UK Report Misses the True Cost of Counterfeiting

Aug 31, 2010

Recently, the UK Telegraph and Daily Mail published stories discussing a new report which claims that purchasing counterfeit goods benefits consumers and the companies whose brands are being knocked off. Not only is this journal article highly presumptuous, but it could not be farther from the truth. Counterfeiting is a global problem with enormous consequences. Criminal networks, motivated by enormous returns on investment and minimal criminal penalties, according to the OECD pass over $250 billion dollars in counterfeit merchandise into the global economy. The losses in revenue for brand owners are just the tip of the iceberg in terms of the damaging effects of counterfeiting. Global counterfeiting has lead to the losses of millions of jobs, billions of dollars in tax revenue, and has created sophisticated criminal networks that have been well-documented, particularly in Italy and Hong Kong.

Moreover, in many cases, the criminals may be producing a litany of counterfeit products. This was the case for a New York man who was recently sentenced to 37 months in prison for his role in a counterfeiting scheme that included trafficking more than one million fake Trojan condoms, luxury handbags, Barbie dolls, and comic books. The point here is that counterfeiters are not limited to producing one fake good or another–but rather emphasizes the nature of this illicit activity–counterfeiters will go to any lengths to make a profit. Dr. Wells, in this study, implies that not all counterfeiting is equal, and that the purchasing of some fakes should be allowed. But he misses the point in that all counterfeiting is criminal activity that is damaging our economy, forcing companies and small businesses to cut jobs, and providing a funnel of money for illicit activities.

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