Every year, more than 11 millioncontainers arrive into the U.
Another 13 millioncome from road or rail.
And another quarter billionpackages enter the U.
by air travel.
It turns out a growing numberof these shipments contain counterfeit or fake goods.
Seizures ofcounterfeit products at U.
borders have increased 10-fold overthe past two decades.
The total value of seized goods, if they’d been real, reached nearly $1.
4 billion dollars in 2018.
Most are coming from mainlandChina or Hong Kong.
The Chinese counterfeiters popup so fast.
The moment you take themdown, another one pops up.
The rise of e-commerce hasfueled counterfeiting around the world.
Amazon said it blocked more than3 billion suspected fake listings from its marketplace in 2018.
International e-commerce sellers must stepup and do more.
The economic cost ofcounterfeiting is mounting.
The OECD says fake goods account formore than 3 percent of all global trade.
While some estimate thesale of illicit products could result in more than 5.
4 million net job lossesworldwide by 2022.
businesses are going outof business because of counterfeit goods.
We visited one of thebusiest entry points in the U.
to get a glimpse at the influx offake products and to find out what authorities are doingto stop counterfeiting.
Counterfeit goods are unauthorized copiesof products protected under intellectual property regulations.
Louis Vuitton, Michael Kors, Gucci andyou see this has some writing on this in another language.
Sellers try to trick consumers intobuying imitation goods by using logos, symbols and featuresthat identify certain brands.
You’ve probably seen counterfeit productsbefore, like knockoff Louis Vuitton purses orfake Rolex watches.
Some are made using lower qualitymaterials so they’re less expensive to produce.
Counterfeiters make moneyby luring consumers to these well-known brands, trying to convince themthey’re getting a deal on the real thing.
Selling counterfeit goodsis against the law in the U.
Most Americans, I think, havethe misguided impression that if I buy a Rolex watch and I know it’sa fake because I bought it for 20 bucks on the street, not for twothousand bucks in the store, who gets hurt by that? The reversequestion is the more important one.
Who’s benefiting from that? Overwhelmingly, it’s organized transnationalcrime that is running counterfeiting networks.
Counterfeits come inall shapes and sizes.
According to U.
Customsand Border Protection.
The most popular counterfeit itemsare apparel and accessories, watches and jewelry, footwearand consumer electronics.
We got the Nike sneakers.
One of the first things you lookat is you can barely bend this.
I’m actually having to use a lot ofstrength just to get a little bit of bend out of this.
Counterfeiters take advantage of Nike’sname, brand recognition and multi-million dollar marketing campaigns tosell fake versions of the signature sneakers.
Do you see alot of counterfeit Nikes? Yes.
We see a lot ofa lot of counterfeit Nikes.
Consumer products and pharmaceuticals also makeup a big share of counterfeit goods.
These are especially dangerous becausethey pose health and safety risks.
In 2018, Europol intercepted13 million doses of counterfeit drugs ranging from opioids to heartmedications worth more than $180 million .
The agency said it’s seena rise in counterfeit medicine in recent years.
They’re not held tothe same standard, they can go under the radar, they don’t haveto worry about the FDA.
Not only is it not going toprobably treat the ailment that you have, but it’s potentially going to giveyou ther ailments because you just don’t know what’s in that product.
With more consumers shopping online, it’s becoming easier for fakes to beat out legitimateproducts on marketplaces.
E-commerce platforms like eBay, Amazon andAlibaba have ushered in a golden age for counterfeiters.
One of the great opportunities ofthe digital economy is that someone in a small town in Delaware cancome up with a really neat product, and they can sellit globally relatively seamlessly.
But if it really catches onand someone else can simply counterfeit or copy it, then yourcompetitive advantage is dramatically reduced.
Khubani is the CEO ofTel ebrands, a New Jersey-based company that pioneered the concept ofAs Seen on TV.
Billy Mays here forthe Jupiter Jack.
Telebrands says it has sold billionsof dollars worth of products like the Pe diVac orLint Lizard through TV infomercials.
The counterfeits pop up on Amazon within30 to 60 days of us launching a TV commercial.
So now when consumers go toAmazon and search for our particular product, more people buy the counterfeitbecause it’s a cheaper price than buy our original product.
This is the original product.
And this is the counterfeit.
Side by side, you canabsolutely tell the difference.
The counterfeits on Amazon have hada devastating impact on our business.
Khubani said he was sofrustrated he took his concerns all the way to President Donald Trump.
I met with Trump in Bedminster, New Jersey, at his golf club.
We just pulled it shows up tothe table and started talking to him.
And once he said counterfeits on Amazon, that’s all we had to say.
We had his attention.
Khubanisaid counterfeits on Amazon are threatening the business models ofcompanies like Tel ebrands.
The firm invests in findingdeveloping and advertising new products.
It expects to recover those investmentsonce the products are sold.
That’s not happening thanksto the fakes.
Think about it.
If we spend, put all these resources time, energy, money, the design, make sure the consumerwants to buy it, come up with a marketing campaign to launchthe product and do all that effort and find within 30 days theproduct dies a very fast death because the counterfeits is not muchincentive to be innovative and continue to come upwith new products.
