BOSTON - One of the cheapest places to buy software is on eBay, where merchants sell programs that come directly from manufacturers, saving them from paying a mark-up to distributors.

But it may also be a risky place to shop, as it can be tough to discern good values from scams.

In the US, the Consumers Union -- which tracks Web retailers and advises consumers on internet shopping through its ConsumerWebWatch.org service -- urges buyers to use common sense.

"If it sounds too good to be true, it is," says Beau Brendler, director of Web Credibility for the site.

A Reuters reporter bought four popular software titles through eBay stores, which unlike auction operators sell products at fixed prices. Three of the titles worked flawlessly; the fourth was dead on arrival.

The reporter was able to install and register bargain basement copies of Adobe Photoshop Elements, Microsoft FrontPage and Trend Micro PC-Cillin internet Security. The average discount on those programs was 75 per cent.

The fourth program was a dud. The downloaded copy of Nero Ultra Edition Enhanced, a suite of music and video software that retails for US$100, cost only US$7.

THE GRAY MARKET

Much of the new software that is sold on eBay is what's know as "gray market" product -- items that have somehow made their way out of the normal distribution chain.

It's also known as "OEM" software -- a term that frequently appears on eBay listings. It stands for Original Equipment Manufacturer and simply means it's an authentic version of the product, not a copy.

One of the most common types of OEM software are programs intended to be sold with another product.

For example, a camera maker might bundle copies of Adobe Photoshop Elements when its products leave the factory.

A retailer or distributor removes the software, then sells it to a third party who lists it on eBay. The packaging on that software might not be the same as the full-price version, but the functionality and support is identical.

Software makers contend that gray market sales violate terms of the licenses that control use of their products.

The industry's main trade group, the Software & Information Industry Association, has sued five eBay merchants who sell OEM products, but has no plans to go after consumers who buy it, says group Vice President Keith Kupferschmid.