September 08, 2013

Margin Trading Scam

Hello, fellow Capsuleers!

Today we are discussing a pretty common type of scam. This time it is more advanced than the ones I have shown you so far. Therefore I need to tell you some basics so you can fully understand the underlying system of this scam.

In EVE you have different skills for market operations.
These skills are found in the "Trade" category. One skill for example reduces transaction taxes. Another skill increases the number of contracts you can set up. The skill used in the scams is Margin Trading. Now you know why the scam is called "Margin Trading Scam". Let me quote the explanation text:
Ability to make potentially risky investments work in your favor. Each level of skill reduces the percentage of ISK placed in market escrow when entering buy orders. Starting with an escrow percentage of 100% at Level 0 (untrained skill), each skill level cumulatively reduces the percentage by 25%. For a maximum reduction of approximately 24% total escrow at level 5.
 Now what does that mean? Essentially it says:
If you set up buy orders, you normally have to pay the total ISK up front. With this skill you don't have to pay 100% of the value, just 24% (at level 5).

Here is an example:
You want to buy 100.000x Antimatter Charge S at a price of 20 ISK each. With level 0 of the Margin Trading skill you would pay 2 million ISK (100%). With skill level 5 you would only pay 480.000 ISK up front.

But what happens with the remaining 76%? Well, the remaining ISK will be paid when the buy order is completed. If there is not enough ISK, the buy order fails and will be removed from the market.

Now that you know the basics, let's take a look at today's scam.
A very "helpful" Capsuleer is informing the Amarr local chat about an exploitable buy order (Easy cash! Yaaaaaaaaaay!):

Let us take a look:

Now look at that first buy order:,98 ISK per Item. Additionally the minimal volume is 4. Let's do some math: You will get 8.180.848.595,92 ISK if you fulfill the buy order. There are six items for sale. The cheapest four items (to fulfill the minimum volume) you have to buy will cost 3.798.000.000,00 ISK. So you would make a profit of 4.382.848.595,92 ISK. At this point your greedy self would shout "BUY IT! BUY IT NOW!". Gladly your rational self has stopped you from this stupid decision. Always remember EVE rule #1:

If it's too good to be true, it's probably a scam.

Let's recapitulate:
A buy order with Margin Trading 5 is set up. Instead of the full 8 billion ISK the player has only paid 1,96 billion ISK. The scammer has to make sure that the character who sets up the buy order has no ISK left. This way the buy order will always fail. With another (mostly the main) character the scammer has set up three sell orders (normally 30-200% above-average) to provide four items which will most likely be bought by potential victims. Alternatively Corp. wallet divisions are used instead of alt characters. Note that the scammer varied the number of items and the price of the cheapest four modules. This way it looks less suspicious. 

Now the scammer waits for his prey. Eventually an unaware capsuleer buys the four cheapest modules available at the market. At this point the scammer made roughly 3,5 billion ISK profit since it was his sell orders which were bought by the victim. Afterwards the victim wants to sell the previously bought modules, but the buy order fails since the scammer don't have enough money to pay the victim.

 There are some variations regarding margin trade scams, for example a buy order wants 5 million Antimatter ammunition (as quantity AND as minimal volume), but only a stock of 2 million is available in the entire region.

Make sure you have a sharp eye on the "min volume" column if you check buy orders.

That is all for today.

Thanks for reading and fly safe! o7

1 comment:

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