Te lebrands is one of many U.
firms struggling to fendoff counterfeiters online.
In January 2020.
The Department of Homeland Security issueda report saying the rise of e-commerce has intensified theproblem of counterfeit trafficking and puts U.
companiesand entrepreneurs at risk.
That puts them out of business.
That’s that’s the cost.
Bob Barchiesi testified in aHouse Judiciary Committee hearing in 2019 about how e-commercepresents new opportunities for counterfeiters.
At the click of a mouse, y ou could get product and you get it directlyshipped to your house.
Booming e-commerce sales have led toa surge in shipments of small packages.
There were 161 million expressmail shipments in 2018 and 475 million packages shippedthrough international mail.
The International Chamber ofCommerce found counterfeiters use smaller shipments to try tolower their risk of detection.
Customs and BorderProtection officials are being inundated by a growing number ofsmall shipments arriving into the country every day.
A rule that allows packages valuedat under $800 to enter tax-free has exacerbated the problem.
When we’re talking about early 2000s, you’re looking at about between 3, 000 and 5, 000 seizures.
Now, you fast forward to today.
We’re almost pushing 40, 000seizures a year.
Not only does it increase theworkload and that really gets the officers in the trenches and they reallyhave to spend a lot of time and finding that, but it’sa multi-billion dollar industry.
We’re just scraping thetip of the iceberg.
imports more goods from Chinathan any other country in the world.
At this warehouse in NewJersey, about 90 percent of the products arrive from China.
And it’s the job of U.
Customs and Border Protection officials to decide which ones are realand which ones are fake.
Boulder, Colorado-based Ni te Izeis another company that has suffered from counterfeiting.
And it’s fighting back.
It said it removed 75, 000counterfeit listings from online marketplaces in 2019.
I would say 99 percent of thecounterfeit products that we see are coming directly from China.
The supply chain, the components, theraw materials, all of the things that you need in orderto make counterfeits, you have those set up in China.
In 2018, U.
customs agents seized a shipmentof 300 counterfeit Nite Ize accessories like these that had beensold through Amazon by sellers with names like “Snakey, ” “Max MaxMax, ” and “Very Lee Good.
” We filed a lawsuit to tryto track down those counterfeiters.
When Amazon heard about the breadth ofthe issue, they took over the case.
Amazon has subpoenaed other techand financial firms to try to get more information aboutthe fakers’ identities.
But tracking down counterfeiters iseasier said than done.
The sellers are really good athiding their identity, and so they they put up fake stores withfake names and fake addresses.
And so you’re really leftto find some breadcrumbs.
The immense cost of counterfeiting caseson top of brand damage and loss sales are too high forsome businesses to take on.
But there’s nobody we can goafter for counterfeiting our products.
Typically, if a company is locatedthe United States and they counterfeit our product, wehave legal recourse.
But if they’re based in China, there’sno way we can enforce our intellectual property rightsin China.
China pledged to take steps tolower the number of counterfeits produced in the country as part ofthe phase one trade agreement with the U.
China has also pledgedfirm action to confront pirated and counterfeit goods, which is a big problemfor many of the people in the room.
We’ll make sure that this happens.
And we have very, very strong protection.
Some still say China will onlytake the issue seriously once businesses in the country experiencethe costs of counterfeiting themselves.
I think it gets solvedwhen you have Chinese companies and Chinese in innovation andthey start getting counterfeit.
And that’s happening.
Some businessessay e-commerce platforms need to be held more accountable.
Right now, e-commerce companiesaren’t usually liable for counterfeits sold by a thirdparty on their platforms.
In Amazon’s case, more than halfof total merchandise sales come from third party sellers.
How many more brick and mortar retailershave to go out of business before someone goes after Amazon? How many patent holders and inventorshave to lose millions in royalties before the governmentfinally does something? In a statement to CNBC anAmazon spokesperson said, “We are actively fighting bad actors in protecting ourstore and we will continue to work with brands, governmentofficials and law enforcement.
” The company launched Project Zero in2019, which allows brands to remove counterfeits fromthe marketplace.
It said it invested more than$400 million to fight fraud, counterfeit and other formsof abuse in 2018.
eBay told CNBC it invests millionsof dollars annually to fight counterfeits.
Chinese e-commerce giantAlibaba launched an anti-counterfeiting alliance in 2017after widespread criticism about fake goods on its platforms.
In January 2020, President Trump signedan executive order that tries to prevent counterfeitingon e-commerce websites.
Meanwhile, legislation introduced in 2019by a bipartisan group of senators aims to give U.
Customs and Border Protection officerswider authority to seize products that infringe certaintypes of patents.
Frankly, it’s more important that wefind ways to protect the creators who helped make American societyso rich and so robust.
Consumers also play a role inreducing the sale of counterfeits.
Officials say tell-tale signs includea misspellings on packaging, bad reviews and bargain prices.
The bottom line is, if it lookstoo good to be true, it is.