Counterfeit products are a growing, and dangerous, problem
— -- From fake versions of the drugs Adderall and Avastin to phony designer watches and wedding dresses, counterfeiting is rising fast and is increasingly becoming a safety concern.
U.S. Customs said agents seized 24% more shipments of counterfeit goods in the last fiscal year (ended Sept. 30, 2011) than in its previous year. And 325% more counterfeit goods were confiscated from 2002 to 2012 than in the previous decade.
While phony designer purses are declining — and didn't even make Customs' list of top counterfeit products last year — counterfeit pharmaceuticals were up 200% in the 2011 fiscal year.
"There's demand, and it's gotten easier and easier to copy (products) and to sell them over the Internet," says Therese Randazzo, intellectual property rights director at U.S. Customs and Border Protection. Consumers "need to be familiar with the genuine product, where it's sold and what it looks like."
Recent developments:
•The Food and Drug Administration in April found counterfeit versions of the cancer drug Avastin that had made their way into doctors' offices. It was the second time this year FDA found fake Avastin, which lacked the critical therapeutic ingredient.
•FDA warned last month of two cases of consumers receiving fake versions of the attention deficit hyperactivity disorder drug Adderall. A consumer noticed misspellings on the label.
•A federal grand jury last month indicted wine dealer Rudy Kurniawan on three counts of wire fraud and one count of mail fraud for selling cheap, counterfeit versions of rare wines. Kurniawan would get empty bottles of pricey rare wines, fill them with blends of lower-priced wine and make counterfeit labels, the indictment says.
•Three people suspected of selling counterfeit Apple iPhones, iPads and iPods were arrested in February at a New York City store. Even entire phony Apple stores have been found in China.
Customs officials work closely with companies and federal agencies, including FDA and the Consumer Product Safety Commission, to spot counterfeit goods and keep them out of the country.
According to Gallup Consulting and the U.S. Chamber of Commerce, 64% of counterfeit electrical products are purchased from legitimate shops and retailers. CPSC has recalled counterfeit power adapters that were sold on eBay.
The Electrical Safety Foundation International says more than 1 million counterfeit electrical products have been recalled in recent years, including extension cords, power strips and batteries. These products can cause fires and destroy devices.
"Not only is the consumer getting shoddy merchandise, but the savings for buying the cheap fake can easily be eclipsed by the damage that such products can cause," says Richard Nelson, a business crimes lawyer at Sideman & Bancroft.
Most well-known brands have "several hundred to several thousand pretenders" selling their goods online, says Fred Felman, chief marketing officer for brand protection firm MarkMonitor.
He says the company has found 15,000 websites selling counterfeit versions of one "major" luxury brand's products.
MarkMonitor also represents a high-end wedding dress designer whose dresses are counterfeited and sold online. Sites purporting to sell discount versions of the wedding dresses will even copy the real site's photography and other digital elements.
Like other counterfeited products, Felman says, the quality of the fake fashions ranges from "grotesque to actually being very good reproductions."
But counterfeit versions of name-brand toothpaste, shampoo and perfume can carry serious risks. Randazzo says phony versions of branded personal care products often contain "caustic chemicals."
An older case involving counterfeit toothpaste containing antifreeze may be an extreme example, but Randazzo says once many counterfeit products are opened, "bacteria grows readily."
"If you look at how some of these things are made, it's really disgusting," Randazzo says.
A reasonable price doesn't necessarily mean you're getting the real thing. Felman says counterfeit prices can range from 10% to 60% off the retail price.
