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Margin Trading Scam - A Guide
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Gregory Brunswick
Deep Core Mining Inc.
Caldari State
#61 - 2012-01-22 08:26:11 UTC
Am I the only one that has seen a spike in this type of margin scam since this been posted?
Jarnis McPieksu
Aliastra
Gallente Federation
#62 - 2012-01-22 11:34:47 UTC
Gregory Brunswick wrote:
Am I the only one that has seen a spike in this type of margin scam since this been posted?


Natural. It is trivially easy to do, not against game rules and people fall for it. Why not try?

It'll either die down or CCP steps in at some point and somehow fixes things. It is bit of an annoying scam in that if you are a fairly new player and haven't heard of it, there is no real red flashing light beyond the "if it seems too good to be true, it probably is"...
Patri Andari
Thukker Tribe Antiquities Importer
#63 - 2012-01-22 17:08:57 UTC  |  Edited by: Patri Andari
Jarnis McPieksu wrote:
Gregory Brunswick wrote:
Am I the only one that has seen a spike in this type of margin scam since this been posted?


Natural. It is trivially easy to do, not against game rules and people fall for it. Why not try?

It'll either die down or CCP steps in at some point and somehow fixes things. It is bit of an annoying scam in that if you are a fairly new player and haven't heard of it, there is no real red flashing light beyond the "if it seems too good to be true, it probably is"...


This is becoming stupid.


Okay boys and girls. Here is how you spot a margin trade that you should either avoid or in no way act in reliance of.

1. open the market and select the item you are interested in.

2. spread the window so that you can see "min volume" column. (this seems to be the step most lazy people forget)

3. If min volume > 1, avoid.

That's it! That is all you need to know.

Now stop being afraid and stop pretending there is no way to avoid this pitfall.

Be careful what you think, for your thoughts become your words. Be careful what you say, for your words become your actions. Be careful what you do, for your actions become your character. And character is everything. - author unknown
Xearal
Dead's Prostitutes
The Initiative.
#64 - 2012-01-22 17:38:26 UTC
To the OP:

Thank you for posting the entire setup of this scam. While I peronally already knew about it a long time, and figured out how it worked, and thus never fell for it. (tbh, I've never fallen for any scam * knocks on wood * ), it's nice to see it all laid out and posted, which makes people falling for it look even more stupid, as a little research can teach them all they need to know to avoid it.

As for ways to 'counter' this scam. There's 2 possible ways:

1) Get the item somewhere else at a competitive price or manufacture them, then move it to the place where the scam is taking place, and list it at less than the scammer's orders, thus allowing you to pinch some of their profits.

2) If you have enough of said item, sell it to the buy order, yes it will fail, but in trying, you will have removed the bait from the scam, and cost them their market fees on placing said order. Then watch if they try to set it up again, and if they do, try selling to it again, thus costing them more money to keep the bait 'live', while they're not making money on the inflated items.

Personally, I prefer doing option one, for two reasons:

1) The 2nd option doesn't make you any money, while the first does.
2) If done with 'moderation', the scammer will continue to make money, thus continuing their scam, thus allowing you to milk more money from them. Best way is to set up your own sell order somewhere between the other sell orders that are placed by the scammer, so they will make some money on the cheapest sell orders they have, before being stuck with the rest of their stuff as your sell order takes up the rest of the stuff.
Also, it will allow for more people to fall for the scam, as more marks will be able to buy into the 'promised profit'.

Does railgun ammunition come in Hollow Point?
Renarla
#65 - 2012-01-22 23:50:11 UTC
Is the minimum amount part really necessary, or am I misunderstanding or how it works?

Let's say you put 10 of some random item up for sale at 200m and put a Margin Trading buy order for 10 up for 300m with a minimum amount of 1, and then transfer all of your isk into a corp wallet or alt's wallet. Even if someone buys 1 of your item and tries to sell it to you, or if they try to "break" the scam by bringing the item from another region, it will still fail even if the minimum amount is only 1 right?
Dagny Jameson
Brutor Tribe
Minmatar Republic
#66 - 2012-01-23 18:48:56 UTC
I use margin trading honestly. Mostly by putting up buy orders for a few different things I can resell (as I have no preference which of them fills first). It's nice to be able to leverage your ISK that way. Especially in slower markets there is not much chance of all your buy orders being filled at the same time, so I can wait for one to fill and then resell those items. I have rarely ever had the margin called, and I use it like this all the time.

