Action Line: Beware of 'gray market' products
| Friday, Nov 20 2009 10:36 AM
Last Updated Friday, Nov 20 2009 10:37 AM
Editor's note: Action Line is a weekly column from the Better Business Bureau answering consumers' questions and concerns about money and business issues.
Dear Action Line:
I was recently shopping at a local discount chain store and found several items of hair products that I normally can only buy in salons at much higher prices. I was thrilled and called all my friends to let them know. But when I got home and told my husband, he said I had purchased illegal black market merchandise. I say I did nothing wrong. Another friend said I had purchased gray market products. What did I buy?
Dear Reader:
Without seeing the actual products, I don't know exactly what you bought. You would have to check with the manufacturer to be certain.
However, in increasing numbers, consumers throughout the country are purchasing bargain priced merchandise that was not intended originally for sale in the U.S. marketplace. This "gray market" merchandise ranges from perfume, watches and shampoo, to electronic items and cars, and is usually sold through the mail, at specialty stores, discount outlets and at some larger retail outlets.
Here's how the gray market works. A manufacturer makes products for sale within a certain country -- say the United States, as an example. That company also manufacturers some of those same products, intending to sell them in other countries. Someone buys these products outside the United States and then imports them back into the United States for sale here. These items are considered gray market to distinguish them from the products originally made for sale within the United States.
In contrast, a black market is the trade of goods and services that are illegal in themselves and/or distributed through illegal channels, such as the selling of stolen goods, certain drugs or unregistered handguns.
Why bother with this circuitous route? Cost savings. Manufacturers often sell the same products for less in the international market than they do in the domestic one. The products intended for export may be identical to the ones sold within the United States, but may be of a somewhat different design to reduce cost. Distributors may be cut out of the supply chain, reducing overhead.
Gray market merchandise can result in some unexpected disadvantages to the buyer that consumers should be aware of. For example, gray market goods may not be covered by the manufacturer's warranty or if the product does come with a warranty, it may not be valid in the United States. If such a product breaks or is defective, the manufacturer may not be willing or even required to rectify the problem. Other disadvantages may be nuisances; for example, instructions may be printed in a foreign language.
In some instances, the product may not comply with U.S. laws and may require costly adjustments before being used legally within the United States. Gray market cars, for example, may not comply with state pollution and safety standards, and could require a number of costly alterations to become legally titled and licensed in California. This is especially true when it comes to smog testing in this state.
As always, a good motto is "buyer beware."
Vickie Sanders is assistant director of business services for the Better Business Bureau serving Central California. Send your consumer concerns, questions and problems to Action Line at the Better Business Bureau, 1601 H St., Suite 101, Bakersfield, CA 93301 or vickie@bbbcencal.org.
