From the sounds of it, it's some cheap Chinese thing, so yeah, they can probably get away with it. Do it in US/Japan and they'd probably get sued pretty quick...
^ $90?
If I didn't already have a PSP, I probably would've looked into one of these.
Though, I am a little weary of the screen - if it's like the PSP, then it's a 16:9 ratio, so why is video restricted to 320x240 (4:3 ratio)? Decoding issues?