| Kippreport.com

Special report: Ferreting out fakes

June 20, 2010 11:38 by Liz Peek

Not only do companies face lost revenues – commonly as much as 4 to 5 percent of the total – but Taylor points out they also confront huge liability problems. If a person is sickened by taking a fake drug, it can be virtually impossible to prove the seller’s innocence. “It can take a knowledgeable engineer or a forensic specialist to determine whether the product was a fake,” says Taylor.

While finding that you’ve been defrauded with a non-Gucci handbag is disappointing, using faulty mechanical parts or taking tablets for heart disease that actually turn out to be talcum powder could be deadly. Let’s not even consider the damage fake condoms could cause. The World Health Organization estimates that as much as 10 percent of drugs sold are fake; another group puts sales of knock-off drugs at $75 billion worldwide. Similarly, industry sources say that there have been dozens of airline accidents caused by fake and unreliable parts. Analysts estimate that as much as 10 percent of all goods produced worldwide are fakes.

Inspector Brian O’Neill runs the Organized Crime Investigations Unit for the New York Police Department, including the Trademark Infringement Unit. His outfit has made headlines in recent years by aggressively cracking down on counterfeiters. O’Neill explains that makers of fake goods have evolved from a “local to an international business. At first, it involved silk screeners reproducing a logo on a t-shirt and sewing fake labels on jeans. That business fell off because they weren’t fooling many people. Now most items are imported, and they are very close to the originals. It’s a huge problem for the brands, and for us.”

Indeed, the evolving sophistication of counterfeiters makes detection increasingly difficult, and more expensive for industry to combat. With today’s computer capabilities it is easy to scan a label and send it to an unscrupulous commercial printer, who can reproduce it in a matter of hours, cranking out millions of labels.

The globalization of supply and distribution channels, multiplying the links in the control chain, has also boosted the criminal trade. The crooks not only copy labels; O’Neill says they duplicate consumer authentication items like the Underwriters Laboratories symbol, which is meant to guarantee the safety of electrical devices. “There have been problems with electrical cords” says O’Neill, “and even with Bluetooth devices that have burned people’s ears.”

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