How much does counterfeiting cost companies?

Counterfeiting goods has become the costliest crime worldwide. In 2018, counterfeiters are seeing sales of these products up to $1.7 trillion a year. By 2022, the product pirate problem is anticipated to reach $2.8 trillion.

How e-commerce plays a role

Many products and parts are produced overseas and purchased through e-commerce. Online retailers such as Amazon, Walmart, and eBay provide the perfect platform for counterfeiters to bring fake goods to market. The sheer volume of mail coming into the U.S. with these illegitimate products being delivered is staggering and, therefore, impossible for postal workers to manage the excessive number of counterfeit packages which arrive in the United States every day.

In 2017, over 34,000 products were seized from Amazon's website for being counterfeit as reported by the overseeing agencies of U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement.

The counterfeiting occurs not only in end-user products, but also in parts used in manufacturing such as aircraft parts, vehicle airbags, and halogen vehicle headlights. In fact, according to an article in Forbes Magazine, an estimated 250,000 airbags being used in American cars are counterfeit. Additionally, the Federal Aviation Administration estimates 520,000 parts used in planes are counterfeit. The implications of this for safety are unsettling at least.

Impacts of counterfeit products and parts

For consumers, counterfeit products have not been tested for proper and safe use the same way that noncounterfeit products are tested. For example, knock-off products and parts produced overseas are not subject to the same safety rules and regulations as products manufactured in the U.S.

For manufacturers, the cost to legitimate companies are sometimes obvious and other times not so obvious.

  • Sales - Sales are affected when people purchase a lower-priced counterfeit item or part rather than a legitimately produced and tested product.
  • Lawsuits - Companies can be party to a lawsuit when counterfeit parts used in their products fail, seriously injuring or even killing end users.
  • Job loss - When projected sales of vehicles, for example, go down, so does the need for labor to complete the manufacturing. This could lead to layoffs. By 2022, an estimated 5.4 million jobs will be lost due to counterfeiting.
  • Brand and reputation - Other costs such as brand and reputation are less easily measured but still very real. A highly publicized case of injury attached to a company's name can be remembered negatively for years to come.

What can companies do to prevent counterfeiting of their products and parts?

Protect your ideas and design portfolios. An experienced intellectual property lawyer can assist you in obtaining patents, trademarks, and copyrights to safeguard your innovations. An IP attorney can also litigate cases of patent piracy and counterfeiting when they are discovered.

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