This page looks at questions about forgery, fraud and
authenticity regarding consumer products such as accessories
(the '$5 Rolex'), 'organic' food and clothing.
It covers -
following page considers pharmaceuticals, publishing and
the forgery of components such as replacement equipment
Questions about piracy of intellectual property are explored
in the IP Guide on this site
and the supplementary profile on trademarks.
Preceding pages of this profile have suggested
that misrepresentation by vendors and forgery are a feature
of most markets, with prevalence reflecting factors such
as potential returns, the cost of creating a fake, penalties
for forgery and the likelihood of being convicted.
It is unsurprising that fake sportswear, watches, designer
pens and handbags are found in Europe, Australia, China
and other locations. For some people there is a reverse
chic in buying - even flaunting - a fake or a knock-off.
Attitudes about fraud in food products are less positive,
although in advanced economies with strong traditions
of consumer protection
and consumer activism
most people appear to believe that what they are getting
is indeed what they asked for.
The International Chamber of Commerce argues that counterfeiting
accounts for around 5% to 7% of world trade, with a higher
figure in sectors such as the music and computer software
that find themselves competing with counterfeiters suffer
a direct loss in sales. Some markets are even dominated
by counterfeiters, creating barriers of entry for the
producers of the genuine product. Consumers, who are
deceived into believing that they bought a genuine article
when it was in fact a fake, blame the manufacturer of
the genuine product when it fails, creating a loss of
Countries also suffer from the consequences of counterfeiting
and some of the harmful effects include loss of tax
revenues, loss of job opportunities and the use of proceeds
of counterfeiting to fund other crimes. In countries
where counterfeiting is rife there may be a lack of
much-needed foreign investment and subsequent foreign
know-how because IP rights are not being adequately
World Customs Organization estimates trade in 'fakes'
as US$512 billion; other organizations put the proportion
of global trade in fakes as over 10%.
Academic comments are provided in The Economics &
Management of Global Counterfeiting (PDF)
by Derek Bosworth & Deli Yang. Susan Scafidi's cogent
2006 Written Statement on H.R. 5055, 'The Design Piracy
Prohibition Act' (PDF)
and Alexandra George's E-shopping for Fakes: The Internet
Business in Trademark Counterfeits (PDF).
There is a more popular treatment in Knockoff: The
Deadly Trade in Counterfeit Goods (London: Kogan
Page 2005) by Tim Phillips, Deluxe: How Luxury Lost
Its Luster (New York: Penguin Press 2007) by Dana
Thomas, the fervent Illicit: How Smugglers, Traffickers
and Copycats are Hijacking the Global Economy (New
York: Anchor 2006) by Moises Naim and Bee Wilson's Swindled:
From Poison Sweets to Counterfeit Coffee – the Dark
History of Food Cheats (London: John Murray 2008).
For a Canadian view see the 2007 Counterfeit Goods:
A Threat To Public Safety report
by the national parliament's Standing Committee on Public
Safety & National Security
Some consumption of forgeries is innocent: we assume that
few people would knowingly buy vodka that includes methylated
spirits, fake pharmaceuticals or ersatz aircraft parts.
Other consumption involves user complicity. Surveys by
UK pollster MORI revealed that 40% of British consumers
admit that they would knowingly buy counterfeit products
"if the price and quality were acceptable".
76% of that group would buy fake clothing or footwear
(it is claimed that up to 11% of 'famous brand' clothing
and footwear in circulation is illicit), 43% watches,
38% perfume and 22% electrical goods.
A 1998 New Zealand government report
suggested that piracy and faking of goods will increase
worldwide because of the -
cost of development of more sophisticated software and
cost of replicating sophisticated products
of brands and the desire of consumers to have (in particular
to be seen to have) goods bearing such brands
of entertainment and the desire of consumers to experience
cost of international trade, and the reduction in restrictions
in international trade
of the underworld because of the ease of travel and
periodic breakdown of law and order in various regions
through political unrest and economic recession
to sell via the net means greater opportunity to purchase
without prior inspection, and from sources less easily
fashion and accessories
Some sense of faking of fashion items is provided by reports
in 2006 from the German Customs agency that over the preceding
six months it had seized 117 shipping containers that
contained nearly a million pairs of fake Nike trainers,
toys and watches - with a street value of US$490 million
if the goods were legitimate.
