Newegg Ships Fake Intel Chips; Supplier Threatens Journalists For Reporting It

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News Posted: Sun, Mar 7 2010 3:51 PM
You know what's even better than weird news? Weird news well-flavored with legal stupididy, that's what. Our saga today starts with a shipping oddity; specifically the fact that Overclockers.com forum member Dreadrok ordered a Core i7 920 from Newegg and received a completely fake processor. It's a good fake, too—if it weren't for a few misspellings on the outside of the box, we'd believe it was completely legit, particularly if we didn't take the time to scour the box looking for the telltales.


This is a fake box, not a real one. You have 10 seconds to find the differences. Go!

Dreadrok initially faced skepticism over the veracity of his claim so he put up a YouTube video that captures all the products in question, including his "heatsink/fan," by which we mean the block of something wrapped in masking tape with a sticker on top to make it look like there's a fan in t he box from the outside. You can watch the video below:



Intel
has been notified of the problem, as has Newegg; it appears that the well-known and well-trusted company bought a lot of 300 fake processors in a shipment of 2000 ships total. All 300 of the fake processors came from the supplier D&H Distribution. Newegg has claimed that the fake processors were actually 'demo units', implying that Intel shipped out 300 entirely fake kits complete with fake processor, heatsink, fan, packaging, and a freakin' fake installation guide that consisted of a bunch of sheets of paper held together by a single staple. We won't even go into the misspellings.

This situation already qualifies as unusual given Newegg's longstanding reputation, but here's where it takes a left-hand turn and plunges straight into weird. As of today, the two websites that reported on the problem—CoolardOCP and Icrontic—have been hit by a cease-and-desist letter courtesy of D&H Distributing. From the letter:
It has recently been brought to our attention that you are responsible for publishing on the internet, and specifically on your websites, untrue statements respecting allegedly counterfeit Intel Core i7 processors which you allege were sold to Newegg by D&H. This letter places you on notice that these statements are false. You have no basis for publishing these false and malicious statements about D & H. These false allegations are defamatory and disparaging to D&H”s business and business relations and have caused grave and irreparable damage to our client. [we] demand that you (i) cease and desist posting such defamatory material about D&H.; (ii) remove the contact and any reference to D&H from your website; and, (iii) post an immediate retraction and apology which shall remain posted for not less than thirty days."
Right. Because threatening the press with noisy letters works so very well. Reports indicate that Newegg is arranging RMAs for any affected customers. If D&H did provide Newegg with fake CPUs you can bet Intel will be extremely interested in where those chips came from.
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Yikes...those D&H numnuts don't realize that their cease-and-desist letters are only going to fan the flames!

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3vi1 replied on Sun, Mar 7 2010 4:33 PM

LoL: Streisand effect activate!

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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rapid1 replied on Sun, Mar 7 2010 5:11 PM

rofl 3vi1 wow that's the first time I have ever heard anything like that on Newegg. This does bring one thing to note concerning the system for the contest though. Even benchmark site admins are ordering these things recently, which just accentuates the system being given away on the contest in 7 days or thereabouts.

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3vi1 replied on Sun, Mar 7 2010 5:21 PM

I trust NewEgg to make it right for the people that got burned; I've had nothing but good service from that place.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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3vi1 replied on Sun, Mar 7 2010 5:22 PM

Hmmm... but now that you mention it: The fact that he said the bottom of the processor box was already open is somewhat troubling... :\

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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rapid1 replied on Sun, Mar 7 2010 5:37 PM

Rotten egg's!

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:( i have ordered my parts for my first computer and my cousins computer from them and got all good parts/service! can't believe they are doing this... The fact that they tried to cover it up by saying they were demos just makes them seem even worst, its saying they knew they were fakes...

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Joel H replied on Sun, Mar 7 2010 8:53 PM

No, it isn't. Let's not be conspiracy theorists here.

Newegg isn't a single location, the company has several warehouse and distribution centers. There's no way for them to physically check every package. The screw-up is more on D&H's end; I'm guessing they didn't fully validate a business partner.

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Joel H:
The screw-up is more on D&H's end; I'm guessing they didn't fully validate a business partner.

Be careful Joel, you just might be getting a letter in the mail!

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Another fine YouTube video HERE. I can't wait to hear the whole story behind this snafu!

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Some of us remember Oldegg, or more precisely Egghead.com. They were hacked by a credit-card thief and thousands of customers' records stolen; the name change was the least of their legal problems. If they survived that, they can survive a few knock-off processors.

It's interesting to note that the way the scam was detected was typographical errors on the packaging! 95% of the Internet users I've come into contact with wouldn't know proper spelling if it bit them on the buttocks. Kudos to Dreadrok (what should we call him? Customer Zero? Deep Chip?) for being that aware. It did make me take a long look at my Core i7 860 package, which has passed the spelling test (though most of the instructions are in pictures).

The cease-and-desist order has absolutely no validity in court and is clearly bluster. The better alternative for D&H Distributing would have been to feign shock and outrage that one of their suppliers could have slipped them the fakes, and that they would investigate and punish the parties responsible. Not doing that makes it look like you're the aforementioned "parties responsible."


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D&H = Dung&Hype Unlimited

Betcha their ATTORNeys don't have licenses either.

"We don't need no stinkin' badges," retorted Dung&Hype's Chief Counsel.

MRFS

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supremelaw:

D&H = Dung&Hype Unlimited

Betcha their ATTORNeys don't have licenses either.

"We don't need no stinkin' badges," retorted Dung&Hype's Chief Counsel.

MRFS

That's enough, mister...you're gettin' a letter fer sure.

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Joel H replied on Sun, Mar 7 2010 11:45 PM

As far as I know / have been able to research, there's no link between NewEgg and Egghead.

