7 On Your Side: Warning about online gray market sales

SAN FRANCISCO (KGO) -- When you're shopping online, you can definitely find deals. Many websites offer products at a lower price than official dealers. But is it a good idea to buy?

Online shopping opened the floodgates for so called gray market sellers. They buy brand-name products overseas, then bring them in through underground channels. The items are real, but so are the potential problems that can come with them.

The deals can be irresistible, such as 20 percent off iPhones on eBay, 60 percent off watches on Amazon and designer shoes, computers, and handbags all at a discount.

"We're talking about large amounts of money that are going through the gray market," explained attorney Richard Nelson of the Alliance for Gray Market Abatement, who says the items are authentic even legal but also risky for the buyer.

"You have no guarantees that what you're getting is going to work," he said. "And, you have no guarantee that the manufacturer is going to stand behind it."

"I was in the market for a full-frame camera," said San Francisco college student Melissa Kurtz.

She wanted a Nikon camera to launch a career in photography. But it wasn't cheap.

"I went researching and then Tronic City showed up on Google," she said.

Tronic City offered the very camera she wanted for $2,800. That's a savings of about $200. Every little bit helped, so she went for it.

"It worked fine for a period of time," said Kurtz.

The camera came in the right box and had the instructions. But three months later she ran into a big problem.

"The pins were broken or bent," she said. "So I couldn't take pictures or record pictures."

Kurtz thought it was a defect. She says Tronic City told her to send it to Nikon for repair. So she did, but Nikon sent it right back saying it was a gray market product so they wouldn't touch it."

Kurtz adds, "I don't think it's real."

Gray market products actually are real but generally intended for sale in a foreign country. Someone buys them cheaply overseas and resells them here at a discount.

"There's a story behind the products that may not be quite clean," he said.

Nelson says the products could be damaged in shipping, opened, used, repackaged, stolen, or have parts swapped out. Electronics might have foreign power cords or foreign manuals.

That's why manufacturers usually won't stand by them, and will not cover them under warranty in the United States.

"On the Internet, you're looking at a picture of something," said Nelson. "It may look perfectly fine and you only find out when you receive it there's something wrong with the product."

California law requires retailers to warn customers when they are buying gray market products.

The notice was not on the Tronic City website. The camera came with a policy notice saying all items are covered by U.S. warranty, but it was not.

A Tronic City spokesperson said in a telephone interview that Melissa knew it was a gray market item because the website said import, which was the very last word in fine print. The spokesman also claimed Murtz "broke" the camera. She would have to pay Tronic City $1,000 to fix it.

"We explained to her that we would be more than happy to service it, however there would be a fee involved for up-servicing it because she damaged the product," said spokesperson Le Eiry.

Kurtz says she did not break it and certainly didn't know it was gray. But she's learned a discount can sometimes cost you.

If you want to be sure you are not getting a gray market product, buy from the manufacturer's authorized dealers. You'll be covered if something goes wrong.

If you see a cheaper offer from a non-authorized seller, it's a red flag and it may cost you more in the long run.

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