The French Customs agency more graphically supplied the
BBC with film of a seizure where its officials discovered
enough fake Louis Vuitton fabric to cover 54 tennis courts.
In 2002 the International AntiCounterfeiting Coalition
(IACC) argued that some 18% of counterfeit products seized
by US Customs were up of fashion and related items: clothing,
handbags, watches and sunglasses.
Works on law and practice include 'The ethics of counterfeiting
in the fashion industry: Quality, credence and profit
issues' in Journal of Business Ethics by Brian
Hilton & Stephen Chen, Julie Tsai's 2005 'Fashioning
Protection: A Note on the Protection of Fashion Designs
in the United States' in 9 Lewis & Clark Law Review
447, Anne Briggs' 'Hung Out to Dry: Clothing Design
Protection Pitfalls in United States Law' in 24 Hastings
Communications & Entertainment Law Journal 169,
Mary Lynn Stewart's 2007 'Copying and Copyrighting Haute
Couture: Democratizing Fashion, 1900-1930s' in 28 French
Historical Studies 1 (PDF),
Safia Nurbhai's 2002 'Style Piracy Revisited' in 10 Journal
of Law & Policy 489 (PDF),
Jonathan Barnett's 2005 'Shopping for Gucci on Canal Street:
Reflections on Status Consumption, Intellectual Property,
and the Incentive Thesis' (PDF)
in 91 Virginia Law Review and thinner 2005 Between
the Seams, A Fertile Commons: An Overview of the Relationship
Between Fashion and Intellectual Property (PDF)
by Christine Cox & Jennifer Jenkins.
The number of food and beverage items sold under
forged labels or where sale involves mis-representation
(for example that a commodity is 'organic') is unknown.
In 2006 the UK Food Standards Agency gained attention
with a claim that around 10% of "our weekly shopping
may be counterfeit". That claim reflected indications
in the UK, Australia and elsewhere that
eggs were being labelled as the more expensive free-range
46% of bags labelled as basmati rice had been diluted
with inferior varieties, some by as much as 60%
claims about the organic status of fruit, vegetables
on some wine bottles were counterfeit; others featured
legitimate labels but had been filled or refilled with
inferior wine or wine adulterated with nasties such
of commodities ostensibly with a protected designation
of origin (PDO) status, eg prosciutto di parma that
came from Bulgaria
of imported and/or non-organic honey as the local and
organic, with honey from India, China, Tanzania, Argentina
and Moldova found to be contaminated with antibiotics
banned in food production
use of health marks (eg the symbol signifying that eggs
came from hens vaccinated against salmonella)
mislabelling of farmed fish (including species such
as salmon, trout, sea bass and bream) as the more expensive
non-premium species as their more desirable cousins
(for example bonito becomes tuna)
of traditional deceptions such as inclusion of colouring
and water to mislead consumers about weight, quality
and other attributes (one UK survey indicated around
40% of frozen chicken breasts had a meat content of
between 26% and 5% less than appeared on packaging)
of genetically modified organisms in what are claimed
to be GMO-free products.
to identify food fraud now include DNA testing (a unique
signature for species), testing of isotopes (useful for
high-value PDO items), physical inspection (marks made
by wire racks on newly-laid battery farm eggs are discernable
under ultraviolet light) and inclusion of markers (eg
in high end beverages such as Gordon's gin).
As in the past, consumers rely on retailers as a guarantee
of quality, although it is clear that some vendors have
been misled about the authenticity of particular items
and others have turned a blind eye to potential problems.
Promoters of some high end products have foreshadowed
mechanisms such as online verification by consumers of
specific items, for example an online register that features
a unique number for each bottle of burgundy.
Some 'fraud' is simply exploitation of consumer naivety.
Coca-Cola was questioned by the FSA in 2004 over labelling
of its Dasani "pure, still water" - "as
pure as bottled water gets" - alas merely a filtered
version of the wet stuff that came out of the taps at
its factory in Sidcup, Kent. Thames Water, which supplies
homes in the area where the product is sourced and bottled,
sells water at the equivalent of 0.03p per 500ml. Coca-Cola
offered Dasani for 95p per 500ml. "Pure" did
not mean lovingly extracted from a pristine mountain spring.