Not with min. qty, though. The only time I use that is for buying insignias, I really don't want to travel for every single insignia with a region-wide buy order, so I usually put a minimum of like 10-20 per sale.
Dagny Jameson
Brutor Tribe
Minmatar Republic
#67 - 2012-01-23 18:50:20 UTC
Renarla wrote:
Is the minimum amount part really necessary, or am I misunderstanding or how it works?

Let's say you put 10 of some random item up for sale at 200m and put a Margin Trading buy order for 10 up for 300m with a minimum amount of 1, and then transfer all of your isk into a corp wallet or alt's wallet. Even if someone buys 1 of your item and tries to sell it to you, or if they try to "break" the scam by bringing the item from another region, it will still fail even if the minimum amount is only 1 right?

The problem with this is that it is a lot easier for someone to "happen to" have enough of the item to satisfy the buy order. So there's a much higher chance of it failing before someone buys from the scammer's sell order. They only make a profit if someone buys up the full amount, and it helps them if the min qty is something in the order most people don't have sitting around.
Professor Humbert
Project Fruit House
#68 - 2012-01-24 18:00:34 UTC  |  Edited by: Professor Humbert
Renarla wrote:
Is the minimum amount part really necessary, or am I misunderstanding or how it works?

Let's say you put 10 of some random item up for sale at 200m and put a Margin Trading buy order for 10 up for 300m with a minimum amount of 1, and then transfer all of your isk into a corp wallet or alt's wallet. Even if someone buys 1 of your item and tries to sell it to you, or if they try to "break" the scam by bringing the item from another region, it will still fail even if the minimum amount is only 1 right?


The minimum quantity is not pulled out of thin air.. there's some math behind:

10 x 300M isk = 3,000,000,000 isk

at Margin Trading 5, your escrow is

3,000,000,000 * (0.75)^5 = 711.9 M isk

You see... minimum quantity of 1 unit (300M) will mess up the scam :)

For the buy order to fail, the escrow must never be sufficient to cover the minimum quantity.

---

So if you see a scam order, try to guesstimate the escrow behind.
It is the actual money available to any seller who is willing to match the total price of his sell order.

Coming back to your example, let's say I have that item in enough quantity.
I guesstimate the scammer's escrow to be around 711M.
Even though the buy price is 300M each, I place a sell order 10 x 70M.
And the order goes through because there's enough money in the escrow, right? right?

Not always.

Because, the scammer can always pre-empty his own escrow by using the above counter himself.
Bugsy VanHalen
Society of lost Souls
#69 - 2012-01-25 16:30:43 UTC  |  Edited by: Bugsy VanHalen
Renarla wrote:
Is the minimum amount part really necessary, or am I misunderstanding or how it works?

Let's say you put 10 of some random item up for sale at 200m and put a Margin Trading buy order for 10 up for 300m with a minimum amount of 1, and then transfer all of your isk into a corp wallet or alt's wallet. Even if someone buys 1 of your item and tries to sell it to you, or if they try to "break" the scam by bringing the item from another region, it will still fail even if the minimum amount is only 1 right?


NO

When you place the buy order the cash is taken from you wallet and placed in escrow. If the money is not there the buy order will fail and not be setup.

the margin trading skill allows for only a percentage of the total order to be placed in escrow.

So if you set up a buy order for 10 units totaling 300m with max margin trading you will still have 25% of the order in escrow or 75m. 10 items for 300m is only 30m a piece so having a minimum of 1 someone could try to sell 2 of the item to you and it will go through as it would only require 60m of the 75m in escrow.

The way to make this work is to sell the two items to yourself using an alt. this will deplete the escrow leaving in this example a buy order for 8 items @ 30m a piece or 240m for the entire order with a minimum number of items at 1 but only 15m left in escrow preventing even a single item sold to go through. The problem with this is the order could be fizzled buy a single unit of the item raising the risk of lost profit for the scammer while making the order look legit.

