grey market | KitGuru https://www.kitguru.net KitGuru.net - Tech News | Hardware News | Hardware Reviews | IOS | Mobile | Gaming | Graphics Cards Fri, 03 May 2019 09:55:15 +0000 en-US hourly 1 https://wordpress.org/?v=6.4.3 https://www.kitguru.net/wp-content/uploads/2021/06/cropped-KITGURU-Light-Background-SQUARE2-32x32.png grey market | KitGuru https://www.kitguru.net 32 32 Ubisoft teams up with Genba Digital to try and put an end to PC key reselling https://www.kitguru.net/gaming/matthew-wilson/ubisoft-teams-up-with-genba-digital-to-try-and-put-an-end-to-pc-key-reselling/ https://www.kitguru.net/gaming/matthew-wilson/ubisoft-teams-up-with-genba-digital-to-try-and-put-an-end-to-pc-key-reselling/#respond Fri, 03 May 2019 09:00:57 +0000 https://www.kitguru.net/?p=412364 Over the last few years, many game publishers have been trying to find ways to combat grey market key-reselling for PC games. There have been numerous instances where mass numbers of game keys were deactivated after being fraudulently obtained and sold on certain stores. Now, Ubisoft is looking to implement a new system called ‘silent …

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Over the last few years, many game publishers have been trying to find ways to combat grey market key-reselling for PC games. There have been numerous instances where mass numbers of game keys were deactivated after being fraudulently obtained and sold on certain stores. Now, Ubisoft is looking to implement a new system called ‘silent key activation', where no CD keys change hands to be re-sold in the first place.

Ubisoft is teaming up with Genba Digital to change the way it sells PC games digitally. The ‘Silent Key Activation' system developed by Genba works by setting up a ‘keybank', which remains inaccessible to third-party stores. So when you go to buy an Ubisoft game from a partnering website, you will be asked to sign in with your uPlay account to complete the checkout process, a game key will when be assigned to your account without it ever being seen by the retailer or end user. That key then gets crossed off the list in the bank.

 

Speaking with Gamesindustry.biz, Genba Digital CEO, Matt Murphy explains that this method “gives publishers control of how their products are distributed” compared to the current method of “throwing a big Excel spreadsheet of keycodes to e-tailers”. The end goal with this system is to prevent keys from being resold, it will also have the knock-on effect of giving publishers greater control over pricing, as keys will no longer be available for games at high discounts unless directly approved by the publisher.

Moving forward, Ubisoft will no longer sell PC games through a third-party store that doesn't use the silent key activation process. Genba Digital is also in talks with other high-profile publishers to implement this system, so expect this to start popping up more often throughout the year.

KitGuru Says: If physical copies of PC games continue to be sold, then CD keys will still be obtainable. From the sounds of it though, publishers are looking to usher in a ‘keyless' future for PC gaming which likely means a final end to boxed copies depending on how many publishers end up using this system, or a similar one. 

 

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Japan outlaws the resale of game keys, rendering grey market sites illegal https://www.kitguru.net/channel/generaltech/damien-cox/japan-outlaws-the-resale-of-game-keys-rendering-grey-market-sites-illegal/ https://www.kitguru.net/channel/generaltech/damien-cox/japan-outlaws-the-resale-of-game-keys-rendering-grey-market-sites-illegal/#respond Thu, 03 Jan 2019 16:58:23 +0000 https://www.kitguru.net/?p=399877 Grey market key resellers have always proven divisive, coming under fire for their alleged role in depriving developers and publishers of sales. This is no longer a problem in Japan, as the country has opted to outright ban the resale of digital keys in their entirety. Japan’s Unfair Competition Prevention Act finally recognises “data (information …

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Grey market key resellers have always proven divisive, coming under fire for their alleged role in depriving developers and publishers of sales. This is no longer a problem in Japan, as the country has opted to outright ban the resale of digital keys in their entirety.

Japan’s Unfair Competition Prevention Act finally recognises “data (information recorded in electromagnetic record),” implementing steps to protect digital information by law. These latest amendments particularly impact the gaming industry, prohibiting controversial sites like G2A and even the personal reselling of keys on eBay.

Since the text is only available in Japanese, translations provided by Google (via GamesIndustry.biz) state that it is split into three sections. Firstly “distributing tools and programs for altering save data” has been prohibited, followed by “reselling software product keys online without the creator's permission.” Lastly, “offering services that modify save data on the customer's behalf is no longer allowed by law.

