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 user 2005-09-15 at 10:01:00 am Views: 55
  • #12767

    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
    Special Partner Promotion

    “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
    typically higher.”

    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