Counterfeit Investigations & Awareness
Counterfeit Investigations & Awareness
I am very cautious of where I buy brand name goods, and to be very honest, I rarely do as I am quite a minimalist as far as possessions are concerned. One reason I am cautious buying or when advising others where to buy brand items is that I know for a fact that there are vast amounts of counterfeit goods on the market which are virtually impossible to tell from the originals, and some are just as good as the originals at lower prices.
Anything can be counterfeited, especially these days where designs for products or the products that are going to be counterfeited are easily obtained in the global marketplaces. Designer labels and authenticity documents are easily forged, and many counterfeiting operations are just as or almost as sophisticated as the original operations.
Counterfeited items are more common than most people think and have always been around. In some countries in the markets and bazaars you can take it for granted that everything from branded t-shirts to condoms is counterfeit. If you want the originals, don’t shop in the markets and bazaars, go to malls and regular stores and hopefully, you will get the real deal.
I remember back when I was in the British Army in Cyprus in 1991/93 that the movies being sold on VHS videotape were virtually all “dodgy” copies. We knew most were not originals due to the price, quality of the covers and of the actual footage and also the fact that we could get a lot of the major movies long before they were officially in the cinemas… These were not being sold underground as they were for sale in the Naffi’s and Choggy Shops on the camps and Sovereign Base Territories.
In this article, I will talk about some of my encounters with the world of counterfeits and give you some basic pointers on how not to get caught out buying counterfeit goods. Now the consequences of buying counterfeit items can have quite a few ramifications, to start with it’s illegal in most places and if you’re running a legitimate business, also you can lose your money and destroy your reputation if clients find out you are selling fake products.
Note that I said, “legitimate business” as there are many who you would think are legitimate businesses who are happy to sell counterfeit to the right customers if they think they can get away with it and if it increases the profit margins.
In addition to the need of being wary of counterfeit products, you need to be aware of wrongly named products; this might sound common sense, but it happens. Unscrupulous sellers will wrongly mark to sell them as originals or higher value products. This sting usually happens when those tasked with purchasing a product have little actual knowledge of what they are meant to be buying.
An example of this happened to an associate of mine who was asked for a quote for PKM machine guns for a large security outfit operating in Iraq at the height of the security boom. He gave the company a fair price only to be told it was excessive compared to another quote they had been given, which was ridiculously low for PKM’s. The buyers did a little digging, and it turned out the other quote stated PKM’s but was actually for RPK’s, a completely different weapon system. The error was considered clerical, but I would strongly doubt it. In those days, money was being thrown around and the sellers knew if they sent the wrong order, then the security company would most likely just reorder the PKM’s. This is an OK practice when you have a ton of government money to squander, but if you’re a small business on a tight budget being sold the wrong products can ruin you.
Here I am going to talk about some of the main products that are counterfeited or faked and what buyers need to be aware of. This is just the tip of the iceberg, and I have quite a few other stories, but what is written here should address a few common issues!
Counterfeit Investigations & Awareness: Gemstones
In reality, unless you are an expert, telling apart real and fake gemstones is virtually impossible. While working the security circuit in London in the mid-1990s, I knew a guy who borrowed a lot of money to buy diamonds in West Africa. He smuggled them back into the UK only to find out he had bought industrial quality diamonds, which were pretty worthless… Needless to say, he did not make the huge profit anticipated, lost a lot of money, broke the law, took a lot of risks only to be scammed.
I pity those guys that go out and spend hard-earned money on diamond jewelry for their wives and girlfriends. I am just a little bit cynical and when I see the adverts for jewelry stores, what goes through my mind is how many of the tons of stones they are selling are actually below the grade and quality that they claim and how many are just fake.
These days high-quality diamonds should come with a certificate, but these can be bought on the black market or forged. Most diamonds purchased at a retail level are not even certified, so how do buyers know what they are getting, well they don’t, and I expect most of the shops’ counter staff have no idea what they are selling either apart from what they are told.
Picture this: a man goes into a plush jewelry store in a decent area to buy an engagement ring for his fiancé. He is shown a selection by a very elegant and knowledgeable salesperson and decides to buy a $10,000 ring with a GIA certified stone set in it. Now, think about it! How can he possibly know if the stone is real? Maybe when he gets divorced, and his then ex-wife tries to sell a ring she thought was worth $10K only to be told it’s worth about $500… Such buyers are being set up from the moment they walk into an unscrupulous jewelry store.
Off subject, but another situation when you have to be careful with unscrupulous jewelers is when valuable items are taken in for cleaning or repairs. This is an opportunity for valuable gemstones to be swapped out for fakes, and the owners would never know the difference until they try to sell the piece of jewelry. The common defense of the jewelers is that the fake stones were already in the jewelry, most owners can never prove they were not. Or jewelers can counterclaim the owners were trying to scam them and swapped the stones after they left the store. Difficult cases, especially in places where jewelers hire the local police for security… The cops are not going to bite the hand that feeds them now, are they?
