Time to take fake seriously

This week saw another flurry of news on a wide range of fake goods - including a report from Russia on the extent of the problem of fake alcohol, that is estimated to kill 42,000 Russians a year. If fake booze doesn't kill you - the head of a fake golf club flying off, might. This article claims the problem is at epidemic proportions in the US... and gives buyers the usual platitude: if the price is too good to be true, it probably is. How long before the counterfeiters simply charge full price to defeat this technique?? The spectre of counterfeit electronics also made it into the media this week: fake memory cards. Enlightened manufacturers are finally beginning to put unique codes on products that consumers can check.

And finally, some (not new) numbers from the WSJ:

The global economy for illicit goods is massive, but by definition impossible to measure. What we do know is that it is getting bigger. The number of counterfeit items seized at European Union borders has increased by more than 1,000%, rising to over 103 million in 2004 from 10 million in 1998. At U.S. borders, seizures of counterfeit goods have more than doubled since 2001. Even allowing for improved detection rates, there is little doubt that the situation is getting worse. In the 1980s, 70% of firms affected by counterfeiting were in the luxury sector. But in 2004, more than 4.4 million items of fake foodstuffs and drinks were seized at EU borders, an increase of 196% over the previous year. In the U.S., seizures of counterfeit computers and hardware tripled from 2004 to 2005. There are also fake electrical appliances, car parts and toys.

Counterfeit medicines were reckoned to account for almost 10% of world trade in medicines in 2004. A recent study in the Lancet concluded that up to 40% of products labeled as containing the antimalarial drug artusenate contain no active ingredients. Most of these fake drugs are headed for the world's poorest countries. The World Health Organization estimates that 60% of counterfeit medicine cases occur in developing countries.

Just to prove it's not just luxury goods and drugs...

Sarah Lee, the diversified consumer goods company, successfully sued a distributor for reselling counterfeit ... wait for it ... shoe polish! Armed Marshalls raided the Pell warehouse and found 46,000 tins of fake polish imported from China and branded as Kiwi. Apparently the stuff smelled so bad, they had a sign that said "Smells Terrible But Still Works Great."

And then there's fake candy (hats off to Jim Rees for finding these pieces):

Bags, Balls and Bad Medicine

This week has seen yet more bad news about the growing problem of fakes. Is the problem an increasing number of fakes, or an increased awareness? Nobody knows for sure.

• Spalding is busting someone's balls in China (sorry) ... fake balls claiming to be Spalding's. They estimate the extraordinarily precise figure of 5.6 fake balls being sold for every real one. As we often hear, the company is not getting a lot of suport from local officials - who are reluctant to crack down. Expect this problem to get MUCH worse as the olympics near. We predict that any brand associated with the Olympics will be counterfeited.
• Once again, fakes have (allegedly) shown up at WalMart. This time, LVMH is suing Sam's Club for stocking what it claims are fake Fendi handbags. WalMart is maintaining they are real - but it's not the first time this has happened. WalMart settled similar claims by Tommy Hilfiger, Polo and Nautica. What is amazing is that retailers and shoppers cannot easily verify if the product is real or not (or diverted). WalMart's defense may well be: "we couldn't tell they were fake". Fendi obviously doesn't want its high end brand associated with the bargain basement big box retailer - so perhaps they should give their customer's a way to authenticate they're getting the real deal?
• A recent report out once again shows how enormous and tragic the crime of counterfeit anti-malarial drugs has become. While high speed drug testing equipment may work - it is pitiful that this lifesaving drug still relies on a crummy hologram (that has been counterfeiting 12 different times) for protection. We have blogged about this problem before - but the global health agencies seem slow to tackle the problem. Who will step in and save the millions of children affected by malaria, and potentially at risk from substandard, adulterated, or no-efficacy drugs?

Counterfeit Britain by the Numbers

The UK is very active in tackling its counterfeiting problem. It is the home of the ACG, as well as many respectable and innovative anti-counterfeit technology firms. High taxes on certain products make fakes more attractive - but it is reasonable to assume that the rates of counterfeiting seen in Britain are reflective of all developed economies.

According to Bob Fenton, security liaison manager for the Tobacco Manufacturers’ Association (TMA), out of 229 packs collected from trash cans after a sporting event, 14 — or 6% — are counterfeit. This is considerably higher than the rate the TMA estimates of fakes of all cigarettes consumed in Britain (2.6%).

In 2004, counterfeit Lipton teabags made up 67% of the foodstuffs seized in the UK. This may explain why your correspondent has always found a cup of Lipton tea to be a pale imposter of the decent British cuppa.

Adidas and Nike copies accounted for 27% and 26% of seized sportswear. Louis Vuitton ripoffs comprised 18% of seized accessories. Philip Morris counterfeits made up 47% of seized cigarettes. And Rolex fakes accounted for 16% of watches and jewellery.

Unilever said “We have come across our brand being used on sun-care products claiming a protection factor of 90. There are two things wrong with that — the sun-protection numbers go up to only about 50; and, worse still, this product did not contain any sun protection at all."

Counterfeit goods ... how to spot one.
The last few weeks have provided a wave of news that helps us build a clearer picture of just how bad the problem of counterfeits can get, and how hard it is getting to spot them.

• Bausch & Lomb has recalled millions of bottles of ReNu ($200 millions) and is potentially liable ($ billions) as a result of contaminated contact lens fluid - and the inevitable flood of personal injury lawyers builds (such as as the hysterical 1-800-BAD DRUG). This product was real - not counterfeit. But the case shows just how much damage a contaminated fake will do to a brand. Needless to say, counterfeiters don't worry about such things as cleanliness and bacterialogical and fungal control.
• Bosch, the German auto parts maker, has stepped up it's efforts to curb counterfeiting of spare parts - where it is particularly rampant in the Middle East. Unsubstatiated estimates suggest 30% of parts are fake. Bosch has launched a public education effort to attempt to dampen demand.
• MSNBC's Dateline ran an investigative piece on Sunday, "uncovering" the shocking facts of the counterfeit drug trade for TV viewers. Katherine Eban, of course, already uncovered this tangled web of deceit, lies, bureacratic foot-dragging, and political finger-pointing in her excellent 2005 book "Dangerous Doses" (which has just been published in paperback). Indeed, she exposed the same cases: Procrit, Epogen, Lipitor, Retrovir... and the Dateline program has updated the list with counterfeit Viagra, Arisept, Norvasc, Crestor, Vaniqa, Xenical and Tamiflu. At the end of the program they talked about RFID - about the trials with Viagra and Oxycontin... but widespread RFID is widely expected to be about a decade away and faces awesome hurdles.
  
• Virginia police busted a sporting goods retailer for selling hundreds of thousands of dollars of fake Nike and Timberland product. Once again we hear that "the fake boxes are perfect, the boots are perfect." Genuine Timberland boots have a leather shoe lace through them that are sealed with a honey wax on the end, while the fakes are sealed with plastic on the end. A representative of Nike shoes told police that for many of the counterfeits, "they have to cut the soles open to know whether they're real or not."
  

Isn't it time that consumer's had a better way to tell if their products are real or not other than closely inspecting the font on the label or cutting open the soles on their sneakers? We think so.