Know Your Scams: Margin Trading

The period shortly before and after a new expansion is released typically sees an increase in scamming from people in the major trade hubs. Most are obvious scams, even for newer players who take the time to look at them, but some are not obvious and the most common example of this is the Margin Trading Scam.

Setup

The premise for the scam is quite simple, encourage someone to buy an overpriced item or items by providing bait in the form of a buy order for the same item(s) but at a significantly higher price than what they are being sold for.

An example would be:

I place for sale on the market three Tobias's Modified Torpedo Launcher at 650m ISK each and then I put a buy order up for three Tobias's Modified Torpedo Launcher with a buy price of 1b each but I set the quantity to 3.

Now the Seller goes around advertising in various channels that obviously the person who put the Buy Order up must have made a mistake (perhaps playing while drunk) and put an extra zero in their buy order. They wish they had the ISK to take advantage but perhaps someone else could and make some money on this.

What Happens Now

Eventually a a player, the mark, will see the advertising, investigate and very possibly try to profit by this "obvious mistake".

Off they go to the market and find three being sold for 650m, which they then buy and they try to sell back to your buy order but it fails because there is not enough ISK in the wallet of the character who placed the Buy Order. 

Result: The mark is now out 1.95b ISK, the 'failed' buy order is removed disappears and most importantly you're richer because you sold those pesky officer modules so quickly.

How Margin Trading Makes This Work

The key to this scam is the Margin Trading skill and the higher the level it is trained the more useful it.

Without the skill any buy orders that a character places will result in the ISK needed being removed immediately from the players wallet and places it in the "market escrow" account. When someone fulfills your buy order the money is transferred from the "market escrow" account to the other players account.

The Margin Trading skill allows you to lower the amount of ISK needed to place buy orders from 100% to 24% of the total value, of the order, when the skill is trained to V. 

For example with Margin Trading trained to Level I:

• When you put up a buy order for an 100 items at 10,000 ISK, the game removes 750,000 ISK (75% of the total) from your wallet, and puts that into the "market escrow" account. The remaining 25% remains in your wallet until the buy order is filled 
• The remaining 25% is not in the wallet of the seller when the order is filled it will be cancelled, the seller keeps the item and receives no ISK and the buyer receives their monies back but no item because the sale never occurred.

The higher Margin Trading is the less ISK you need to raise the buy order and so long as once the order is placed you keep the wallet of the character empty you have no risk to yourself and just need to advertise and get a mark.

Remove Margin Trading, Remove The Problem

No, this isn't a solution. Margin Trading actually is a skill any legitimate trader can make use of. The ability to not have to have the entire buy order value taken from your wallet means they can put what remains to good use and either raise more buy orders or cover others that will be filled. 

I use Margin Trading to help me get my monthly raw materials for my towers, placing buy orders for two or three billion ISK worth of materials but only having to provide a few hundred million ISK upfront really helps my liquidity. It's my own fault if the ISK isn't there and someone wants to fill my buy order, but combined with good Sell Orders and common sense (don't overextend) you don't.

How Can You Protect Yourself

You cannot stop these types of scam let alone any of the dozens that any trade hub regular sees in local, instead you need to be aware of what they are and how to find them.

Now you know what the Margin Trading Scam is you can, hopefully, better identify it and avoid becoming the mark