As the saying goes, you get what you pay for, and that is all too true these days thanks to cheap global manufacturing and the explosion of e-commerce.
According to the U.S. Department of Commerce release of 3rd Quarter 2016 E-Commerce Sales, the number of Americans making purchases online show no signs of slowing down. In the report total e-commerce sales tipped the $101 billion mark, an increase of 4% (±1.1%) from the second quarter of 2016. E-commerce now makes up 8.4% of total sales, a figure that has kept up with overall consumer spending and quadrupled in the past decade.
A Forrester Research report titled “U.S. Online Retail Forecast: 2015 to 2020,” predicted online sales are expected to surge past $530 billion by 2020, a number that online consumers are on pace to exceed.
Consumers turn to the web for convenience, endless aisles, and above all, price. In an attempt to stretch their dollar, consumers have pushed for less expensive goods and services to which companies have responded with outsourced contract manufacturing and low-to-no-overhead online storefronts with products drop shipping directly from the manufacturer or distributor.
This race to the bottom on pricing has been a boon for consumer spending, but has had an unintended consequence—emphasis on consequence. Counterfeiting has moved off of the streets of major cities and into the online consumer’s browser.
A 2013 report published by the Organisation for Economic Cooperation and Development, the global counterfeit industry is worth as much as $461 billion. Thanks in large part to convincing stock images, slightly discounted prices, and forged brand logos and safety symbols, counterfeit manufacturing of goods is projected to hit nearly $1 trillion dollars by 2022.
|Global economic value of counterfeiting and piracy could top out at $2.3 trillion by 2022, and in excess of 5 million jobs lost. Click to Tweet|
New research commissioned by the International Trademark Association (INTA) suggests the 2022 figure only represents part of the impact of international trading in counterfeit goods. The overall global economic value of counterfeiting and piracy could top out at $2.3 trillion by 2022, and in excess of 5 million jobs lost.
Not surprisingly, the United States has been the country hardest hit by this surge in counterfeit e-commerce.
The risks associated with the global counterfeit industry isn’t strictly economic. There is also personal risk involved with purchasing counterfeit goods—no greater example than in the consumer electronics and power cord industries.
Counterfeit electrical cord and components risk damaging expensive electronic equipment and causing personal injury to their users. Apple has been fighting dangerous counterfeit power cords for years and filed a trademark infringement lawsuit against one of the companies producing low cost alternatives to their certified power cords.
In the suit, filed in October of 2016, Apple stated, “Counterfeit power products, such as those supplied by Mobile Star, pose an immediate threat to consumer safety because, unlike genuine Apple products, they are not subjected to industry-standard consumer safety testing and are poorly constructed with inferior or missing components, flawed design, and inadequate electrical insulation. These counterfeits have the potential to overheat, catch fire, and deliver a deadly electric shock to consumers while in normal use.”
Independent verification from UL (Underwriters Laboratories) included in Apple’s complaint, said that the fake power adapters “were so poorly designed and constructed that they posed a risk of lethal electrocution to the user.”
Unfortunately, consumers are not necessarily victims. In the their book, The Economics of Counterfeit Trade: Governments, Consumers, Pirates and Intellectual Property Rights, Peggy Chaudhry and Alan Zimmerman, shed light on 2002 research that lists product attributes that should throw up a red flag for consumers.
The top three attributes that indicate the product is likely counterfeit are; a lower price, the location where the product is being sold and poor packaging.
Two of the three attributes are able to be detected at the point of purchase. Prices that seem too good to be true usually are and is often a strong indicator of a less than reputable company. As for the location being sold, examine the website for misspellings, awkward language and overall poor grammar. Seek out the contact us page—the consumer should be wary of websites that are missing the contact us page or if the page only offers a contact form. Reputable companies will list verifiable locations along with valid phone numbers for business to be conducted.
While the study examined attributes of a pirated video compact disc, experts suggest that these attributes can apply to all counterfeit goods.
The book also outlines studies that suggest that consumers are at times willing accomplices in the criminal activity associated with buying counterfeit or pirated goods—developing attitude statements such as counterfeit products do not hurt the US economy, and I buy counterfeit products because the prices of original manufacturer products are unfair and gouge.
Just how pervasive is the counterfeit problem in the electric power path industry? There is no way to really know. Counterfeiting is exceedingly difficult to police and control. Repercussions for producing or selling fake goods range in severity and is largely dependent on the country in which the counterfeit goods originate.
Today, there is no coordinated global effort to effectively take down the counterfeit industry. Avoiding fake items falls almost exclusively on the consumer in the ultimate case of buyer beware.