News Column

Buyer Beware of Gray Market Discount Prices

Nov. 21, 2012

Tim Sheehan


'Tis the season for holiday cheer, shopping for presents, looking for great deals -- and for buyers to beware.

Experts in technology and consumer affairs are reinforcing the warning as a slew of used computers pop up for sale at bargain-bin prices on websites such as Craigslist or eBay.

Take, for instance, a "lightning fast Dell Optiplex 745 Business Class Desktop Computer," listed on Craigslist for $180 and loaded with Microsoft Windows 7 Ultimate operating software, Microsoft Office 2010 and other software programs. Legitimate licensed copies of the software alone would run in the neighborhood of $450 -- far more than what the seller was asking for the entire package.

That raises a huge red flag for Keith Kupferschmid, senior vice president for intellectual property issues for the Software and Information Industry Association, a Washington, D.C., trade association that is on the lookout for illegal copies of software, also known as pirated or bootlegged software.

"It is an issue we have been following, and it's become an increasingly significant problem," said Kupferschmid. "It seems like we're seeing it more lately on Craigslist and other sites like eBay and iOffer. Ads are trying to sell people laptops at a lower price point, loaded with what we believe is pirated software."

Another concern is the potential for unscrupulous sellers to install a free demonstration version of popular software such as Microsoft Office -- a trial version that expires and stops working after a couple of months -- but passing it off to unwitting buyers as the fully licensed version.

"Whether it's pirated software or whether it's demo software, it's the customer who's going to lose out," Kupferschmid said. "It's fraud against the customer."

Two Craigslist advertisers touting cheap computers with expensive software in Fresno and Clovis acknowledged Tuesday that they don't have license certificates for the software they've loaded on the computers they're selling, nor can they provide the installation discs for the programs.

Randy Peng, who listed the "lightning fast Dell" with Microsoft Windows 7 Ultimate and Microsoft Office 2010, told The Bee that he doesn't need licenses for the software. "If it's only one one or two computers, it's no problem," he said.

"A lot of people ask me the question because Windows Ultimate is like a $300 program, and how can we sell a computer with software for $100?" he said. "Most of the programs, we download them" from an online forum, "and my friend tells us it's activated, and we use it, no problem."

Peng, who has posted nearly 70 Craigslist ads for computers in less than two months, said he buys used computers at deep discounts at auction from local government agencies. Sometimes they come with operating software, "sometimes they are swept clean."

But, he added, "I tell the people I'm not selling the software, just the computer alone. If there's a problem with the software, we don't guarantee the software."

Owners of legitimate tech-service operations say they and their customers are the ones who deal with the fallout from shady sellers.

"There are two very specific ways that this comes back to bite people," said Gary Alexander, owner of South Valley Computers in Hanford and Selma. Every operating system installed on a personal computer has a certificate of authenticity registered to that specific computer. If a seller reuses the same authentication code over and over to install the operating software on multiple machines, "eventually Microsoft figures it out and that number stops working," he said. When the customer tries to update the software, a message pops up on their computer telling them they have an illegal software copy and gives them a limited time to get a legal copy.

"The other way is if someone gets a virus on their computer, they bring it for service to someone that they didn't buy it from. If we have to reinstall Windows, we don't have the certificate to reinstall it," Alexander said. "Now, instead of a $100 job, it becomes a $200 job because we have to get them a legal copy of the software."

Yet another possible danger is the security of private information, said Joey Fernandez, assistant director of business services for the Better Business Bureau of Central California.

"With Craigslist, there's always going to be a risk," she said. "You don't know the person on the other end of that ad." The potential for computers to carry Trojan horse viruses or other avenues of "backdoor" access means "that someone could be controlling those computers and you don't know about it," Fernandez said.

Buyers need to exercise simple common sense when they evaluate a deal on Craigslist, eBay or anywhere else, Fernandez said. "You're just not going to get a really nice laptop for $100 or $200; it's just not realistic," she said. "If there's a huge discrepancy in the price, there's a huge discrepancy in what you're going to get."

Alexander and Kupferschmid said if someone is contemplating buying a cheap computer through an online ad, they should always make sure the seller can provide an authentic license for the software.

"Every major piece of software has a certificate of authenticity," said Alexander. "That's the biggest key right there."

In the case of Microsoft's Windows operating software, the license is a sticker on the cabinet of the computer "with a huge string of characters," Alexander said. "That way you at least know Windows is legal." For other Microsoft programs, the disc comes in a package with a certificate and a registration code, and the discs themselves are marked with holograms.

Kupferschmid added that in addition to verifying the license, the buyer should ask whether the license can be legally transferred to a new owner.

Distributed by MCT Information Services

Source: (c) 2012 The Fresno Bee

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