While this sounds a lot like modding services such as Nexus, the target is more towards cheaters that modify files via services such as Cyber Save Editor for PlayStation 4. This product has since been discontinued in the country, and it surely won’t be alone.

Punishments for breaching this law can vary, with the translation stating that it depends on the case. This can range from claims for damages up to a staggering ¥5 million, up to five years in prison or a combination of the two should the crime fit.

KitGuru Says: Laws often don’t properly account for data, sitting vastly outdated in the digital age, so it’s great to see a country properly re-evaluate its stance. The question now, is whether Japan sets a good example to other countries. Do you think reselling keys should be against the law or do you embrace them?

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Darkwood developer combats grey market with free torrent https://www.kitguru.net/gaming/damien-cox/darkwood-developer-combats-grey-market-with-free-torrent/ https://www.kitguru.net/gaming/damien-cox/darkwood-developer-combats-grey-market-with-free-torrent/#comments Fri, 25 Aug 2017 17:30:14 +0000 https://www.kitguru.net/?p=345124 After a long and somewhat troubled development, first time developer Acid Wizard Studio managed to launch its top-down horror Darkwood just last week. Since then, the studio has issued an appeal, pleading with fans to stay away from grey market key re-sellers despite releasing a safe, DRM-free torrent on The Pirate Bay. Darkwood has had …

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After a long and somewhat troubled development, first time developer Acid Wizard Studio managed to launch its top-down horror Darkwood just last week. Since then, the studio has issued an appeal, pleading with fans to stay away from grey market key re-sellers despite releasing a safe, DRM-free torrent on The Pirate Bay.

Darkwood has had a rocky history, as Acid Wizard Studio explains it missed deadline after deadline since its journey began in 2013. The game just managed to claw onto a crowdfunding campaign before heading to Steam Early Access in 2014 for “financial reasons,” where it was in fact met with applause by fans. Steadily, the slow pace of development showed fewer and fewer hands clapping as the number in negative reviews on Steam increased, with many believing that the game had turned into abandonware like many early access games before it. Still, the game has a happy ending, with the full version sitting on the Steam store for £11.99.

Since the game made its way to full release, the studio explained that it has received an excess of emails. Some of these are that of fan appreciation, but most comprised of scammers trying to get free keys under the guise of reviewers, which the developer believes would be resold on grey market sellers such as G2A and Kinguin. The controversy with these sites is that profits don’t find its way to the developer, but the individual seller who places the listing on the market. There’s also no telling as to how these keys are obtained and, through personal experience, these keys can also be revoked by the seller at any given time.

Alongside this plea, Acid Wizard Studio has offered an interesting alternative. A completely DRM-free torrent has been safely uploaded to The Pirate Bay containing the latest Darkwood, version 1.0 hotfix 3, which the studio encourages those to use if they are on the fence about buying the game or simply can’t afford it at this moment.

“There's no catch, no added pirate hats for characters or anything like that. We have just one request: if you like Darkwood and want us to continue making games, consider buying it in the future, maybe on a sale, through Steam, GOG or Humble Store,” pleads Acid Wizard Studio in an Imgur post. “But please, please, don't buy it through any key reselling site. By doing that, you're just feeding the cancer that is leeching off this industry.”

While this is an unusual move, the studio hopes to play on the morality of pirates by openly offering a try-before-you-buy experience, relying on the quality of the game to encourage a purchase at some point, if not immediately. And so far, the quality of the final product speaks for itself, as it sits with a rating of “Very Positive” on the Steam store, fulfilling its intended goal with user Zumbah’s review noting that Darkwood is “An actual horror game, no jump scares and it manages to be one of the scariest games out there.”

KitGuru Says: Interesting tactics to promote all of the hard work the small development team has done is exactly what Darkwood needs to achieve all it can. Only time will tell whether or not consenting fans to pirate the game is the answer, however, as pirating is something we wouldn’t usually advocate no matter how blurred the lines become. Do you plan on picking up Darkwood in the near future?

