Round-up on counterfeiting of consumer goods

Counterfeiters have existed for time immemorial. Ever since the concept of value was introduced by exchange of money and the idea of authenticity or identity first became established, fraudsters have aimed to produce fake money and forged documentation. Following the counterfeit money were unauthorized copies of the products that the money could purchase, a trade which has become ubiquitous and sometimes even represents a larger market than that for the authentic item.

With the spread of globalization, a diverse range of counterfeit products are sold and bought all over the world. Sometimes this is without any attempt by the seller to deceive, with the fake product offered to a consumer who willingly buys a bootleg or replica copy. Others are to customers who think they are purchasing the real thing, often from a very expensive or luxury brand or of a very popular and desired item.

No matter the intent behind the transaction, commerce in counterfeit items is growing all the time and presents many dilemmas for corporate investigators and law enforcement in identifying the fraudulent practices and protecting both brands from this illicit trade while preventing consumers, wittingly or otherwise, from engaging in it.

  • Most of the world’s counterfeit items are produced and manufactured in China – enough so that the trade in these fraudulent goods is a $400 billion industry, by some accounts representing as much as 10% of China’s GDP. This is a striking paradox, as many authentic items such as Nike shoes and Apple iPhones are produced practically alongside knockoff versions of the same. While the traditional logic is that counterfeit goods are part of the assumed risk of doing manufacturing business in China, corporations are actively trying to take control via clever action against fraudsters. Brand protection efforts include hiring private investigators to find and seize fake goods and try to navigate the complicated, labyrinthine underground of the Chinese counterfeiting industry:  To Catch a Counterfeiter
  • South Korea has joined China as one of the major world centers for counterfeit activity. However, unlike many of the goods which come from China, which are low-quality replicas that make unconvincing fakes to the educated consumer, the market in South Korea is knowingly demanding for “copycat brands.” These consumer desire is driven by the prevalence of streetwear fashion which replicates items worn by celebrities and seen on the internet from brands which are not easily purchased or even available in South Korea. In order to answer customers’ requests to be up on these global trends, counterfeiters are making high-quality fakes to sell to the fashion savvy who might not even care whether their items are real, as long as they are able to access the desired style:  Why South Korea Is the Home of Counterfeit Culture
  • More than what’s in a name – what’s in a set of parentheses? For years Costco has sold rings advertised on their in-store signage as “Tiffany” rings. There is no affiliation between the rings sold by the wholesale giant and those available at the specialty jewellery retailer Tiffany & Co. While Costco made no claim that it was selling imitations of the Tiffany & Co. rings, Tiffany alleges that calling the rings “Tiffany” on the signage was a false identification, and that consumers could have been misinformed and mistakenly purchased the rings believing they were Tiffany & Co. A judge has ruled that Tiffany is entitled to almost $20 million in damages and interest from Costco for this marketing scheme, indicating that “Tiffany” is not to be used a generic term to describe the setting of a ring to consumers, as Costco alleged it was intending to do:  Costco owes Tiffany more than $19 million for selling counterfeit rings 
  • Counterfeit goods in the apparel market are well-known, everyone having seen before the ubiquitous fake Louis Vuitton and other designer bags that brands have been fighting against for years. Another area in fashion where fakes are becoming prevalent is makeup. The black market in the beauty industry is growing all the time, with counterfeiters making and selling popular products to satisfy demand when the real ones sell out quickly, aren’t available in certain markets, or are highly priced. The safe and hygienic production of makeup is a very complicated business, involving health standards, inspections, and scientific processes, which fraudsters do not typically invest time or money to replicate along with the products. Consumers having gotten sick and injured from using these fake makeup products which are often ordered online or bought in the discount shopping districts where knockoff handbags used to be the main fare. Especially concerning is that many people purchase these fake cosmetics in bulk, to fraudulently resell online as the real thing or to use on unsuspecting clients as makeup artists:  We Went Inside Beauty’s Black Market & It’s Worse Than You Think
  • Equally concerning to consumer protection and safety as fake cosmetics is the growing prevalence of knockoff wine. The Chinese market is participating in rising prices and demand in a hot retail wine market, for auction buyers, home drinkers, and restaurant suppliers alike. Along with these eager buyers, as always, come the sellers of counterfeit and contraband products. Fake imported wines abound in China. On high-ticket wines, empty bottles of the real thing are actually sold on the black market and then re-filled with fake wine to be sold to unaware purchasers. Aside from damaging the high-end market with a flood of counterfeit wines, there are also concerns for the average consumer. Sometimes dangerous ingredients and chemicals are added to cheap wine to change the color or taste in order to fool consumers, who can then get sick from the doctored alcohol:  China Is Facing An Epidemic Of Counterfeit And Contraband Wine

Companies and governments worldwide are doing their most to crackdown on the illegal production and manufacture of counterfeit goods, and to prevent the sale of these products to consumers. This is an effort which requires international cooperation and a constant pursuit to stay up to date in the counterfeiters’ methods in order to attack and prevent their attempts. Consumer protection and brand value to corporations are both at risk in the continued spread of these illicit practices and products.

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