Unsurprisingly, when a bottle of premium wine can retail
for US$15,000 or more (the record is £105,000 for
a bottle of the Lafite 1787) - and collectors lust after
vintages supposedly from the cellar of Napoleon I, Thomas
Jefferson, Tsar Nicholas II but provenance is fuzzy -
there is a trade in counterfeit wine. In the first century
AD Pliny the Elder lamented that "not even our nobility
ever enjoys wines that are genuine". More recently
it has been claimed that more bottles of 1982 Petrus are
consumed in Las Vegas and Hong Kong every year than ever
produced by the Bordeaux estate, which currently ships
around 2,500 crates in a good year.
Some contemporary observers have claimed that fakes account
for one in 20 upmarket bottles; as with the sale of antiquities
investigators have questioned whether leading auction
houses have turned a blind eye. During 2007 the FBI thus
sent subpoenas to major auctioneers, dealers and collectors.
Christie's, which sold $58m (£31m) of rare wine
in 2006, responded that it does not sell any lot known
or suspected to be inauthentic -
take appropriate steps to establish authenticity, and
work with the leading experts, authorities and institutions
in the relevant field to research the property that
is consistent with claims noted earlier in this profile.
Scams are highlighted in The Billionaire's Vinegar:
The Mystery of the World's Most Expensive Bottle of Wine
(New York: Crown 2008) by Benjamin Wallace, discussing
controversy over sales by Hardy Rodenstock (aka Meinhard
In Australia one gang was caught in 1998 selling fake
1990 Penfolds Grange. The Italian mafia more industriously
unloaded over 16,000 bottles of 1994 and 1995 Sassicaia.
In France during 1983 leading dealer Remoissenet was found
to have used falsified papers in selling what were purported
to be 500 cases of Meursault Les Genevrières premier
cru, Puligny-Montrachet and other treats. Bouchard Père
& Fils, the largest vineyard holder in the Côte
d'Or, paid fines of US$400,000 after being found in 1987
to have been mislabelling or doping 23,000 cases.
Misrepresentation and adulteration is evident in other
products. In Europe, for example, there have been recurrent
scandals regarding labelling of olive oil, with dealers
passing off sunflower and hazelnut oil as premium oilive
oil or exploiting EC production subsidies by relabelling
non-EU oil as coming from Italian farms. That led one
EC fraud investigator to comment "it is as profitable
as cocaine but without the risk".
In 2007 the New York Times questioned claims
that upmarket sportswear from Lululemon Athletica contained
seaweed, with the fabric supposedly releasing "marine
amino acids, minerals and vitamins into the skin upon
contact with moisture" to reduce stress and provide
"anti-inflammatory, antibacterial, hydrating and
detoxifying benefits". Its lab, alas, could not find
any sign of seaweed or of marine amino acids.
Claims that products/services are 'ethical' or 'green'
have a commercial value and are thus susceptible to fraud.
Critics, including 'environmental marketers', have expressed
concern regarding 'greenwash' - essentially efforts to
mislead consumers, journalists and regulators about a
vendor's ethical or environmental bona fides.
Explicit misrepresentation or elision includes -
vagueness, eg promotion of a product (including insecticides)
as "chemical-free", "eco-friendly",
"green", "all-natural" (just like
arsenic, cobra venom and deadly nightshade?) or "non-toxic"
certification, eg where a product is falsely claimed
to have been certified by a legitimate body, where there
is no certification ("certified organic" but
not by any discernable entity) or where certification
was provided by a subsidiary/affiliate
of offsets, eg "from sustainable harvesting"
but without an indication of the impact of shipping
the product across the globe or the environmental impact
of production (sustainable timber processed in a worst
eg indications that no animals were used in product
testing and production or that a product is CFC-free.
offers, tickets and tokens
In practice most scams are limited by the perpetrators'
ingenuity and the consumer's credulity or lack of resources
for verification. In 2005, for example, one Australian
internet scam saw consumers receive a fake Hoyts media
release by email. That message promoted a supposed deep
discount offer on tickets for the national cinema chain.
The scam has been attributed to a disgruntled former employee
amid ructions over the group's latest restructure, which
saw departure of around half the staff in the Hoyts' HQ.
In 2009 NSW Police reported that fake department store
gift cards had been used to acquire electrical goods,
with over $750,000 of those items then being sold on eBay.
A raid on the apartment of Andrew Sun allegedly found
41 iPods, 180 laptop computers, eight personal computers,
42 mobile phones, 64 PlayStation consoles, 201 GPS navigation
units, 113 cameras, 18 PlayStation portables, 12 Nintendo
Wii consoles and 220 Myer gift cards.
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