COUNTERFEITERS LOVE ELECTRONICS
COUNTERFEITERS LOVE ELECTRONICS
2005-09-15 at 10:00:00 am #12509
Counterfeiters Love Electronics
Travel the world, and
it’s safe to assume the Gucci bags and Rolex watches for sale along
city streets are counterfeits. Now, increasingly, shoppers can add
name-brand electronics to the list of goods to distrust.
As many as one in 10 high-tech products sold worldwide are actually
knockoffs, according to a survey by an anti-counterfeiting group. The
study, released Tuesday by the accounting firm KPMG and the Alliance
for Gray Market and Counterfeit Abatement, or AGMA, based its estimates
on data gleaned from interviews with executives at 15 large IT
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“It catches a lot of people off guard because they think that we’re
building very complex technologies that are very difficult to
counterfeit,” said Nick Tidd, president of AGMA and a vice president
for sales and business compliance at 3Com.
In contrast to watches, DVDs and CDs, far more counterfeit technology
products are hawked over the internet than on street corners. AGMA
identified China as a hotbed for the origination of knockoffs, which
range in quality from obviously inferior imitations to fakes that are
hard to differentiate from the real thing. The variety of counterfeits
on the market today is vast.
“At first it started with Rolexes and Louis Vuitton bags, and now it’s
spreading to everything you can think of,” said Joseph Loomis, vice
president of marketing for Net Enforcers, which provides
brand-protection services to companies.
Today, Loomis is seeing more counterfeits of established brand-name
products like the Sony PlayStation. He expects the enduring popularity
of Apple Computer’s iPod will spur knockoffs of the digital music
But imitations aren’t limited to well-known consumer devices. According
to Tidd, 3Com recently detected a counterfeiter selling a fake version
of a switch used to network office equipment. Printer toner cartridges
are also a favorite target for knockoffs.
In many cases, counterfeiters don’t reproduce a device themselves.
Instead, they take a DVD player or MP3 player from a low-cost
manufacturer, and slap on a label of a more reputable company — a
practice known as “rebranding.”
AGMA’s definition of counterfeit also includes items made by contract
manufacturers that contain unauthorized parts. Contractors, often based
in developing nations, are hired by original equipment manufacturers,
or OEMs, to make products carrying the OEM brand. But contract
manufacturers don’t always follow the OEM’s specifications, Tidd said,
and can produce shoddy products with high return rates.
Consumers generally can’t tell if a product they buy contains
unauthorized parts. According to Tidd, the responsibility lies with
OEMs to determine whether a product is up to spec, following up on
clues like a sudden spike in returns.
For shoppers, Loomis said, guidelines for avoiding counterfeits are
pretty basic. If a price seems too low, there’s probably a catch. This
is particularly true of sellers on auction sites like eBay, where
counterfeiters commonly hawk their wares.
EBay has a longstanding program in place for intellectual-property
owners to identify unauthorized sales, but doesn’t monitor each new
listing added to the site to determine if it’s a counterfeit, said
Chris Donlay, an eBay spokesman. In addition to counterfeits, auction
sites also attract sellers of gray-market goods, which are products
sold through an unauthorized channel.
As for counterfeiters, the electronics sector is attractive because
products have a high retail price compared to other watches or
handbags, said Marie Myers, director of internal audits for
Hewlett-Packard and a former AGMA president.
“If you counterfeit a handbag, the handbag may sell for $10 or $20,”
she said. “When you’re counterfeiting electronics, the unit price is
That’s also why counterfeit technology will likely anger customers more
than other types. After all, Myers noted, most people who buy a Gucci
handbag from a street vendor for $10 know it is a fake. If it falls
apart, they won’t be especially surprised.
But an unwary online purchaser of a $2,500 computer, AGMA noted in its
report, may not be as understanding when it breaks. They’ll be even
less understanding when they find out a warranty doesn’t apply, since
the product is a counterfeiT