This is also common. scammers will do this scam but place the buy order for a larger number of units say 10,000 units with a minimum of 10% of the total order 1000 units. than by selling 2000 units to the buy order themselves they empty the escrow below what is needed for the minimum order. This would leave a buy order for 8000 units with a minimum of 1000 units that would still fail even if the seller only tried to sell the minimum to the buy order.
Vibesz
Odelion Invention
#70 - 2012-01-25 17:06:52 UTC
Almost fell for this yesterday, but then I took an arrow to the knee.
Dyaven
#71 - 2012-01-25 17:44:54 UTC
This is not as easy as it seems. I've lost 1b trying this and I'm done. Ugh.
Fat Buddah
Federal Navy Academy
Gallente Federation
#72 - 2012-01-26 02:05:21 UTC
Dyaven wrote:
This is not as easy as it seems. I've lost 1b trying this and I'm done. Ugh.


You are the guy who did the 'legit' scam in Dodixie, right?
Corpia Sin
Perkone
Caldari State
#73 - 2012-01-26 03:31:30 UTC
I am a newbie trader and could you please explain more clearly what is going on? I want to be able to avoid this scam if possible. And the only way is to know how it is accomplished. At this point it is quite confusing to my feeble mind.

You say that you buy out all the sell orders of your particular item and relist them higher - in your case at 412k increasing the minimum sell order. Is this right? I guess this is where I have trouble ... to me that seems like a risk in of itself. And would send a warning sign that's something fishy when someone comes along and just purchases and entire sell market in an item then relists that same unit amount but at higher isk?

Ok considering I understand this so far you then set up your margin buy order first then buy out all the units? - Why does it matter when you buy out the items to increase minimum sale? So you bought all of the Scorch M and relisted one large sell order at 412k? Or do you relist the sell oders at 411.99 with .1 isk increments to look more official? Or does that even matter? Then you count the number of units you bought to do so (5000) - then created a margin buy order for that with a min. 5k amount?

Why do you have to relist this margin buy order 2x? I have yet to do margin trading. I have to assume that the first listing used gives an error because there is no isk in your wallet cover the 25% - is this correct? Then you relist the same margin buy order but this time with enough isk in your wallet to cover the costs this time - allowing the order to proceed.

Ok so if I understand up until here... you then hope someone falls for this and buys up the 5000 unit @ 412k isk (which earns you profit) and then they resell back to you earning you even more?

If all the stars align I think you would walk away with great profit. But I am skeptical on the ease of this. It seems like you have to spend time finding the perfect item, price split, and number of items, and a fast turn item. Finding such a market in itself could take time and I am not sure worth the effort. However one who spends hours viewing market trends one could now and again see an opportunity such as this.

I think going out purposefully to conduct this scam would prove to be time consuming - however I am a newb and just beginning my adventure in eve.

Clarification on this or any other ideas are welcome, this is quite interesting. When you think you seen everything in eve...
Dyaven
#74 - 2012-01-26 08:14:00 UTC  |  Edited by: Dyaven
Fat Buddah wrote:
Dyaven wrote:
This is not as easy as it seems. I've lost 1b trying this and I'm done. Ugh.


You are the guy who did the 'legit' scam in Dodixie, right?


Yep! :D I did 660m in backwards scams before I got it right. I thought it was closer to 1b but some of my isk seemed "lost" due to how the corp wallet works, it was actually there. A veteran of the scam took me under her wing and taught me the ropes and I was able to get a successful one off, still working on recovering from my losses however.

What I still don't really understand is how it's done without the use of a Contract to sell the items. Trying to put a buy order higher than a sell order will just automatically fill the order and vice versa.
KrakizBad
Section 8.
#75 - 2012-02-02 19:32:13 UTC
Bump. Sigh.
Bugsy VanHalen
Society of lost Souls
#76 - 2012-02-03 03:26:41 UTC
Corpia Sin wrote:
I am a newbie trader and could you please explain more clearly what is going on? I want to be able to avoid this scam if possible. And the only way is to know how it is accomplished. At this point it is quite confusing to my feeble mind.

You say that you buy out all the sell orders of your particular item and relist them higher - in your case at 412k increasing the minimum sell order. Is this right? I guess this is where I have trouble ... to me that seems like a risk in of itself. And would send a warning sign that's something fishy when someone comes along and just purchases and entire sell market in an item then relists that same unit amount but at higher isk?

Ok considering I understand this so far you then set up your margin buy order first then buy out all the units? - Why does it matter when you buy out the items to increase minimum sale? So you bought all of the Scorch M and relisted one large sell order at 412k? Or do you relist the sell oders at 411.99 with .1 isk increments to look more official? Or does that even matter? Then you count the number of units you bought to do so (5000) - then created a margin buy order for that with a min. 5k amount?

