Why Is Counterfeiting Bad for Business and the Economy

The effects of counterfeiting are not only evident in annual financial reports and tax estimates. The direct negative effects are felt by a large number of people, and job loss is one of the most troubling things that can happen to an individual. Established in 2008 and formally codified in the Trade Facilitation and Enforcement Act of 2015, the center is one of the U.S. government`s most important weapons in the fight against criminal counterfeiting and piracy. Led by a director of HSI as well as deputy directors of HSI, the Federal Bureau of Investigation, and U.S. Customs and Border Protection, the center brings together 25 key federal and international agencies in a working group that takes a three-pronged approach to combating intellectual property crime and commercial fraud: prohibition, investigation and public relations. This allows the CIO Centre to leverage the resources, skills and authorities of each partner. The impact of counterfeiting is clearly negative and strong action against the industry must be taken as soon as possible. The year-over-year growth is staggering: the counterfeit trade was worth $461 billion in 2013 and is expected to reach $991 billion in 2022.

If this illegal production continues, the consequences discussed in this article will only get worse and affect more people in more tangible ways. It is important that people are aware not only of the counterfeit trade itself, but also of the ripple effects it causes, corrupting and harming all levels of society as they become a greater force in the world. It should be noted that 70 to 89 billion US dollars are lost each year worldwide due to counterfeiting. The money lost could have been used for education, health and innovation. A document published by the National Bureau of Economic Research measures the impact of counterfeiting on foreign investment through declining exports. The study focuses specifically on industries that are particularly sensitive to changes in intellectual property rights in countries with high counterfeiting rates. The resulting decline in investment due to counterfeiting is estimated at $111 billion per year, representing a 5% drop in exports from these countries and sectors. The same study found that countries can expect a 20% increase in exports if they enforce intellectual property rights more strictly.

The more we advance, the better the technology we need to stop these fraudulent activities. Innovative solutions such as the NeuroTags solution can help brands completely prevent counterfeiting of their products. Counterfeit products cost the global economy more than $500 billion a year. That`s why the private sector is working with U.S. Customs and Border Protection to raise awareness across the country to educate Americans about the dangers of counterfeiting. To find out how to protect your brand and business, contact us at +1 (800) 546 4454 Counterfeiting is a major global industry today, a trillion-dollar problem and a significant threat to any brand or business. As technology evolves, so does the sophistication of counterfeiters to replicate products. The production and trade of counterfeit products poses a significant threat to the health and safety of consumers. It also impacts the economic growth of legitimate businesses and consumers due to lost revenue, downtime and replacement costs. To mitigate these threats and ensure public safety, agents at the U.S. Immigration and Customs Enforcement`s (ICE) National Intellectual Property Rights Coordination Center (IPR Center) work with federal, state, and local law enforcement partners across the country to dismantle counterfeiting operations and hold those involved accountable. We are conducting a similar exercise to illustrate how the level of domestic production and consumption of counterfeit and pirated goods can change over time.

We use data on the most recent and projected growth rates of world trade and GDP, as well as the projected growth in counterfeiting rates. Using this approach, we project that the value of counterfeit and pirated goods produced and consumed domestically could be between $524 billion and $959 billion by 2022. Higher counterfeiting rates in a country clearly have a negative impact on foreign investment. Companies operating in sectors where IPRs are sensitive, i.e. sectors heavily affected by counterfeiting, are particularly discouraged from investing in countries where IPR enforcement is insufficient. Counterfeits affect everyone. Counterfeit products are manufactured under unregulated conditions using poor quality materials and are not subject to mandatory quality controls. Many counterfeit products such as pharmaceuticals, electrical and electronic accessories, toys, food and auto parts pose a serious threat to consumer welfare. The main effects of counterfeiting are listed below. Our analysis shows that the level of counterfeiting and piracy is high worldwide, has increased since previous estimates and is expected to continue. Our estimates of these values for the four quadrants are presented in Table 1.S below. Red Points` trademark protection analysts studied how and why the problem of counterfeiting arises.

In collaboration with the International Trademark Association (INTA), the ICC asked Frontier to update its 2011 report on the global impact of counterfeiting and piracy. The 2016 report found that despite increased efforts by the private sector, governments, international governmental organizations and NGOs, counterfeiting and piracy continue to increase at an astonishing rate. (Read also the summary of the economic impact of counterfeiting and piracy) Many brands suffer huge losses due to counterfeiting in the form of lost sales, consumer dissatisfaction, irreparable damage to brand reputation, etc. According to the Global Brand Counterfeiting Report 2018, counterfeiting would reach more than $1.82 trillion worldwide. We also estimated the impact of changes in the frequency of counterfeiting and piracy on economic growth. Our econometric model, which estimates the impact of changes in the intensity of counterfeiting and piracy on economic growth, suggests that a reduction in the intensity of counterfeiting and piracy in 2017 would be between $30 billion and $54 billion for the 35 OECD countries. There are ways to tell if a finished product is genuine or fake. If a trademark is not protected by a digital anti-counterfeiting solution, customers should closely examine the quality of the product packaging and check for spelling mistakes.

Brands can protect their customers from counterfeiting using various anti-counterfeiting solutions available on the market. In the Ted talk that follows, Alastair Gray explains how counterfeiting supports organized crime. The best anti-counterfeiting strategy involves a holistic, multi-layered approach that includes anti-counterfeiting products, track and trace technology, and digital integration to provide an effective end-to-end supply chain solution. Of course, depending on the product and underlying strategy, this approach can also increase consumer trust in a brand and produce positive results (in addition to avoiding negative results). We are seeing significant effects on the labour market through the crowding out of legitimate economic activity through counterfeiting and piracy. We estimate that net job losses worldwide in 2013 will be between 2 million and 2.6 million, and we expect net job losses of 4.2 million to 5.4 million by 2022. The Global Brand Review sat down with a panel of industry experts from different countries – China, the United States, Ukraine and Russia – to discuss how entrepreneurs can combat illicit trade in goods. The IPR Center has been at the forefront of the U.S. response to intellectual property theft and international trade law enforcement for more than 12 years.