Counterfeit Investigations & Awareness: Luxury Watches
Counterfeit luxury watches are a massive business globally. Even in the early 90’s when I was in the British Army in Cyprus guys used to buy the £20 to £30 fake Rolexes on the Turkish side of the border in Nicosia and bring them back; they were clearly tourist fakes but looked “OK” if not closely inspected.
When in London, dealing with those in the jewelry business, I learned there were generally three levels of fake watches. Level 1 was the cheap costume fakes that sold for about £40; it was clear they were not real on close inspection. Level 2 was the more professional fakes that sold for about £300, looked and operated just about the same as the originals but were not perfect. Level 3 was the near-perfect fakes that only a jeweler could identify after taking the back off the watch for a close inspection; these sold for about £800.
I am sure a few of you are thinking who would buy an £800 fake watch when you can get a near-perfect one to impress other minions for £300? The answer is other shady jewelers and watch sellers. I know of one jeweler who sold a fake Rolex to someone at the price of an original thinking they were a tourist and were leaving the country. Well, the watch broke, and when the buyer took it to be fixed, he was told it was a fake. To cut a long story short the buyer presented the jeweler with the options of getting a good beating and the police finding out about his scam or him just giving a refund; he wisely decided on giving the refund. I am very sure there are many people walking around this world wearing near-perfect counterfeits of some very expensive watches and they will never know.
Counterfeit Investigations & Awareness: Clothing & Accessories
I am sure the vast majority of tourists visiting holiday locations like Turkey or Mexico have bought or been very tempted to buy the cheap counterfeits of designer clothing, sunglasses, wallets or handbags etc. that are on display everywhere. Most people won’t see the harm in buying counterfeit clothes etc. as something cheap and cool to wear or for gifts. Do these sales hurt the designer brands, well yes and no… If the counterfeits are almost as expensive as if they were originals, then yes, they hurt the designer brands and the consumer financially. If the counterfeits are being sold way under the retail price then, maybe they are not hurting the designer brands, since those buying them would never pay the full retail price anyway.
Counterfeits of designer clothing can truly hurt the brands, their distributors, and buyers when they are sold wholesale as originals. If a store buys a consignment of say designer jeans from a distributor or wholesaler and what turns up are very good counterfeits, then the store and its customers are buying substandard products. As long as nobody is aware they are buying counterfeits, the distributor or wholesaler can make a lot more money selling or mixing in counterfeits with their orders.
As with luxury watches, if distributors, wholesalers or stores mix in counterfeits with original high-value items they can increase their profits dramatically and most consumers will never be able to tell they are actually buying a fake.
Counterfeit Investigations & Awareness: Perfume & Makeup
With counterfeit perfumes and makeup, we have the same issues of loss of profits for the brands and distributors, but now we also have health risks for those that use the products. Even though those counterfeiting the products will put time and effort in making the products look like the real deal, they are not going to be too concerned with the contents of the product or the hygiene of the location where it was made and packaged.
Cheap counterfeit products are always attractive to buyers, but when we start getting into products that you put on your skin or ingest, you have to be extremely careful as a consumer. For the distributors and stores, tight controls need to be maintained at all levels of the supply chain to ensure original brand products are not swapped out for fakes.
Counterfeit Investigations & Awareness: Pharmaceuticals
Counterfeit pharmaceuticals are a major problem internationally. It has been estimated that up to 200,000 people die from malaria in Africa alone due to taking fake drugs with few or no active ingredients.
In many countries where the pharmaceutical industry is not highly regulated a very high percentage of drugs sold in pharmacies and markets will be counterfeit. In a lot of 3rd world countries, even the pharmaceuticals supplied from such places of hospitals can contain a high percentage of counterfeit or sub-standard drugs.
Some of the counterfeit pharmaceuticals con contain no active ingredients; they are blatant fakes packaged to look like the real products. Other counterfeit and substandard pharmaceuticals may contain some active ingredients but not to the standard of the real drugs.
I am sure you understand if someone is taking fake or substandard drugs it means they will not be in any way effective in fighting the person’s illness or preventing infections, etc. This is where the consumer must ensure that if they need medications, they are buying the quality products that they require from reputable suppliers.
The main sources for counterfeit drugs are countries such as Turkey, China, Hong Kong, India, and Pakistan. The products they sell as originals are usually below market prices so, international wholesalers when comparing prices from distributors from Asia and Europe will see a clear difference in the prices, and bigger profit margins in the sub-standard or counterfeit products.