Why do you have to relist this margin buy order 2x? I have yet to do margin trading. I have to assume that the first listing used gives an error because there is no isk in your wallet cover the 25% - is this correct? Then you relist the same margin buy order but this time with enough isk in your wallet to cover the costs this time - allowing the order to proceed.

Ok so if I understand up until here... you then hope someone falls for this and buys up the 5000 unit @ 412k isk (which earns you profit) and then they resell back to you earning you even more?

If all the stars align I think you would walk away with great profit. But I am skeptical on the ease of this. It seems like you have to spend time finding the perfect item, price split, and number of items, and a fast turn item. Finding such a market in itself could take time and I am not sure worth the effort. However one who spends hours viewing market trends one could now and again see an opportunity such as this.

I think going out purposefully to conduct this scam would prove to be time consuming - however I am a newb and just beginning my adventure in eve.

Clarification on this or any other ideas are welcome, this is quite interesting. When you think you seen everything in eve...




They generally do this with items that are hard to find on the market. like rare low value tags, or modules or rigs nobody uses that there is no supply or demand for.

You find a low value item with very little supply. buy all the available stock. which will not be much if you choose the right item. then set all the items you bought in a series of sell orders at a very high but believable price. several orders at a range in price that will give you a huge profit.

Then you use an alt with maxed margin trading skill to set up a buy order for that item with a minimum number of units high enough that the total will be more than what you have placed in escrow. The margin trading skill will allow you to only have to escrow I think 25% of the total funds needed for the order. Than you make sure that character has no isk in there wallet, or use a corp wallet division that is empty.

Someone searching the market will see the buy order and see that the selling price is lower and think, hey I can buy these and sell to that order and make a profit. they buy all your over priced items and try to fill the order. since there is not enough escrow in the order to cover it and the character that set it up has an empty wallet the order will fail and be removed from the market.

You just sold a stack of items for way more than they are worth and the character that bought them is now stuck with goods they way over paid for and the juicy buy order they wanted to sell to failed and is now gone.

That is the simplest explanation I can come up with. I hope you can see how it works now.
BabySeal Clubber
KittehsofDoOoOoM
#77 - 2012-02-03 15:50:12 UTC
No matter how I look at it, I can't feel sorry for anyone who falls for it. Knowledge is power, and if you don't pay attention to all the finer details, you deserve to be scammed.

Natural selection is a b*tch.... for those who get chopped off the block.
Singeabooty Raj
Doomheim
#78 - 2012-02-03 16:56:06 UTC
BabySeal Clubber wrote:
No matter how I look at it, I can't feel sorry for anyone who falls for it. Knowledge is power, and if you don't pay attention to all the finer details, you deserve to be scammed.

Natural selection is a b*tch.... for those who get chopped off the block.

Concurage. But please no club teh poor baby seals. Blink

Black Man with Goggles
Freylock
Royale Strategic Imperative
#79 - 2012-02-15 07:19:56 UTC
Fell for this the other day.
I was all, "Only contracts are scams; the market is totally safe"
Then I was all, "qq"
Lesson learned--thanks for the post.
Buruk Utama
Science and Trade Institute
Caldari State
#80 - 2012-02-15 08:10:56 UTC
Dyaven wrote:
Fat Buddah wrote:
Dyaven wrote:
This is not as easy as it seems. I've lost 1b trying this and I'm done. Ugh.


You are the guy who did the 'legit' scam in Dodixie, right?


Yep! :D I did 660m in backwards scams before I got it right. I thought it was closer to 1b but some of my isk seemed "lost" due to how the corp wallet works, it was actually there. A veteran of the scam took me under her wing and taught me the ropes and I was able to get a successful one off, still working on recovering from my losses however.

What I still don't really understand is how it's done without the use of a Contract to sell the items. Trying to put a buy order higher than a sell order will just automatically fill the order and vice versa.


Its my understanding that this is why the min buy quantity is so high. You place it high so the market order cannot fill it by itself. Saw this yesterday on some mind links. The min quantity was over 800 which was more than the number of items for sale on the market.

Can someone confirm this issue. If you place a buy order with a min quantity @ 500 at a 100k/pu and the market has a total of 1000k units between 20-50k/pu will the market simply slice out 500 units or is the market looking for an individual sell order that has more than 500 units in order to fulfill the min quantity requirement?