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Consumer Goods - counterfeit, knockoffs and grey imports

Consumer Goods – the cost of buying cheap

Consumer Goods – there is no free lunch

Whilst a great many consumers are very price conscientious, many fall foul of the two most common traps – unknown grey imports and street peddling. Have you ever heard of anyone buying a bargain on the street corner? I doubt it. One of the more recent scams was the street peddling of flash drives – usually faulty units. Another, known brands of car audio amplifiers, weighted to feel the same as the original. Until you open the unit. Oh yes, they work – just not the way the manufacturer intended. So what’s the beef with grey or parallel imports. Same product, different price and warranty. Most consumers do not check the warranty of a product, let alone have the serial number registered or printed on the invoice or receipt.

Consumer Goods - counterfeit, knockoffs and grey imports
Shupu – Knockoff Shure
Courtesy:  Victorgrigas – Wikimedia Foundation

Many, if not most parallel importers sell their products slightly less than the RRP. If it sounds too cheap, then it is. Distributors pay premium for 3 year warranties, parallel importers not. In fact many of them offer their own servicing, mostly by unskilled repair personnel, cannibilisation being the norm. This of course means the original bill of material is affected. It also may mean an unsafe appliance, especially where certain components must be replaced by that for it’s intended use, be it mechanical or electrical. The general rule of thumb – buy known brands and scrutinise the warranty and find out whom the repair agents are. Do a web search, do your homework.

Consumer Protection Laws

The consumer protection act in many countries forces store owners to disclose grey imported products. The products may be required to indicate address of manufacture, possibly the distributor and hopefully list the service agent. Not all products get serviced of course. This applies to foodstuffs and cosmetics as well. Motor vehicles get imported, often through an unofficial distribution network. Read up before paying out any money – often the company doing the import is fully aware of the risks but don’t tell the potential buyer. This includes safety issues, recalls and whether RH or LH drive vehicles are even permitted on the roads.

Once an item is out of warranty many companies sell generic parts to assist in repair. Authorised service agents are not unknown to mark their products up by sometimes as much as 1000% or more. The motor industry is full of horror stories. The internet has made available lists of companies selling top quality spares, accessories and even dedicated parts for all makes of vehicle. Be cautious as to whether the motor industry approves such parts and be especially cautious of counterfeit semiconductors. An expensive, high end component will not be sold cheaply – it will be counterfeit. Unfortunately, those that purchase through eBay will often bump their heads unless they can get a guarantee of some sort. Returns are always available of course, at your cost. Ensure that there is a minimum of a 30 day cash bounce back – one where you can get your money back. Do not purchase lubricants, especially those for hard working industrial, marine, aviation or vehicle purposes from a dubious source. It’s not worth the $10 000 repair.

It has been disclosed that unsavory manufacturers are now producing counterfeit aviation spares. This now no longer is just a case of blatant fraud but opens up a whole new can of worms. It has lead to lengthy jail sentences as well as capital punishment (in China). Rightly so. This now no longer is a parallel import in the true sense of the word but blatant disregard for human life. Aviation and marine critical parts are very expensive. Ditto for motor vehicles. This would include air bags, brakes, linkages, suspension parts etc. How many of these parts can be purchased around the corner from you? This obviously applies to motorcycles as well, possibly more so.  In this increasingly technologically advanced world we live in, electronic, electrical and mechanical components are subject to extreme working stresses and this calls for proper parts to be used, by original manufacturer, type and for sustained use in extreme working conditions. Would one purchase a no-name brand parachute? I doubt it. Likewise for these parts. Even lenses used in motor vehicle lighting needs to be bureau of standards or D.O.T. approved. In many cases we do replacements with a cheaper part not realising the safety significance. Or the legality of it.