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G2A to give developers access to key database and royalty payments https://www.kitguru.net/gaming/matthew-wilson/g2a-to-give-developers-access-to-key-database-and-royalty-payments/ https://www.kitguru.net/gaming/matthew-wilson/g2a-to-give-developers-access-to-key-database-and-royalty-payments/#comments Tue, 28 Jun 2016 09:28:21 +0000 http://www.kitguru.net/?p=297388 It has been quite the week for G2A, who had something of a PR nightmare when indie developer TinyBuild put up a blog post criticising the company's business practises. However, it seems that G2A is willing to make some changes in order to be more developer friendly going forward, this includes giving devs access to the …

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It has been quite the week for G2A, who had something of a PR nightmare when indie developer TinyBuild put up a blog post criticising the company's business practises. However, it seems that G2A is willing to make some changes in order to be more developer friendly going forward, this includes giving devs access to the key database so they can help verify illegally obtained keys as well as royalty payments on all marketplace sales.

In an email sent to Eurogamer, G2A gave the following statement: “As a leader in the digital gaming marketplace, we recognise our responsibility to serve the greater good for the entire gaming industry. Recent events have demonstrated that we need to move faster to introduce new benefits designed with developers in mind, and invite them to play an even bigger role in creating the marketplace of the future.”

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Going forward, developers can apply for their ‘up to 10 percent' royalty cut on all sales made through the G2A marketplace, they will also have access to the database of keys on sale at G2A so they can help identify any keys obtained through illegal means, like credit card fraud.

Aside from that, those buying on G2A will also have a ‘developer funding' option, allowing them to contribute a bit more to developers who have keys on G2A. The rollout for this new system is planned to take place on the 29th of July.

KitGuru Says: This is a step in the right direction for G2A, this new system certainly seems fairer than what was on the table beforehand. It will be interesting to see how developers and regular G2A customers react to these changes going forward.

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Green Man Gaming now shows where its game keys come from https://www.kitguru.net/gaming/matthew-wilson/green-man-gaming-now-shows-where-its-game-keys-come-from/ https://www.kitguru.net/gaming/matthew-wilson/green-man-gaming-now-shows-where-its-game-keys-come-from/#comments Wed, 18 Nov 2015 15:56:15 +0000 http://www.kitguru.net/?p=275585 There has been a lot of controversy surrounding grey market key sellers over the last couple of years and slowly, publishers have been trying to clamp down on the practise. One of the more reputable key sellers, Green Man Gaming, was accused of grey market practises this week, so in response, the store will now …

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There has been a lot of controversy surrounding grey market key sellers over the last couple of years and slowly, publishers have been trying to clamp down on the practise. One of the more reputable key sellers, Green Man Gaming, was accused of grey market practises this week, so in response, the store will now list exactly where its keys came from for each of its games.

Green Man Gaming's troubles began earlier this year, when CD Projekt Red let it be known that GMG did not get its Witcher 3 keys from the studio, which helped explain why they were selling for so cheap at the time. Things escalated this week when the Subreddit ‘GamerDeals' banned GMG listings after coming across evidence that suggests the store's Activision and Ubisoft codes don't come directly from the publisher.

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In response to this, Green Man Gaming confirmed that it would now be more transparent with where it gets its codes from in a Facebook post: “You spoke, we listened. We know you want great games at great prices. In response to your feedback, rolling out from today on the Green Man Gaming store you’ll see our pages now have two new pieces of information: 1/ When you can expect the delivery of a key, 2/ The source of that key.”

“We are committed to continually improving our site, so you can expect the very best service and experience from us. Bear with us as we have over 5000 titles to update, but remember that your feedback is always really important to us, and we want to keep helping you make informed decisions when shopping with us. Thanks for your support!”

Some listings, like the one for Fallout 4, will have the publisher listed as the source of the code. However, other ones, like the listing for The Witcher 3: The Wild Hunt, will simply list an ‘Authorised Distributor' as the source, which is quite vague and doesn't shed that much light.

Discuss on our Facebook page, HERE.

KitGuru Says: I generally find Green Man Gaming to be trustworthy but it is probably hard to compete against less reputable sites like G2A and Kinguin, due to their prices. 

