OVERVIEW OF COUNTERFEIT PRODUCT PROBLEMS

"Perhaps most troubling is the widespread threat counterfeiting poses to public health and safety.  Few Americans truly appreciate the significance, scope or consequences for this crime." 
Senator Orin Hatch (R-Utah), 1995

Product Counterfeiting is Big Business:
Losses to U.S. business from the counterfeiting of trademarked consumer products is estimated at $200 billion a year according to the Department of Commerce.  Often the consumer thinks of pirate computer software, fake Rolex watches and the like as the primary counterfeit goods being offered to the consumer.  This is not the case.

Common Counterfeit Products:
Counterfeit goods include auto parts, aircraft parts, baby formula, apparel, purses, jewelry, shampoo, cosmetics, sunglasses, software, medical devices, consumer drugs and medicines and food products. . . and more.

Safety Concerns Involving Counterfeit Products:
It can be unnerving boarding a commercial airliner, knowing that the odds are good that the aircraft has at least a few counterfeit parts in it.  Airliners and helicopters have crashed due to such spurious components.  In one crash alone, 68 people died.  Counterfeit auto parts--notably brake pads--have also caused deaths.  Counterfeit shampoo has caused hair loss, counterfeit stomach medicine has caused ulcers and counterfeit toys and baby foods have caused serious problems for children.  Counterfeit clothing is generally quite shoddy and "replica" kids clothing usually is not flame retardant and can present a fire hazard.  Likewise, counterfeit sunglasses are generally not shatterproof and often have no ultraviolet protection.

Product Counterfeiting Costs Americans Jobs:
The sale of "replica" watches do, of course, cost some American jobs.  However, the problem is worse with counterfeit auto parts.  The U. S. Department of Commerce has estimated that the auto industry could employ 210,000 new workers, if the cost of counterfeit products could be eliminated.

Counterfeiting Benefits Organized Crime and Terrorists:
The FBI believes the 1993 New York World Trade Center Bombing was financed by counterfeit T-shirts and sports apparel.  Product counterfeiting frequently plays a part in the laundering of drug money.

Tax Avoidance by Counterfeiters:
In many cases, counterfeiters do not charge customers sales tax, or charge the tax, but retain it.  Additionally, many counterfeiters pay only a fraction of their true income tax liability, if they pay any at all.  This shortage, of course, is made up by the rest of us.