Counterfeiting
Information
PRODUCTS
THAT HAVE RECENTLY BEEN COUNTERFEITED
- Watches
- Clothing
- Sunglasses
- Handbags
- Video Tapes
- Baby Food
- Shampoo
- Nutritional formula
- Cough drops
- Liquor
- Fragrances
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- Candy
- Children's toys
- Brake pads
- Helicopter parts
- Airplane parts
- Computer software
- Ulcer medication
- Antibiotics
- Birth control pills
- Artificial heart valves
- Health and Beauty Aids
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HOW TO
SPOT A FAKE:
The International Anti-Counterfeiting
Coalition offers consumers five tips to help avoid purchasing
counterfeit goods. Keep an eye out for:
- Labels that are blurred or torn.
- Product names that are misspelled or altered.
- Unannounced changes in product content, color, smell or
packaging.
- Missing codes, 800 consumer numbers or trademarks.
- Products with unusual claims and warranties, or those
lacking the usual guarantees and/or licensing agreements
one should find.
IF YOU THINK A
PRODUCT MAY NOT BE LEGITIMATE, CALL THE NUMBERS LISTED BELOW:
- For automobile parts: GM AWARE LINE: 800-244-3460
- For computer software: Software Publishers Association: 1-800-388-7478
- For sports merchandise: 800-TEL-CAPS
- If you have difficulty locating the manufacturer or
require additional information about counterfeiting and
diversion, call The Kessler & Associates Tip Line: 1-888-TIP-OFFS
For other products, or for further information, contact the
International Anti-Counterfeiting Coalition at (202)
223-5728. |
...Countering Counterfeiting
(continued from page 1)
babies generic baby food with Similac labels,
and many of the infants refused to eat the lower-quality food
or developed rashes or experienced seizures. Users of fake
Head & Shoulders were exposed to bacteria that made people
with weakened immune systems ill. Both companies addressed the
problem, but it is impossible to say how many consumers now
hesitate to buy these products because they fear purchasing
tainted goods. These companies' reputations have suffered.
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As
counterfeiting continues to grow rapidly on a worldwide scale,
companies are being forced to take their heads out of the
sand. Customized proactive programs are becoming increasingly
popular. One of my clients says, "We think of it as
insurance, and set aside money in our budget to protect
ourselves from counterfeiting and diversion just as we do to
protect ourselves from fire. It makes sense in today's world.
We would rather spend a little money now than a lot
later." |
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...Product Diversion
(continued from page 1)
likes the idea of expanding into new markets,
and it knows that you're still making a profit, so the deal is
agreed to. Smart business move, right? Maybe not. The
retailer, it seems, took delivery of the widgets and
immediately shipped them back to the States, where he sold
them to distributors at $16.95 apiece. Even with the shipping
costs, he made a tidy profit, the distributors increased their
margin, and consumers still got legitimate goods. Everyone is
happy, except for you. Your business was undercut. That's
diversion.
When Profits Mean Losses
Diverted goods are a problem
because so many companies adopt a flexible pricing plan in
order to optimize profits. Many foreign countries couldn't
afford to buy American goods at domestic wholesale prices, so
the wholesale price is lowered. Or new markets may open up
domestically, provided that the company is willing to sell
products at special promotional or institutional rates.
Diverters see these price differentials as opportunity. Buy
low, sell high. It's the bedrock beneath all investment
strategies, the mantra chanted by Wall Street's gurus. It's
also a violation of contractual agreements, conspiracy to
defraud, and a breach of international trade and
transportation laws. But diverters fail to mention that.
The Victimless Crime
One problem with prosecuting
diversion is that it is difficult to establish where the harm
was done. With counterfeited ulcer medication, there are clear
victims-the consumer was sold bogus goods, the manufacturer
lost market share. But with diversion, it's less clear. The
goods are legitimate, the manufacturer still |
made a profit (though smaller), and no one was
harmed. But the business suffering from diversion can lose
millions of dollars a year.
What You Can Do
To avoid having your products
diverted, there are several steps you can take. First, be wary
of new accounts. If a potential overseas distributor asks you
to print all shipping markings only in English ("so that
we know it's really American goods"), if he offers his
own shipping services, or if he claims to have a large market
ready to buy, check him out. He may have set up a front
company that has a reputation for dealing in gray goods, or he
may have a history of making shady deals. If he has absolutely
no history, and the company seems to have been created
recently, be equally suspicious.
Second, get a third-party
evaluation of all unusual new accounts. Don't leave decisions
to sales and marketing, because they're trying to meet quotas
and increase numbers. Do research and be objective. Third,
consider using a cargo inspection company to oversee the
transportation of goods, making sure that shipments actually
go where they are supposed to. Knowing that such a company is
involved will often cause a potential diverter to back out in
search of easier prey. And fourth, contact a third-party
investigative consultant to regularly review your paperwork.
Employees who know that they are being checked up on are far
less likely to try making a little money on the side than
employees who feel they are given free rein. Periodic reviews
of bills of lading, invoices, and shipping receipts will
assure you that your product is moving as it should. And if
something out of the ordinary comes up, trained investigators
will know how to quickly follow the paper trail and find out
where the goods went. |
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