Again, for the wholesalers, there is the problem of not being sure what they are getting even if they are buying products from Europe. I recently heard of one licensed wholesaler in the Middle East that purchased a large consignment of pharmaceuticals from Europe of which he believes the majority were in fact fakes from Asia.
In the early 2000’s I dealt with a counterfeit investigations case where a contact of mine had located a large operation selling what they knew were counterfeit pharmaceuticals in Eastern Europe. To cut a very long story short, the company whose products were being counterfeited said the fake products were the best copies they had ever seen. What actions, apart from sending a half-assed investigator, did they take to locate the source, etc.? Nothing… Why? Well first is the cost and effort it would take for an efficient investigation, and second, they would sooner ignore the problem due to it being so vast.
Counterfeit Investigations & Awareness: Alcohol
Each year counterfeit alcohol kills and causes major health issues for many people. A common bar scam is for brand named liquor bottles to be filled with cheaper brands. This is especially common when the liquor is going to be mixed since most people cannot tell the difference between a certain say vodka from another, especially if it’s mixed. In this scam, generally people are just losing money to the unscrupulous bar and club owners, but when the alcohol is produced in an unhygienic and unregulated environment, it can kill.
For the consumer, it’s very difficult to know if the alcohol they are being served in a bar or club is the original brand. If the consumer is buying a bottle of liquor from a store check the labels and packaging for anything that looks out of place, but to do that effectively you must know what the original labels look like… To stay safe, always buy drinks from reputable stores and hope they have been securing their supply chain properly.
Counterfeit Investigations & Awareness: Food
Branded foods is another market flooded with counterfeits, and we are not just talking about high-end products. A branded bottle of ketchup will sell for more than an unheard-of local product in many places, so the counterfeiters just need to make some branded labels, and they have increased the salability and profit margins on their local product. Another area that has issues with fake products is the organic food industry. It’s easy for non-organic grains etc. to be mixed in with organic grains; who can tell the difference once they are in the stores being sold?
All of the previous issues with counterfeits apply such as food being produced and stored in unhygienic, unregulated environments and the issues of loss of profits for responsible wholesalers and distributors. I advise people it can make more sense to stick to local brands when traveling rather than paying more for Western-branded products that have a high chance of being counterfeits, and I say this as I have tasted some very bad coffee and ketchup etc. over the years that clearly were not from the sources the labels said.
Counterfeit Investigations & Awareness: Machinery
Substandard and counterfeit machinery and car parts etc. are common and not only can cause financial loss for legitimate distributors but also put the end-user at risk because of bad manufacturing and substandard materials.
If you’re paying below market price for a branded product, the chances are it’s fake. Individuals who buy machinery and car parts etc. should try to verify that those they are buying from are official distributors or dealers for the brands being bought.
Counterfeit Investigations & Awareness: Software
These days where everyone seems to be dependent on their smartphones, computers, and email installing counterfeit software apps on your devices can cause you chaos. It’s easy for those producing counterfeit software to include Trojan viruses within the programs that can corrupt your devices and give hackers access to your private or business information.
These days you can download most software directly from the manufacturer’s websites, this is a far better option than buying a far cheaper version on a CD ROM or a thumb drive from a market vendor or the like. You get what you pay for, so don’t go buying problems!
Hopefully, from this short article on counterfeit investigations and awareness, you can see some of the problems that are caused by counterfeit goods and what can be done to ensure that you or your business don’t end up purchasing fake products.
For individual consumers, make sure you are buying products from official and reputable distributors and stores. For legitimate stores and wholesalers, you have to ensure that firstly you are buying from a reputable distributor, this is where basic due diligence is essential, and then you must ensure that your supply chain is secure and originals cannot be swapped out for fakes at any point.
I am sure many of you are wondering what measures the actual brands are taking to combat the counterfeiting of their products. Well, most make an effort to control the counterfeiting of their products, but they tend not to be very successful.
Counterfeit investigations cost money that many large corporations are not willing to spend. To identify and investigate counterfeit products from where they are being sold to the production facilities can be very complicated, time-consuming and involve working in several different countries.
Once a successful investigation has been completed the next task will be getting the local authorities to enforce any laws that are being broken and try to shut down the operation. This can be a difficult task as in most places, law enforcement usually has limited workforce and budgets that are focused on other crimes.
In many places, the activities of counterfeiting operations are not seen as being a problem as they are generating income for the local economy. If the counterfeiters learn of possible enforcement operations against them – from local law enforcement or government that they keep on the payroll – they just change locations or the products they are manufacturing to something legal, for a while at least.
Unless there is a substantial amount of money being lost or the counterfeiting operations are blatantly damaging the reputation of the brands, no actions are usually taken against them. Sadly, the job of most corporate security managers is more about protecting the reputation of their companies rather than dealing with such things as counterfeiting as they usually do not have the budgets or manpower to deal with such a vast problem.
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