Counterfeit (Fake) Products
Product counterfeiting is a form of consumer fraud: a product is sold, purporting to be something that it is not. This is different from the crime of copyright violation, which involves the unauthorized transfer of licensed material, such as the sharing of music or video files electronically. Product counterfeiting is typically an organized group activity, because the manufacturing of goods takes people and time, and the goal is invariably profit.
Many jurisdictions take the offense quite seriously, for reasons described below. As a result, most product counterfeiting would be considered organized crime under the Convention.
Lesser goods have been passed off as high-quality merchandise since the dawn of organized commerce, but the practice has taken on new meaning and proportions in the latest wave of globalization. With the advent of “outsourcing”, companies in developed countries are responsible for the research, design and marketing of products, while the actual manufacturing of the goods takes place in countries with a productive, yet cheaper, workforce. These manufacturing countries are also generally poorer, and so have lower capacity for oversight. This is usually not a problem, because the licensing company provides quality control – shoddy workmanship or substandard materials mean loss of contracts and possibly legal action.
The Organization for Economic Co-operation and Development tentatively estimated the value of counterfeit and pirated goods that are traded internationally at 2% of the world trade in goods, or US$176 billion, in 2007. This estimate appears to have a stronger evidential base, but was released with substantial caveats due to the lack of comprehensive data.
Unaccountable products are often dangerous products. Knockoff toy producers need not worry about choking hazards or paint toxicity. Counterfeit auto parts are not subjected to the rigorous safety testing borne by their licit counterparts. Due to cheaper materials and workmanship, counterfeit batteries and cigarette lighters are prone to explode.
Counterfeit medicines need not contain any active ingredient at all. Worse, they could contain a substandard dose, allowing the target microbes to develop resistance. In this way, the proliferation of counterfeits anywhere in the world can have ramifications for global health. And counterfeit products have indeed proliferated, as detailed in the flow studies below.
Electronic goods are one of the most commonly encountered counterfeit products, and detection of pharmaceuticals has also been rising. The single most commonly counterfeited class of goods, however, is apparel: clothing, accessories and shoes.
