where another important note comes in. There’s a massive difference between asking if an account has funds and asking if it has enough funds.
Warning: Complicated Stuff
I’m going to give you a warning now. The rest of this is going to go into a lot off accounting information. So be ready. With games and digital distribution extending to several countries in this modern day and age, the real problem kicks in with purchases made either internationally or with a lot of purchases made all at once. If the purchases are made across national borders, it can take longer to find and figure out the credit card information. Meaning that purchase that normally wouldn’t go through, will go through, just because that’s how the system is designed.
The other bigger danger is having a lot of purchases made with stolen credit card information all at once. For the average credit card account, its pretty typical for it to take 24 – 48 hours for a transaction to properly clear and be debited to an account. And you remember what I mentioned before about the companies only checking if the information is legitimate and if the account has funds? Well, this is where that becomes important. To help make it a bit more tangible lets go over to the thought bub- oh right. This is an article and I don’t work for crash course. Hey, maybe one day.
But back to the point. Here’s an example. Let’s say there’s a stolen credit card account that end in 5555 we’ll call it account 5555. Account 5555 isn’t doing so great and can only buy 50 dollars worth of stuff. Now let’s say account 5555 gets caught up in all of this. The bank that controls 5555 suddenly gets a purchase request for a game worth 45 dollars. So, they grant it because the credit card can cover that purchase and all the information is right, so they don’t realize its stolen. But in order to make sure the process is as fast as possible, the bank automated this system with a computer. It can do this entire check in seconds, while having a person do it might take minutes. And remember, to a bank, time is always money. However, it gets a second purchase request for 45 dollars.
Now a big dirty secret the banks don’t like to admit is that they don’t really check a lot to see if the total purchases for a 24 hour period exceed the account limit. The reason why is because when this happens they get to charge you a fee and most people don’t exceed account limits by a lot. Regardless, you have a credit card with only 50 dollars available being charged 90 dollars total. But then they get 30 purchase orders each being worth 45 dollars. Again, they don’t really check or have it all added up, because it takes time for all the information to be confirmed and be applied to the account.
At this point the account is over drawn by 1390 dollars. And while the bank likes charging fees and is willing to let an account go over by a certain amount. They also realize that realistically the person who owns the credit card isn’t going to be able to pay this much and the card was probably stolen. Now keep in mind, this can take a day or two. Meaning the person who committed the theft has had about 24 hours with the keys before anyone has realized anything is wrong.
This is something that can happen with largely reputable companies. And even assuming software is set up to quickly calculate if an account is going over, if the account had something like 2000 worth of funds available it won’t trip any alerts. And these are best case scenarios with the top banks and payment processors. There’s a myriad of much smaller companies that operate completely legitimately, but don’t have the resources to catch this kind of thing in under 24 hours.
So, how does this hurt gaming companies more then piracy? Well, realistically the credit card companies aren’t going to want to pay out so they decline the transactions. Again, the theft now has a massive list of perfectly legal looking codes. He can sell them on G2A and withdraw the money from his account before anyone realizes anything is wrong. Assuming G2A even bothers to try and punish them. And you might be asking another perfectly legitimate question. The company doesn’t get any money from this and has to cancel some keys.
So Where Does The Loss Happen?
If the company didn’t spend anything to produce a physical copy, and someone got the game without paying the company, and the company has technically lost nothing, then how is this worse then piracy?
Because the company takes massive financial losses. See, what you have to understand is where each company in this process gets their money from. The credit card company gets money from the interest they charge the card holder. The company obviously gets money from he person buying the game. And the processioning company assumes the risk of transferring and losing the money and take a fee off the top from processing transactions. Because of this, every purchase technically costs the company something.
Let’s say the game costs 45 dollars. And the processing fee is 5 dollars. At this point, assuming 32 copies were fraudulently obtained and the company got no money from this. That means they still get charged the fees and have lost 162 dollars. And on massive scales of fraud, like with many G2A sellers, this can add up FAST. On top of that, since the processing company assumed the risk of transferring the money, they also charge an extra fee for incidents of this. In one companies case the game cost 40 dollars, and the fee charged to the company was 30 dollars for each case of canceled or fraudulent purchase. Meaning it is possible this act of stealing 32 copies could cost the company another 960 dollars in fees.
And this is just the tip of the accounting nightmare it creates, as most companies count payments they have yet to receive as part of their value and assets, and then make business decisions according to that. Even in this one instance, of only 32 copies being stolen, the company is now at loss of 1122, with 1440 suddenly diapering from their bank accounts for a total 2562 dollars suddenly going missing. 2562 dollars that they counted on being there to do basic things like pay employees and bank loans that had to be taken out to start the company.
Let’s be clear. My example is a very low balled example meant for simplicity. Because this kind of thing can and has added up to much larger numbers in the past. In the case of Humble Bundle, they told Otaku the theft had actively cost them 34,000 dollars in losses that they had to stomach. 34,000 is a lot and if you don’t think it is, try giving up something in your life worth that amount and see how you feel. In the real world this translates to indie developers going under, mid sized developers having to let people go, and AAA developers being unable to afford to make new content for titles they are developing.
How is Piracy Not Just As Bad?
Let’s compare this to regular piracy where you download a copy of a game illegally from some illegal server. In this case no money changes hands and no developer is charged a fee. Despite losing one sale of a game. (In theory. Some projections say that up to 40% of pirated games are done to demo the game and lead to later sales, but I’m not here to argue that point.) Ask them which they would rather have happen. A loss of 35 dollars directly from their bank account or a loss of 0 dollars with the chance of a sale later down the road, because someone felt guilty. I don’t know about you, but I’d rather take the second option. Every time.
G2A Needs To End
But it really is a thing we have the power to stop. It’s the money that drives this market and makes it something people exploit. And if we stop spending money on G2A it will stop. The site will either close down or make the reforms it desperately needs to in order to be a responsible entity. Don’t feel sorry for them either. Because this issue is one they’ve been aware of for some time now. And in big ways. No letter writing campaign or consumer complaints. But really big ways.
Earlier this year, gearbox software teamed up with G2A for a pretty big publishing deal for the upcoming game Bullet Storm. However, the backlash over this was so huge that gearbox threatened to pull their publishing deal with G2A unless a very specific list of demands were met. Demands meant to make G2A a much more reputable place. So trust me, they know. And they know because they lost a lot of money from this deal. They decided not to meet these demands and lost this publishing deal from gearbox in a very public and humiliating debacle
This is why G2A needs to end, NOW. You literally have a system so ripe with abuse and crime, you make out right theft a better alternative for the victim. And again. Don’t pirate. Please don’t. But if you really are thinking of using G2A for your games, just keep in mind the end result. Fewer indie publishers able to churn out games, and bigger publishers having to pass on the cost to your friends and family who actually buy games.
November 17, 2016
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