Diseconomies of scale in fraud, spam, support, and moderation

This is basically regulatory capture for the fraudsters. Fraudsters will have forums full of ID fraud services to fix their KYC problem. Big platforms won't blink at the costs involved with verification. Fraudsters will simply rinse and repeat when their scheme collapses.

Normal business people will have yet another headache. Corner cases will exist where users are condemned to unending bureaucratic limbo. A human support person, if they exist at all, will repeat a meaningless mantra, "I'm sorry sir, we've been unable to verify your identity with the documents provided. This is a compliance requirement as per the online platform safety act of 2026"

All the while, scammers will be churning out new KYC'd accounts. The process will have nothing to do with safety, as the platform will only care about complying with the new regulation. Don't forget that Amazon still earns fees from each sale. Large platforms will enjoy the compliance requirements as an additional barrier to entry for competitors.

Not to mention the inevitable day when all of that personal data is released. Breeches exposed for all to see. Another headache the fraudsters won't have. The regulars of the ID fraud forum will probably enjoy it.

I could start my own VC fund if I had $1 for every post on HN claiming, "It is so simple and easy! We can fix this with more government!" It is never so simple when you are dealing with humans and incentives. Human societies are not codebases you can just patch to eliminate bugs.

> "these systems have to be fully automated because no one could afford to operate manual systems at our scale", what's really being said is more along the lines of "we would not be able to generate as many billions a year in profit if we hired enough competent people to manually review cases our system should flag as ambiguous, so we settle for what we can get without compromising profits".

well anything that comes out of any business has these intentions for sure, but statements could be like multi-dimensional vectors, they could be doing 2 things at once

the ROI for fraud is low for a smaller platform and so it doesn't happen for smaller scale companies as much as it does for bigger scale. but given the interested party who is explicitly looking for the target cohort even the smaller platforms see the fraud

so even if social media as whole were to split into multiple entities, the ROI would still make sense for fraudsters to continue the fraud.

even if you have 1000s of entities, there would be a startup who can build a wrapper out of those 1000s of entities to make the fraud ROI possible. just like how there are businesses that offer scraping competitors

From the article:

>And if I ask who do I trust more, my local reputable electronics shop (Memory Express, B&H Photo, etc.), I trust my local reputable electronics shop more. Not only are they less likely to sell me a counterfeit than Best Buy, in the event that they do sell me a counterfeit, the service is likely to be better.

An international, multi-government taskforce is one solution, potentially. Maybe not. For the problem presented at the top of the article, shopping locally seems like an easy win in comparison.

> Amazon settled to avoid a precedent

Maybe that's the true problem. At some point courts should stop settlements from happening due to the value of precedents to society as a whole.

Well what can you do? Trace their IP back to a VPN or web of proxies? Or more likely grandmas infected Windows XP computer? Then what? Start kicking doors down?

Going to get the FBI involved for a $20 purchase?

Reminds me of Lebowski asking the cops about his Credence tape.