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G2A responds to League of Legends sponsorship ban https://www.kitguru.net/channel/generaltech/matthew-wilson/g2a-responds-to-league-of-legends-sponsorship-ban/ https://www.kitguru.net/channel/generaltech/matthew-wilson/g2a-responds-to-league-of-legends-sponsorship-ban/#comments Fri, 09 Oct 2015 19:00:57 +0000 http://www.kitguru.net/?p=271406 Earlier this week, Riot officially took a stance against the controversial, grey market key selling site G2A. The site was banned from sponsoring any more professional League of Legends teams and its logo was to be immediately removed from any merchandise or marketing material present at the up coming League World Championships event. Now, G2A …

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Earlier this week, Riot officially took a stance against the controversial, grey market key selling site G2A. The site was banned from sponsoring any more professional League of Legends teams and its logo was to be immediately removed from any merchandise or marketing material present at the up coming League World Championships event. Now, G2A has responded to its ban and as you would expect, it's not too happy about it.

G2A has a long history of not policing what is on its store. Too often we see people selling stolen game keys, or even League of Legend accounts or level boosting services. When Riot asked the site to stop people from selling accounts or level boosting services, G2A refused, which resulted in it being blacklisted from the League of Legends scene.

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Since then, G2A has said that the ban is “heavy handed and potentially damaging”. It also claimed that Riot has launched an “aggressive attack directed towards the entire global e-sports community in a failed attempt to dominate and control the industry.”

“The ban has the ability to impact negatively on e-sporters, especially during this fabulous time when hopes are so high for great e-sports events.”

Discuss on our Facebook page, HERE.

KitGuru Says: G2A isn't a site I would trust, particularly since it openly knows that dodgy and shady characters are selling on its store and it openly refuses to acknowledge or do anything about it. However, I do understand why some people choose to shop there, after all, local currency conversion prices on games aren't always fair. 

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Bethesda is deactivating ESO accounts due to fraudulent keys https://www.kitguru.net/gaming/matthew-wilson/bethesda-is-deactivating-eso-accounts-due-to-fraudulent-keys/ https://www.kitguru.net/gaming/matthew-wilson/bethesda-is-deactivating-eso-accounts-due-to-fraudulent-keys/#comments Tue, 26 May 2015 15:34:59 +0000 http://www.kitguru.net/?p=251166 There has been a lot of doubt surrounding the legitimacy of keys sold on the cheap at third-party marketplaces like G2A or Kinguin recently as more and more publishers wise up to fraudulent keys and begin to pull them from the accounts of those that paid for them. Bethesda is the latest to do this, …

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There has been a lot of doubt surrounding the legitimacy of keys sold on the cheap at third-party marketplaces like G2A or Kinguin recently as more and more publishers wise up to fraudulent keys and begin to pull them from the accounts of those that paid for them.

Bethesda is the latest to do this, as the company has begun deactivating Elder Scrolls Online accounts. It turns out that much like in the Far Cry 4 case last year, many ESO keys were purchased using fraudulent or stolen credit cards and then re-sold on these grey markets.

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In a post on the Elder Scrolls Online forums, Community Manager, Jason Leavey posted: “We’ve recently seen an increase in the sale of fraudulently obtained digital game keys for The Elder Scrolls Online: Tamriel Unlimited. We want to remind gamers to shop wisely and only purchase online keys from a reputable source. Fraudulently obtained keys obtained via Steam and then re-sold via third-party websites is a violation of both our and Steam’s Terms of Service. We will be deactivating all game accounts created with such stolen keys starting on Tuesday, May 26th. Affected users will receive an email with instructions on how to regain access to their game account via a valid game purchase.”

The post then supplies a long list of ‘official retailers', which you can view, HERE. 

These cases appear to be popping up much more frequently. Last year Ubisoft had to deactivate thousands of Far Cry 4 and Assassin's Creed keys due to credit card fraud. However, following backlash, Ubisoft reinstated the keys for everyone and took the financial hit. It is worth noting that the company was not in a good position PR-wise at the time as AC:Unity launched with a horrible onslaught of bugs and issues, some of which remain unfixed to this day.

Earlier on last year, thousands of Sniper Elite 3 keys were also deactivated, which led to some controversy.

Discuss on our Facebook page, HERE.

KitGuru Says: I have been trying to warn readers against grey market sellers for a while now. On the one hand, part of being a smart consumer is shopping around for a good deal, unfortunately, when buying from a marketplace like G2A or Kinguin, there is no system in place to ensure that the key is legitimate. While you might be able to activate the key, you won't know where it originated and it seems that buying in bulk with stolen payment details or nabbing codes out of retail boxes is a fairly common practice. 

Let us know if any of you were affected by the ESO key deactivation's. It does seem like an odd move from Bethesda considering the game's waning popularity. 

