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Home » Hacking News » Big companies watching out for little people.

Big companies watching out for little people.

by Majik on September 6th, 2001 A group of U.S. tech companies started a campaign Wednesday to protect consumers from unwittingly buying products intended for foreign markets that may not work in the United States.

Fueled by the Internet, the so-called gray market frequently results in a quick profit for distributors who buy and resell under false pretenses. But the practice can leave consumers without access to tech support, with an invalid warranty or even with a counterfeit gadget.

The Anti-Gray Market Alliance plans to warn consumers about the dangers of buying such products and how to avoid getting duped. The effort may prompt more lawsuits against distributors who resell them, said Marie Myers, director of Compaq Computer's Cross-Border Program Office.

Hewlett-Packard, 3Com, Nortel Networks and Xerox are also members of the group.

There are several types of gray market products. Some are bought by distributors in China or Indonesia and resold in Europe or America. Others are purchased by a warehouse under a special rebate program but sold publicly at full price.

Sometimes a gray market product won't work in the customer's region. For instance, a power cable meant for overseas use won't work in U.S. sockets and a laptop with a European keyboard will be confusing to an American.

In severe cases, the product is defective. Some distributors have taken Compaq computers and stripped out the parts, leaving only the case and the Compaq label, Myers said. After putting substandard parts back in, they resold the computer and original parts separately and at full price.

Gray market technology is a $20 billion industry, according to the trade group Information Technology Association of America.

Myers said tackling the problem is especially difficult because it sometimes requires manufacturers to sue their own distributors.

In August, Compaq settled lawsuits against defendants who claimed to have large government contracts and bought discounted Compaq computers. The distributors allegedly resold the computers to other customers and pocketed the difference.

ITAA President Harris Miller said it is difficult for consumers to know whether they're getting authentic products. He bought a portable DVD player through a Web site, only noticing he had become a victim himself when it arrived with a manual and warranty card in Japanese.

Customers should check to see whether the seller is an authorized retailer for the product--although even authorized retailers have sold out-of-market goods, Myers said. The companies also hope to convince distributors that a quick buck isn't worth upsetting consumers or suppliers over the long run.

"It's kind of like a leaky hose. You put your finger over a hole, and another one pops up," she said. "You can never underestimate how these goods will move."

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