Dr. Dobb's | Is Buying from Online Auctions a Smart Choice?

Is Buying from Online Auctions a Smart Choice?

Knowing your suppliers and whether you're getting genuine, quality products should be your #1 priority.

May 22, 2007
URL:http://drdobbs.com/security/is-buying-from-online-auctions-a-smart-c/199700963

Peter Hlavnicka is treasurer for the Alliance for Gray Market and Counterfeit Abatement (AGMA)

Not all IT resellers, solution providers and systems integrators are authorized by IT manufacturers. Unauthorized resellers are frequently, and almost intuitively, described as "gray market resellers." But are they?

A common description of gray market is the resale of new, genuine goods by unauthorized dealers. It's often incorrectly confused with secondary market, which deals in previously used goods. However, despite goods being genuine, IT manufacturers cannot and will not offer any assurance as to how the goods sold by these unauthorized dealers have been handled, stored, or supported, and may void warranty and other support.

Unfortunately, genuine goods aren't the only goods sold on the gray and secondary markets. Counterfeits, pirated software, and stolen or fraudulently obtained goods are also sold on the gray and secondary markets. Many unauthorized dealers included these black market goods into their offering and effectively became black market dealers. These dealers may typically:

Retrofit used goods and sell them as new.
Sell counterfeit or stolen goods.
Materially alter goods designed and authorized for sale in specific regions.
Fabricate labels for non-genuine goods to make them appear new and genuine.
Use other deceitful "techniques".

Unauthorized dealers often source goods from overseas markets and auctions. Many don't inspect the goods before they sell them to customers and may have no idea what they're really selling. However, many do know they are selling non-genuine goods. Additionally, unauthorized dealers don't have authorization to license software. Software without valid license poses liability to buyers and sellers. This is why their goods are so inexpensive.

Unauthorized dealers favor sales via online auctions. Today, online auctions have no apparent standard for sellers to provide information about auctioned item(s). The lack of standardized information presents an opportunity for dealers to mislead buyers. Only after the buyer makes the purchase and receives the goods can the true genesis of the product be discovered. Even then, the buyer may not be aware of more subtle issues, like warranty and support limitations or software licensing and transferability restrictions. Buyer beware! Authorized channels generally don't sell on online auctions as their authorizations are often prohibiting them from doing so. Also, there will almost undoubtedly be a problem with licensing for auctioned software.

If you expect the value for your money then choosing the right supplier is a critical task. You certainly don't want to discover that product you thought was new is really second-hand, or fake, or even stolen. You also don't want to discover after investing in IT product that obtaining upgrades, original warranty and support entitlement may not be possible. These situations are often costly to customers who have made a choice to buy from an unauthorized dealer without carrying out due diligence to determine whether or not they are really getting a good deal. Always remember there is no price for your peace of mind.

You should request the following before making a purchase:

Suppliers' guarantee that products are genuine and whether they are new or secondary.
Valid software license (proof of license).
Full IT vendor support and warranty entitlement (documentation enclosed).
A letter from an IT vendor confirming authorization status to resell the product (if required).

It's also practical to inspect the shipment upon receipt of the product. Question suppliers regarding the items with suspicious characteristics such as:

Cheap packaging (a plain white or brown box.
Logo on the packaging and/or product that does not match the manufacturer's official logo -- or, it is printed in poor quality.
Products that appear to have been boxed in reused packaging.
Pay close attention to the actual product. Is the print on the product label of poor quality? Do materials like plastics and connectors appear to be substandard quality?
Look for authentication identification on the product and/or packaging.

In addition to questionable packaging, products that are not genuine may display the following technical issues:

Equipment has a high failure rate or does not boot up.
Products are refurbished or are not of current product release and are incompatible with the current software release and other equipment.
Equipment arrives non-functional and the reseller is suddenly unavailable to help you.
Products may arrive short of documentation.

There are places to go to get more information regarding this issue. One such organization is the Alliance for Gray Market and Counterfeit Abatement. AGMA is a non-profit organization founded by leading technology companies to address the global impact of the gray market and counterfeiting on the technology industry.