The impact of product counterfeiting
Product counterfeiting is a big business -- estimated to cost hundreds of billions of dollars each year. It impacts the economy in a variety of ways including consumers that believe they are buying authentic products, legitimate manufacturers that invest in safety and quality manufacturing processes, and retailers that want to provide safe, reliable products to their customers.
Consumers
- Exposure to serious health and safety risks associated with counterfeit electrical products, pharmaceuticals, car parts, airplane parts, baby formula and over-the-counter medicines, etc.
- People that unknowingly purchase counterfeit products anticipating a bargain are actually paying an inflated price for an inferior product.
- In the United States alone, it is estimated that the crime of counterfeiting has caused the loss of over 750,000 jobs.
Retailers
- The sale and distribution of counterfeit products has clear legal risks -- whether sold with intent or without any knowledge whatsoever.
- Retailers pay the costs of merchandise returns of inferior quality products and suffer loss of goodwill and direct sales as a result.
- Cost of recalls.
- Counterfeiters are very hard to trace -- in the case of an injury associated with a defective counterfeit product -- the retailer may be the only traceable company associated with its distribution.
Manufacturers
Legitimate manufacturers invest in research and development, quality materials and manufacturing processes, and they work to meet the conformity assessment schemes of their markets. They work to build brand recognition and to foster goodwill with their end users. The counterfeiters that are their direct competition rely on stealing their brand names and profiting from their goodwill and reputations resulting in the following:
- Direct loss of sales.
- Loss of goodwill.
- Irreparable damage to corporate brand/reputation.
- Trademark dilution.
- Costs of protecting and enforcing their intellectual property rights.
More facts and figures
The U.S. Chamber of Commerce through its National Chamber Foundation has launched a broad initiative to effectively thwart the growing global threat of counterfeiting and piracy to the U.S. economy, the global business community, and consumers. Learn more about the costs on their Website.
In response to the threat posed by counterfeiting, the International Chamber of Commerce (ICC) has launched BASCAP - Business Action to Stop Counterfeiting and Piracy -- to connect all business sectors and cut across all national borders in the fight against counterfeiting and piracy. This global approach is designed to support individual company and organizational efforts and amplify business messages with national governments and intergovernmental organizations. Visit their Website for more facts, figures and information about anti-counterfeiting initiatives around the world.
The International Anti-Counterfeiting Coalition, Inc., (IACC) is a Washington, D.C. based non-profit organization devoted solely to combating product counterfeiting and piracy. Facts on fakes is their report on the impact of counterfeiting.
The Organization for Economic Co-operation and Development (OECD) is a unique forum where the governments of 30 market democracies work together to address the economic, social and governance challenges of globalization as well as to exploit its opportunities. In June of 2007, they completed a study on the economic impact of counterfeiting and piracy. Find the executive summary here.
