The lowest price on the Internet for consumer electronics, watches or cameras isn’t necessarily what you should look for when shopping.
Ask Jane Bass.
The photography buff was so diligent about buying her first digital camera that she shopped for three months before settling on a Nikon. She found a New York-based website — fotoconnection.com — that was asking $1,400. That was $200 cheaper than anybody else. She jumped at the deal.
Jane Bass bought this Nikon D90 and tried to save $200 through an online company that went out of business.
In the spring, Bass took her new camera to Namibia on a safari, where she shot 2,400 photographs. Her new lens was dirtied in a sandstorm and the flash wouldn’t stay down, so she used a rubber band to keep it in place. Once home, she tried to get her camera repaired under the one-year warranty.
She brought it to Fort Worth Camera, an authorized repair center, which sent it to Nikon. But Nikon sent it back with bad news.
It isn’t covered under Nikon’s warranty because Bass unknowingly bought a gray-market camera. Her camera was originally sold to a distributor in a foreign country before it was sold back to someone in the U.S. for sale to a consumer, usually at a below-market price.
Bass had a bad experience with her camera, but her photos from Namibia are breathtaking.
Don’t confuse the gray market with the illegal black market. Gray-market goods are legal and often sold at discount stores. They are brand-name items sold at lower prices because they were originally meant for sale in a foreign country.
As readers of the Fort Worth Star-Telegram Dave Lieber Watchdog column learned first, brokers take advantage of monetary exchange rates. The trade-off is that the cameras aren’t sold by authorized dealers, which means that manufacturers want nothing to do with them if they break.
Gray-market goods also illustrate how prices on the same items are higher in other countries than in the U.S. Other popular gray-market items include cars, cellphones, personal computers, computer games and pharmaceuticals.
In Bass’ case, the camera is an authentic Nikon, but because it wasn’t sold by an authorized dealer, she didn’t receive the USA warranty.
Another African scene taken by Bass with her gray market camera.
Furious, she wrote the president of Nikon in Japan to complain but never heard back. It’s not Nikon’s fault. There was a clue on her invoice: Her camera is listed by the seller as an import model.
Nikon suggested that she ask the seller to pay for repairs. But she learned that fotoconnection.com had gone out of business.
Bass lucked out because she bought camera insurance before her trip, so that covered the $200 for repairs. But she learned two valuable lessons.
The first is that she could have checked fotoconnection.com’s reputation as fastidiously as she researched the camera price. An Internet search would have shown her that the company received horrendous reviews on several consumer websites.
“Absolutely the worst company ever,” several reviewers wrote.
A month after Bass made the purchase, New York Attorney General Andrew Cuomo cited fotoconnection.com as one of many New York camera companies engaging in illegal sales tactics such as using bait-and-switch advertising, substituting inferior products and not responding to consumer complaints. The company had to revamp its business practices and undergo monitoring.
Mario Palos, a salesman at Fort Worth Camera, says its staffers have to tell about two customers a week that their cameras are not covered by a USA warranty. “Most of them ask, ‘What is that?'”
He acknowledges that cameras sold online are often cheaper, but there’s a flip side. At his store, an authorized dealer, a camera can be returned within 30 days and replaced. The store also offers free classes on Saturdays to teach customers how to use their cameras.
Photo by Jane Bass
Nikon tells angry customers such as Bass that gray-market cameras are not imported through Nikon, with proper duties and taxes paid. That’s one reason Nikon will not service, support or offer downloads for the products. Other camera makers, such as Canon, Olympus and Fuji, also turn away gray-market camera repairs, Palos says.
Nikon warns consumers away from dramatically lower prices. Another sign of a gray-market camera comes after it arrives: The owner’s manual may be in a foreign language. The cords and cables might not match U.S. requirements.
Fotoconnection, before it closed, explained to customers on its website that it did sell gray-market products. “There is no real need for concern,” the site said. “Fotoconnection will supply the customer with a 3rd party warranty that will cover the same terms as the manufacturer in the USA.”
But not after it closes.
Photo by Jane Bass
In November 2010, the U.S. Supreme Court heard arguments on a gray-market case involving watchmaker Omega and discount seller Costco. The court will decide whether Costco should be held liable for copyright infringement for reselling watches without Omega’s permission.
The case could affect how gray-market goods are handled. Some say that if the court favors Omega, prices for discount items could go up.
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The right words
Gray-market goods go by different names: Import Model, International Model and Direct Import.
To avoid that, look for the words “USA warranty.” Gray-market products usually offer what they call an International Warranty, Store Warranty or Third-Party Warranty.
Is it a Gray-Market Product?
Ask the dealer if they are an “authorized reseller” of the specific brand you want. Also check for dealers on a manufacturer’s website.
Ask the sales associate what comes in the box. A product should come with all attachments, cords and covers, a warranty and instructions.
Ask the sales associate if a USA warranty card is included.
Ask the dealer about the return policy.
Don’t send in the warranty card until you are satisfied with the purchase and plan to keep the item.
Source: Olympus USA
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Check the credibility of photo and electronics resellers at www.resellerratings.com.
Check credibility ratings at consumer forum www.photo.net.
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Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber
