Grey market software websites are popular with many gamers due to the reduced prices they offer on various titles.
They achieve this primarily by allowing people to buy game keys in bulk from countries where prices are lower, and then selling these keys to people from other regions, where prices are higher.
Even with a mark-up by the seller, these keys can offer great value to potential buyers.
This practice is controversial however, as it exploits the international pricing structures of these products and ultimately results in less revenue for developers.
Many users wonder whether it is legal to use keys from these grey market retailers, or if they can get into trouble for buying through these platforms.
MyBroadband spoke with Rosalind Lake and Priyanka Naidoo of Norton Rose Fulbright about the legality of South Africans buying video game keys from grey market websites
Legal classification of key resellers
“Game key resellers will, for the most part, be treated as supplying goods into South Africa on a parallel import or grey goods basis. This means that they are selling genuine goods but they are not the ‘authorised’ or licensed reseller to sell into South Africa,” said Lake and Naidoo.
Allowing the purchase of parallel imported goods can drive competition and lower prices, which is why it is allowed in South Africa.
It is, however, restricted by the Consumer Protection Act because anyone who is selling goods that are not purchased from the authorised distributor in South Africa is required to inform consumers of this fact.
“Knowingly purchasing stolen or pirated products can expose consumers to criminal prosecution,” they added.
“Genuine” goods are manufactured by the supplier, have the supplier’s mark affixed to the products, and are sold in exactly the same condition as they were when the supplier affixed its mark onto the products.
These companies must also avoid infringing on trade mark or copyrights belonging to the supplier or authorised South African digital distributors or retailers.
“In circumstances where only the digital key is resold without the original packaging, or where the trade mark is used to advertise the key without authorisation, these sites may run the risk of infringing trademarks or other intellectual property laws,” said Lake and Naidoo.
Other possible areas of conflict
They highlighted that there are other ways in which key reseller sites could break the law. These relate to the way in which products are imported, as well as the tax requirements imposed upon such goods.
While there is nothing that directly stops a company from selling grey-market goods to local consumers online, these parties may be required to register as a foreign company operating in South Africa if either of the following two considerations apply:
- The company is a party to one or more employment contracts within South Africa.
- The company is engaging in conduct or has engaged in a pattern of activities within South Africa over a period of at least six months that would lead a person to conclude reasonably that the company intends to engage continually in business activities in South Africa.
The website company will then need to comply with a number of elements to bring its content and online transaction processes in line with relevant provisions under South Africa’s consumer protection law, the Electronic Communications and Transactions Act, and all other laws of South Africa, including tax laws, import requirements, exchange control, and not selling stolen or counterfeit products.