Consumer Goods – critical parts

Microwave ovens use parts which are easily sourced and replaced yet in many instances there is huge risk associated with using incorrect parts. This applies to all high energy circuits. A grey import of a microwave oven from a known manufacturer does not carry the same risk as that where a component has been blatantly copied or counterfeited. Whereas a well known trick years back was for auto tape decks and CD players to be counterfeited, with a near exact match of for example the Yamaha badge been fitted, this has not nearly anywhere the risk associated with counterfeit safety components such as brake shoes or pads.

As mentioned previously, grey imported parts nearly always lack the safety standards required. Purchasing overseas may save you a couple of dollars in the short run but you will nearly always lose in the long. Although it may have an international warranty, many dealer/distributors will not honour the warranty unless under instruction from the manufacturer. Grey imports in some instances are welcomed because it keeps the service industry alive and flourishing – but without the manufacturers blessing you will be subject to heavy overcharging by service agents.

Consumer Goods – Printers and Consumables

Although the CPA warns manufacturers to tread warily when it comes to generic imports of printer consumables it is a known fact that consumables in many cases are vastly inferior to the original product. Especially those sound sold as loose ink or toner for the user to refill. Are these inks actually UV tested? Manufacturers can no longer make a product warranty void if the end user uses generics. As most manufacturers rely on consumables to keep their industry afloat, measures are put into place which prevents the use of generics. It does not take long to circumnavigate these constraints however. In many cases where there is print head damage through contamination it is because of the usage of cheap generics or user tweaking.

Price Protection

In some instances a parallel import makes no difference. A typical example would be where an authorised reseller gets a rebate allowance or price protection to sell to one specific buyer. If this falls flat the reseller then opens the sale to other buyers. The supplier may see this as a grey import. A typical example of this is a mass resale of hard drives, purchased in at a great price point for resale to a local collage or university. The reseller then changes his buyer to that of mass retail to get his product in through the door over that of a rival which did not get that price protection.

Software Licensing

Another area of concern is software licensing. This usually applies to specific regions and is prohibited from sale outside those regions. Check the pack terms and conditions and licensing restrictions. Besides being unlawful the user will end up without any software for his product.

Consumer law does not always protect the user against defects in the event it is used outside the country of purchase. The law may state that the user needs to take the matter up in the country of purchase.

Safety Standards, FCC and Radio Frequency Emissions

This is a very tricky subject and one in which many importers fall foul of chiefly due to ignorance or have their heads very deep in the sand. Every country has a standards commission or bureau. Using the wrong plug and someone is electrocuted is serious business. If your house burns down by the poor wiring of an appliance may be a deciding factor as to whether the insurance company pays out or not. Many third world countries are shipped appliances with the incorrect plug top. If it does not coincide with local regulations you may not resell this product. By importing directly the supplier often disregards the plug type – this needs to be replaced by yourself or your contractor. What about radio interference? It’s not (always) illegal to sell a device which emits radio interference, it’s illegal to use it. Any device which can interfere within the radio spectrum, even the audio spectrum needs to be tested by the relevant authorities and certified. This includes stomp boxes using digital circuitry. Fines are hefty. If the equipment falls foul of safety regulations and/or radio emissions you may face a jail sentence. If it’s safe to use in the USA does not mean it is safe to use in England or Australia. You must follow local regulations – if in doubt don’t use it. Definitely don’t resell it.

Summing Up

So to sum up, not following the authorised channel may deem your product to have no warranty and support whatsoever. It may be an illegal purchase. It may be a dangerous purchase. It may even be your last purchase. If the product causes an accident or God forbid, a fatality, the buyer has no recourse other than taking it up with the authorities in the land of purchase. This is an extremely expensive process. Hell, you can even be sued. Be aware that some countries do not have a consumer law for you to fall back on. Importers and distributors ensure that all products are backed up by a warranty and that the manufacturer will follow consumer protection laws outside the country of manufacture. The user has a choice, to sue the reseller, distributor or manufacturer or all three. If you have imported the product yourself for resale you may find yourself in very muddy waters.

So besides the fact that you end up with grey consumer goods, you may end up in a very grey area of the law – usually the wrong side.





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