Counterfeits, Terrorists and Retailers, Oh My!

Nov 05, 2003
George Anderson

By George Anderson

It used to be that you could buy a counterfeit watch or handbag and know that the money was going to support a needy scam artist or, at worse, the local Mafioso family. Ah, but those were the good old days. Today, law enforcement officials tell us the money you spend on a genuine imitation Rolex or a three-month’s supply of pills that are not Viagra no matter what the Web site says may be going to Osama Bin Laden himself.

According to an Insight Magazine article by Timothy Maier, sales of counterfeit goods in the U.S. are up to roughly $500 billion a year.

Spencer Burgess, director of Carratu International’s Intellectual Property Investigations division told Insight, “Every major terrorist group in the world is into counterfeiting one way or another. It is a fairly straightforward way to raise funds. It does not have to involve the sale of anything sinister. It’s easy to make money from something as bland as a T-shirt. The perception many people have that counterfeiting is run by small groups that are just trying to make a few dollars on the side is completely misplaced. It is very much more organized and malicious.”

Counterfeits are not just being sold on street corners or out of the trunks of cars anymore either. Legitimate retail businesses have sometimes knowingly participated in the consumer fraud.

Peter Leeuwerke, chief executive officer for Sure Trace Security Corp., said, “Senior-level management may not be aware, but the local store manager is pushing for profits. Sometimes they may get about 200 [boxes] of jeans in and they hold this incredible sale. In some of these cases the store managers know exactly what they are doing.”

A number of lawsuits have been filed against Wal-Mart for selling counterfeit goods. Tommy Hilfiger’s suit resulted in an out-of-court settlement as did similar suits filed by Nautica and Ralph Lauren.

The sneaker and sportswear manufacturers, Adidas and Nike, sued Wal-Mart in 2000 alleging the retailer was selling counterfeit copies of their goods. Wal-Mart is reportedly doing an internal investigation to determine if these charges have merit.

Moderator’s Comment: How are counterfeit goods making their way into legitimate retail businesses such as discount stores, specialty retail, etc.? What
roll do retailers have to play in assuring they are not selling counterfeits?

First, a disclaimer of sorts with a request from yours truly: The magazine used Wal-Mart to provide an example of counterfeiting at work in mainstream retail.
To our knowledge, Wal-Mart is no more at fault, perhaps less so, than other retailers who sell counterfeit goods. So, please let’s leave the evil empire rants for another day.

According to the Insight Magazine article, China is far-and-away the largest supplier of counterfeit goods in the world to the tune of $26.7 billion in
annual sales. Hong Kong, Mexico, Korea and Malaysia, the next largest suppliers of counterfeit goods, account for $5.9 billion combined.

Carratu International PLC, a London-based investigator of abuses of intellectual property says nine percent of the world’s total trades are being done in
counterfeits. The company claims it has “unearthed links between counterfeiting and Hezbollah, Basque ETA, Chinese Triad gangs, the Japanese Yakuza crime syndicate, the Russian
Mafia and the drug cartels.”
Anderson – Moderator

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