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Green Man Gaming CEO speaks out on Witcher 3 codes https://www.kitguru.net/gaming/matthew-wilson/green-man-gaming-ceo-speaks-out-on-witcher-3-codes/ https://www.kitguru.net/gaming/matthew-wilson/green-man-gaming-ceo-speaks-out-on-witcher-3-codes/#comments Thu, 07 May 2015 13:00:14 +0000 http://www.kitguru.net/?p=248425 Yesterday, The Witcher 3 developer, CD Projekt Red, told the world that Green Man Gaming was getting its game codes from “unknown sources”. This new information shed some doubt over the legitimacy of GMG as a retailer and made it sound like it could be engaging in ‘grey market' practices, which do nothing to support the …

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Yesterday, The Witcher 3 developer, CD Projekt Red, told the world that Green Man Gaming was getting its game codes from “unknown sources”. This new information shed some doubt over the legitimacy of GMG as a retailer and made it sound like it could be engaging in ‘grey market' practices, which do nothing to support the developer or publisher behind these games.

However, as is always the case, there are two sides to every story and today Green Man Gaming CEO, Paul Sulyok, spoke out to clear up the situation. Speaking with Gamespot, the GMG CEO went on to explain that the retailer has consistently tried to work with CD Projekt Red to support the release of The Witcher 3 but it turns out that the developer has been choosing to focus on promoting its own platform, GOG.

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“Following a six-month dialogue with [CD Projekt RED] about the launch of The Witcher 3, we were disappointed that despite the offer of significant cash advances, and other opportunities to officially work together, (we even offered to fly to Poland to discuss in detail how we could and wanted to support this launch), CDPR chose not to engage with a number of significant, reputable, and successful retailers, including ourselves, as they instead focused on supporting their own platform GOG”.

“We, like millions of customers, are huge fans of The Witcher series, and have been eager for the launch of this amazing title. We believe that CDPR’s desire to support their own platform by working with retail outlets that would not conflict with their own is greater than that of meeting the demands of their audience, therefore we made the decision to indirectly secure the product and deliver it to our customers.”

Since CD Projekt Red has avoided signing a deal with Green Man Gaming to supply it with keys for launch, the retailer has had to go around the developer and source its keys from elsewhere. According to GMG, these keys are coming from retailers that CDPR did in-fact approve initially, which means that the developer is still being supported for the sales of these keys.

Green Man Gaming is still open to working directly with CD Projekt Red on the launch of The Witcher 3 and would be open to working with the developer again on future titles, despite this misunderstanding. Either way, in this situation, Green Man Gaming appears to be in the right.

Discuss on our Facebook page, HERE.

KitGuru Says: The grey market is a tricky subject. On the one hand, it's just good sense to buy a product the cheapest you can find it. However, it is often the case that we don't know where these keys originate from. A lot of the time, codes are taken from inside of retail boxes, which may well have ‘fallen off the back of a truck' somewhere. Alternatively, they may well have been bought by entirely legitimate means, the issue is, nobody knows for sure. Open marketplace sites like G2A would be viewed in a better light if more transparency was given and people could see exactly where their keys are coming from.

In this case, Green Man Gaming did the right thing, it didn't go in to too much detail but it was honest about its failed negotiations with CD Projekt Red and the fact that it was going through third-party channels to get its keys. 

Via: Gamespot

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Green Man Gaming getting Witcher 3 codes from ‘unknown source’ https://www.kitguru.net/gaming/matthew-wilson/green-man-gaming-getting-witcher-3-codes-from-unknown-source/ https://www.kitguru.net/gaming/matthew-wilson/green-man-gaming-getting-witcher-3-codes-from-unknown-source/#comments Wed, 06 May 2015 18:33:34 +0000 http://www.kitguru.net/?p=248316 CD Projekt Red has cast some doubt over the legitimacy of Green Man Gaming as a CD Key retailer. Earlier this week, GMG launched a sale, offering up Witcher 3 pre-orders for $39, which is significantly lower than the standard $60 price. However, a CD Projekt Red rep has said that the developer is not sure …

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CD Projekt Red has cast some doubt over the legitimacy of Green Man Gaming as a CD Key retailer. Earlier this week, GMG launched a sale, offering up Witcher 3 pre-orders for $39, which is significantly lower than the standard $60 price. However, a CD Projekt Red rep has said that the developer is not sure where GMG is getting its codes from.

