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Consumer Fraud Center warning: some daily deals may offer fake or illicit goods

December 7th, 2012

 If you wouldn’t buy an alleged luxury watch from for pennies on the dollar from a street vendor, you should think twice before buying a similar product from a daily deal site.

As the holiday buying season continues to gather steam, the Consumer Fraud Center today issued a warning about a fast-growing trend: the sale of goods at bargain-basement prices through so-called “daily deal” sites, which can mask the sale of counterfeit or illicit goods.

These “daily deals” initially focused on highlighting steep discounts at local merchants seeking to build customer traffic, but have increasingly come to be dominated by third-party retailers interested in dumping large quantities of consumer goods as quickly as possible, even if those goods have not been properly verified as being legitimate.

Flash sales may be questionable

“What makes these sites particularly risky is the liquidation of merchandise through a ‘flash sale’ before its authenticity can be verified,” said James Lee, executive director of the Consumer Fraud Center.

“You are probably safe if buying a voucher for a local restaurant, but you should exercise caution when buying ‘daily deal’ goods at an extreme discount.”

Lee gave the example of purported luxury brand watches sold at discounts of 75 to 90 percent, along with small appliances, luxury apparel items, electronics and toys as being the most-often sold on these flash deals.

“They are not necessarily counterfeit, but a luxury watch or handbag listed for pennies on the dollar has no greater claim to authenticity if sold through a ‘daily deal’ site than one hawked on Canal Street in New York or Santee Alley in Los Angeles,” Lee said.

Site with troubling record

One such “daily deal” site with a troubling track record is Brooklyn-based Shnoop.com, which dispatches email blasts to consumers with featured daily bargains. According to Thomas Peistrup, a Los Angeles-based intellectual property attorney, even after sending a “cease and desist” letter, he was shipped a counterfeit product as part of a client “test buy.”

“We sent a ‘cease and desist’ letter because we were nearly certain that the discounted goods did not originate from the legitimate supply chain. Sure enough, when our test buy later arrived, we confirmed it as counterfeit,” Peistrup said.

Lee reiterated the Consumer Fraud Center’s long-standing advice that consumers should be leery of extreme discounts offered over the internet.

“The advice passed on for generations still holds true: If a deal seems too good to be true, then it probably is,” Lee said.

Lee added that any consumers who purchased a counterfeit or illegitimate item on one of these daily deal sites are encouraged to post it on the Consumer Fraud Center website so other consumers could be warned during this holiday season.

The Consumer Fraud Center is also concerned about the potential for selling counterfeit goods via Amazon Pages and issued a separate warning regarding them.

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