The practice of using bots to exploit online shopping and inventory systems is only slightly younger than the online shopping and inventory systems themselves. The use of sniping bots remains fully permitted on auction sites like eBay, for example, years after eBay’s debut.

These bots, however, may not be fair game for long. While the federal government is yet to expand the BOTS Act to include retail bots, individual states have enacted their own measures to try to level the playing field for consumers.

The bot armies attack

As reported by HUMAN in a recent Automated Fraud Benchmark Report, scalping attacks peaked at nearly half of total shopping cart requests between March 3, 2020 and January 2, 2021. 

Using bots to circumvent inventory management systems obviously harms consumers, who are forced to shoulder the additional financial burdens and increased costs of market and price manipulation. But these behaviors also harm businesses, which have spent millions investing in highly sophisticated, technical systems to ensure prompt, competitive, and consistent deliveries of products, only to have those systems broken, scraped, and undermined by bot armies. 

While the federal government passed the BOTS Act of 2016, 15 U.S.C.A. § 45c, that law is limited to ticket purchasing systems and has not yet been expanded to include other services or products sold on online marketplaces. However, that does not mean that retailers lack recourse against these Grinch bots. 

The counterattack: Autobot laws

For starters, any consumer inclined to purchase items using a bot or from an entity that uses bots bears the risk that orders made using these bots will be canceled, because the use of bots to circumvent inventory management systems likely violates the applicable Terms of Service for large online vendors. 

Given the botsploitation crisis in recent holiday seasons, online platforms are already taking new and additional steps to detect abusive and unlawful bot use…and to prevent any transactions from being culminated using their services. Thus, end consumers who purchase using bots assume the very real risk that the transaction will be canceled and the product may not be delivered at all.

But here’s the kicker: states have begun to implement laws designed to force bot users and consumers alike to disclose the use of bots not only to buy and sell products, but also to influence political elections, and to prohibit transactions where the use of bots are not disclosed. 

In 2018, California passed the first of its kind legislation, termed California’s “Autobot Law,” Cal. Bus. & Prof. Code § 17940, et seq., which “makes it unlawful ‘to use a bot to communicate or interact with another person in California online, with the intent to mislead the other person about its artificial identity for the purpose of knowingly deceiving the person about the content of the communication in order to incentivize a purchase or sale of goods or services in a commercial transaction or to influence a vote in an election.’” Cal. Bus. & Prof. Code § 17941(a). 

The law specifically exempts individuals and businesses who disclose that they are using bots, provided that the disclosure is “clear, conspicuous, and reasonably designed to inform persons with whom the bot communicates or interacts that it is a bot.” Id., § 17941(b).

Beyond the prohibitions set forth in California’s Autobot Law (which is admittedly focused more on disclosure than outright prohibition), businesses that improperly use bots to undermine competition or otherwise monopolize markets or particular products may be subject to class actions lawsuits and other civil suits under state-level unfair competition laws and consumer protection. For example, under California’s Unfair Competition Law (“UCL”), undisclosed bot users could face potential liability for undisclosed bot use to sell products as a form of unlawful, fraudulent, and/or unfair conduct. 

Thus, while Congress labors at the federal level to implement comprehensive reform to expand the original BOTS Act of 2016 beyond ticket scalping, state laws may already provide avenues for relief for consumers and businesses harmed by these acts of automated unfair competition.