Grey market retailers are fairly common in the PC gaming world, with G2A and Kinguin being two of the more prolific examples. However, Green Man Gaming has often proved to be a genuine source

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In a statement sent through to Gamespot, a CD Projekt Red representative said that Green Man Gaming's Witcher 3 codes are coming from an “unknown source”, meaning none of the money generated by GMG's sales will go back to GOG.com or CD Projekt Red.

So this does raise the question, where is Green Man Gaming getting its codes from and how often does it go through non-official channels? The retailer has yet to comment on the issue but hopefully it will clear things up soon.

Discuss on our Facebook page, HERE.

KitGuru Says: The problem with grey market retailers is that none of the money generated makes its way back to the developer. Hopefully this all turns out to be a misunderstanding but for now, if you actually want to support the developers behind The Witcher 3, then you are better off pre-ordering though GOG or Steam. 

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Revoked Ubisoft keys were bought from Origin with stolen credit cards https://www.kitguru.net/gaming/matthew-wilson/revoked-ubisoft-keys-were-bought-from-origin-with-stolen-credit-cards/ https://www.kitguru.net/gaming/matthew-wilson/revoked-ubisoft-keys-were-bought-from-origin-with-stolen-credit-cards/#comments Wed, 28 Jan 2015 13:10:08 +0000 http://www.kitguru.net/?p=232934 On Monday Ubisoft began revoking CD Keys for Far Cry 4 and Assassin's Creed Unity from Uplay accounts that were bought from resellers like G2A or Kinguin. At the time, the publisher stated that the keys were fraudulent but has since elaborated. Kinguin claimed that these keys were bought directly from licensed wholesale distributors and that …

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On Monday Ubisoft began revoking CD Keys for Far Cry 4 and Assassin's Creed Unity from Uplay accounts that were bought from resellers like G2A or Kinguin. At the time, the publisher stated that the keys were fraudulent but has since elaborated.

Kinguin claimed that these keys were bought directly from licensed wholesale distributors and that everything should be fine. However, Ubisoft disagrees and is now saying that all revoked keys were originally bought from EA's Origin service using a stolen credit card.

In a statement to Game Informer, Ubisoft said: “We strongly recommend that players purchase keys and downloadable games only from the Uplay Store or their trusted retailers. We regularly work with our authorized resellers to identify and deactivate fraudulently obtained and resold keys. In this case, we confirmed activation keys were recently purchased from EA’s Origin store using fraudulent credit card information and then resold online.”

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EA has since confirmed Ubisoft's account of events, admitting that the keys were purchased via Origin using fraudulent credit card information. In a statement, an EA spokesperson said:

“A number of activation keys for Ubisoft products were purchased from Origin using fraudulent credit cards, and then resold online. We identified the unauthorized keys and notified Ubisoft. If you are having trouble with an activation key, we recommend you contact the vendor who sold it to you for a refund. We strongly advise players only purchase keys from Origin or trusted resellers.”

G2A and Kinguin are both working with customers to resolve the issue and either replace the keys or issue refunds.

Discuss on our Facebook page, HERE.

KitGuru Says: Buying from grey market resellers is always a bit of a risk and unfortunately it is usually the consumer that gets punished for trying to save some money. Some resellers will likely issue refunds or replace the keys. It will be interesting to see what Kinguin has to say now following the recent turn of events. There is still more to this story that we don't know yet. Were any of you guys affected by the key revoking?

Source: Game Informer

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UK must say NO to grey, in the opinion of YOYOTech https://www.kitguru.net/channel/faith/uk-must-say-no-to-grey-in-the-opinion-of-yoyotech/ https://www.kitguru.net/channel/faith/uk-must-say-no-to-grey-in-the-opinion-of-yoyotech/#comments Sat, 09 Jul 2011 08:26:42 +0000 http://www.kitguru.net/?p=52254 Even if you're only a casual reader of the technology sites, you can't help but come across the expression ‘grey market'. When there were hundreds of suppliers in the market for systems and components, then it was such a complex issue that no one really tried to tackle it. Now the market is becoming clearer, …

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Even if you're only a casual reader of the technology sites, you can't help but come across the expression ‘grey market'. When there were hundreds of suppliers in the market for systems and components, then it was such a complex issue that no one really tried to tackle it. Now the market is becoming clearer, we're hearing some pretty strong words spoken against it. KitGuru caught up with some of the guys at UK-based, performance system builder YOYOTech. They're pretty clear on the subject. They're not happy.

