Do you like getting a bargain from genuinely looking counterfeit luxury articles? Don’t. Fake goods harm us in bigger ways than you might imagine.
Counterfeit products cost the world economy around $250 billion based on the report from last year by the Organization of Economic Cooperation and Development (OECD). Around $1.7 billion of that cost spilled into the American economy. The U.S. Customs and Border Protection (CBP) reported a 38.1 % increase in the value of counterfeit goods between 2011 and 2012, despite the decline in actual number of seizures in the same period.
Beyond the economic cost, counterfeit goods present a serious threat to American lives. Counterfeit food items and medicines didn’t go through federal regulations and can harm buyers. Likewise, critical services like public health and safety are deprived of much needed taxes to function to the hilt.
The U.S. seems to wage a perpetual war against counterfeiters because fake manufacturers are getting really good at imitation. The sticky part is, much of these counterfeits originate from the world’s factory of consumer goods, China. With weak intellectual property rights laws, China is a pirate’s paradise, just a stone throw away from factories that produce genuine American and global articles.
CBP has released a list of the most counterfeited products in the U.S. and here are the top nine and details on how much each has cost the country based on manufacturer’s suggested retail price (MSRP) estimates by the agency:
There’s a huge drop in the number of counterfeit optical media, such as games, DVDs and CDs, from 2,892 in 2011 to 1,409 in 2012. The MSRP also dropped by 30% in the same period. Not that the government is winning over optical media piracy; the game just shifted to online downloads, where putting a cork to an overflowing illegal torrent files is ten times more difficult. Torrent Freak, a lobby group monitoring torrent downloads every year, reported that The Hobbit: An Unexpected Journey is the most pirated movie last year with 8.4 million downloads, while James Cameron’s Avatar is the most pirated movie ever with 21 million downloads.
The number of seized unattached trademark logos and labels remained unchanged between 2011 and 2012, but the market value increased by 59%. Counterfeiters are getting better at going around regulatory agencies by shipping labels separately from their products and stitching them inside U.S. territory to make authentic-looking products. Moreover, if pirates lose the tags, they still have the products. Labels and logos are million-dollar investments because they have an emotional power to influence buyers.
Fake computer and accessories shipments to the U.S. increased only slightly by 1,000 from 2011 to 2012. However, the increase in MSRP value is significant: more than $13 million. PC paraphernalia include integrated circuits, semiconductors, networking hardware and print cartridges. Counterfeit computer accessories are far more dangerous than disabling your home computer or mobile device. They can disrupt sensitive equipment used in health, engineering and aviation sectors if some of these counterfeits manage to get through the supply chain.
The number of seized counterfeit shoes and flip-flops in the U.S. fell by 214 in 2012. Likewise, the MSRP value dropped by 47%, one of the most improved anti-counterfeit performance indicators so far. CBP believes fake manufacturers are feeling the heat of losing container loads from tighter regulatory controls. It’s welcome news for Nike, one of the most faked footwear brands in the world, which fears losing brand integrity caused by counterfeits. It didn’t help that the counterfeit shoes are aggressively sold in websites run outside the U.S. Nike and NFL (Nike is its official uniform supplier) have embarked on a legal strategy aimed to shut down these sites, but it’s more of a “whack-a-mole” battle than a touchdown.
Pharmaceutical counterfeits are one of the riskiest items flooding the U.S. market, almost in the level of a terrorist act if you consider their danger to American lives and limbs. Some of the ingredients used on counterfeit medicines include dangerous chemicals, such as, mercury, arsenic, chrome, selenium, boric acid, floor wax and paint thinner. It’s good news that CBP reported that the number of seized fake drugs fell by 4% between 2011 and 2012, thanks in part to a more aggressive international efforts to stop counterfeit medicines. India and China are the top sources of fake drugs.
Branded clothes are one of the most counterfeited items in the U.S. CBP seized 10,000 shipments of fake apparel and accessories in 2012, up by 26.8% in 2011. Haute couture items are more often counterfeited than blue jeans, jerseys and ball caps because of the former’s higher value. Louis Vuitton, one of the most counterfeited luxury apparels, even took a legal action in 2009 against Google to prevent websites selling fake Louis Vuitton items from appearing in search results. It’s a complex problem that affects even third parties, which are not privy to counterfeit issues.
Seized shipments rose by 40% in 2012, and the MSRP value increased from 104.4 million in 2011. These are the third most counterfeited items in the U.S., but they only comprised 8% of the total seized products, a far cry from the top two fake product categories. Still, the increase in MSRP value means the country is losing more money in the form of taxes. Working closely with China Customs operations, CBP was able to take out over 243,000 counterfeit consumer electronics from the market.
At 29% of total seized counterfeit goods, watches and jewelry are far more popular among pirates than consumer electronics because luxury goods have more value per item. In fact, watches and jewelry had the highest increase in seized MSRP value among all counterfeit goods at 168.9% between 2011 and 2012. Swiss luxury watches are one of the most counterfeited luxury items, and as pirates get more sophisticated, counterfeit luxury watches are harder to detect. A fake Hublot Big Bang, for instance, looks genuinely real to the untrained eye.
These are the highest counterfeited goods in the U.S., a spot they also held in 2011. Signature wallets and handbags comprise nearly half of all seized fake goods in the U.S. (40%) in 2012. The number of seized shipments fell by 17%, but the MSRP value rose to 37%, negating the government efforts. But it’s not all lost. The U.S. Attorney in New Jersey won a landmark case last year when the FBI caught a major ring that traffics counterfeit goods including handbags, cigarettes, and sneakers from China into the U.S. The ring cuts across transportation, customs and distribution systems in both countries. It’s a big blow to the pirates.
As consumers, we can contribute to the fight against counterfeit products in the U.S. by making sure we only buy from authorized or reputable retailers. Although it’s not our legal responsibility to check what we buy is authentic, each of us are morally accountable to be actively conscious that counterfeit goods are a bane, not a bargain, to the whole nation.
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