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M-ManLA replied on Mon, Mar 8 2010 12:53 AM

I'm not sure about this one. Seems a little suspicious, especially since it looks like the guy put it in the mobo. Also, a real editor can use MS Paint to block important receipt information.

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M-ManLA:

I'm not sure about this one. Seems a little suspicious, especially since it looks like the guy put it in the mobo. Also, a real editor can use MS Paint to block important receipt information.

I think this is really happened. It was not just him that got something like this. People all over the place are posting the same looking fakes. All saying they got i7 920s from Newegg.

In Neweggs defense they are sending everyone the real cpus from what I have seen. As far as the claiming they are demo units they may have just been trying not to bash D&H and/or Intel. I'm sure we will here more about this though.

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I agree with Clemsnide, The first thing Newegg and D&H should have done was go on a Shock and Awe campaign! This is like our politicians telling us it is just not true, and it depends on what your definition of IS,...is?! We all know there are huge counterfeiting markets out there that produce everything from money, computers, Rolex's, to tickle me Elmo's! Sometimes even the best of us get taken for a ride.

If we want to be conspiracy theorists? One could always say this is propagated by Lawyers and friends of lawyers. Because, once it gets shipped and opened it is very difficult to prove it is not a scam perpetrated by the buyer to gain products /compensation. In all of this who would profit most from a scam such as this, the Lawyers! unless either company was about to go under and they were making a last ditch effort to make a little more scratch. Or else, if the company was owned by foreign entities who know they can get away with it?

This is why we need these things to be made in the USA, so people can have jobs and everyone can abide by all the same sets of integrity when it comes to running a business. I know for one I would feel a whole lot better buying these products if they were made by your sisters-husbands/ nephew who takes pride in his work and loves his family? That way when you recommend these things on newegg I know it is not someone in Thailand making 7 comments, so the sales go up? That conspiracy enough for you? LOL

Those fakes are pretty bad! it will be kinda hard to prove that is what was received. Our company has always had good dealings with Newegg, and they always seem to do the right thing in the end. We have seen lots of really good fakes, from remoded RAM, cases, rebuilt power units to Windows OS's (with authentic looking holograms. These people try just about everything in the book! Yet thanks to Outsourcing, this is exactly what we get. Of course it doesn't help companies like newegg or Intel either. But when these things are made overseas, whose to say they don't open the shops with their friends after hours to pump out extras! They do it with everything from DVD's to TV's then sell them on the black market with names like Sorny and Maxnibox. They would do exactly the same if we outsourced our F16's as well!

The best thing for Newegg now is to resolve these issues in an honest process and continue to provide stable and reputable service.

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Mmm, neither can I point you to news stories at the moment, but I have vivid memories of that debacle, and the mention of corporate restructuring... and a few months later (still the same year, 2001) Newegg.com was rolled out.

I'll see if I can sharpen the connection up a bit. It does, however, seem suspiciously named for the date it was founded-- in the same way as a DC hotel calling itself the "Newwatergate" would be in 1974.


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Joel H replied on Mon, Mar 8 2010 8:41 AM

ClemSnide,

You got me curious. Turns out I placed my first order at NewEgg on June 6, 2001. It could be that the owner of Newegg was aware of the Egghead brand and named the company appropriately; I've no idea if that's the case. There's been no publicized link between the companies as far as brand restructuring, employee hires, warehouses, etc.

http://ecommerce.hostip.info/pages/374/Egghead-Com-Corp.html

According to that site, Egghead was bought and consolidated into Fry's. The parts that Fry's didn't buy were, I'm guessing, divied up and auctioned.

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Very interesting indeed... Wait and see how this plays out hopefully better quality control and screening of products will improve.

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slugbug replied on Mon, Mar 8 2010 11:31 AM

To D&H Distribution: accept responsibility for your actions instead of threatening people.

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Zestia replied on Mon, Mar 8 2010 12:36 PM

So shouldn't D&H be pursuing defamation claims with NewEgg? If I read correctly, it was NewEgg that first mentioned them as a responsible party. More importantly, kudos to HardOCP for keeping the story posted - at least as of this writing.

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since the suppier was ipex and not D&H. perhaps those cease and desist letters were warranted?

also i know that D & H Distributing is an Intel Authorized Distributor.So is newegg buying product from the grey-market?
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Good catch harooominna.  Ipex has been fired for this mishap my newegg... Read here...

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wow, first time i've heard of something like this happening with Newegg. (I remember the old Egghead, used to browse it while in tech class in high school o.@)

Kudos to the media for ignoring the cons, hope they get whats coming to em.

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rapid1 replied on Sun, Mar 14 2010 6:28 PM

As much business as Newegg does I actually look at this as a good thing. You just have to think about it this is the first time I have heard of anything other than simple things, and I have used them for years.

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Inspector replied on Sun, Mar 14 2010 10:55 PM

huh rapid? i did not really get that, how it good?i have used newegg for 2 years only :) lol

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Actually, the plot thickens.

Newegg have confirmed that it was NOT D&H who supplied them with the processors in question, but IPEX.

Source: http://www.facebook.com/notes/neweggcom/official-update-on-the-intel-core-i7-920-cpu-situation/400548248571

So, D&H are correct in saying that it wasn't them. However, the way they've gone about it has probably done more damage to their reputation than simply shipping out a few duds would have.

If I were a Director of Newegg, I would take a dim view indeed of one of my suppliers instructing their lawyers to threaten MY customers.

(For the record, I'm NOT involved with any company, but have been, in the past, responsible for consumer etail sites selling $5m/week of prouct.)

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acarzt replied on Thu, Jul 8 2010 6:35 PM

that same news broke on this website a while back...

This drama has already ended. :-)

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