“What would you do if you bought a CPU or hard drive, had a problem and were refused an exchange when you took it back?”.   That's the kind of question that the staff in this London store want you to ask yourself.

“It would never happen with product purchased from YOYOTech, because it is all 100% legitimate, purchased from official channels”.

So what is this ‘grey product' that we hear so much about?  Well, it can come from a number of sources, but most often it has been built and/or distributed without authorisation.

The guys we spoke to were clear, “Purchasing unauthorised product is bad for customers, no argument”, said YOYOTech's staff.

YOYOTech is guaranteeing that all the components it plugs in, are genuine and come from legitimate sources

“I've seen it many times in the computer and camera market”, one staff member explained. “Product seems to be an unbelievable bargain and the customer goes for it – even though the product does not seem to be available at that price from anywhere else”.

“It could be that the product itself is a fake or, more subtle, that it has been brought to the UK market through dodgy channels or as part of a large VAT fraud”.  This all sounds very serious, but are there any real consequences?

“If it is a fake, then the problems are obvious”, they explain. “But even if it seems real, there may be no manufacturer support on the product. That problem will make itself known if you think you have bought something with a manufacturer warranty that's at least two years, but the store who sold it to you only offers one year, directly, themselves”.

“Imagine you have a serious problem more than 12 months after purchasing a CPU or hard drive and the manufacturer refuses to support you, will it seem like such a bargain then?”, asks YOYOTech.

They mentioned fraud, so we asked about this, “The government is working hard to close off the loop holes, but for some time people have been engaged in huge frauds relating to the way VAT works on technology and what happens when you export and re-import that technology”, they replied.

“The processes that criminals use are varied and crafty”, they explain. “Let's say someone has a direct buying relationship with someone like Intel. To help ensure smooth delivery of parts, suppliers might drop a huge shipment of chips into a warehouse, but the reseller only buys them as they are needed – on a month-by-month basis. We call that consignment stock and there's nothing wrong with that, as long as it is not abused”.

YOYOTech continued, “Now ask yourself what happens if the warehouse owner decides to get tricky”.

For example?

“Without Intel knowing, deals could be set up for these chips to be exported, sometimes through a series of companies. Eventually, they might even come back to the original owner. Now what you discovered that the CPUs had never left the original warehouse”, we were told. “Ultimately they get sold directly to customers in the UK. There are many variations, but this kind of scheme is called a carousel and it's one of the ways dodgy companies can use the 20% that supposed to be paid to the VAT man as profit”.

“Each of these groups have their own techniques, but there's no doubt that this kind of behaviour contributes to the loss of millions in revenue for the country and creates multiple, non-legitimate channels into the UK market”, they said.

Sounds like a house of cards, does the issue stop there?

“Whenever we see pricing that is too good to be true, we wonder how long those companies will be around before they either decide to run or get arrested”, says YOYOTech. “In either event, customers will get lumbered with unsupported product”.

They carried on, “Not only that, but it puts added pressure on legitimate operations like YOYOTech, because we're trying to provide a service to the public by having a store that's packed full of legitimate technology and open 7 days a week. Surely it's better to have a selection of honest local businesses who are there, long term, to provide support for customers – instead of a nation of grey-market specialists who are ready to run away with their ill-gotten gains the moment there is a police investigation?”

To help combat the grey market, YOYOTech encourages you to check with your suppliers that the components you are buying have been authorised for sale in the UK and that they are not of interest to the various government departments investigating fraud. Sounds like sensible advice.

YOYOTech managers like Ravi Popat work to strict guidelines, 'Legitimate product only - from official channels'. Here seen in Channel Pro, confirming an official deal with official Jennifer Kingwell from Bullguard official Anti-Virus.

KitGuru says: This is an interesting issue and one that has the potential to affect all of our readers.  Buying product with no technical support or warranty is a bad idea. There's also the possibility that product which has been illegally imported and part of a wider crime. We will start discussions with major component vendors like Intel and AMD to see what their official positions are and to see if there are clever things you can do to protect yourself against rogue traders.

It's an interesting one. Comments below or in the KitGuru forums.

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