Q: I was shopping for a new handbag online and noticed a huge difference in prices between retailers. One had a bag for $20, while the other had the same for $200! The first option seems too good to be true. Should I be wary of that amazing deal?
A: It’s possible, though very unlikely, that someone is selling brand name goods at a fraction of the price. It’s far more likely, though, that the cheaper goods are counterfeit. They’re made to resemble the original, but use low-quality materials and little or no quality control in the manufacturing process.
Counterfeit goods used to be confined to small luxury items sold by street vendors. Sunglasses and watches were the easiest to vend to tourists and others who were prepared to deal in cash yet unprepared to carefully scrutinize the goods. The rise of the Internet as an international marketplace has resulted in the proliferation of the “fakes” industry. A recent report by the Organization for Economic Cooperation and Development (OECD) shows that around 2.5% of all global trade is in the form of counterfeit goods.
While the most common targets are luxury goods, modern counterfeit manufacturers have moved on to products where the deception is even more difficult for lay people to detect. Car parts, computers, and pharmaceuticals are among the growing pool of off-brand goods that are being marketed at name-brand prices.
It’s not just the fashion-conscious who should be concerned. These products aren’t held to any production standards. There’s no telling what could be in a counterfeit drug, or whether a counterfeit car part will even work. These products take advantage of the trust consumers put in established brands and could result in serious injury or death.
Even if you’re buying shoes (one of the most commonly counterfeited products, according to the OECD), it may not be harmless fun. Because the manufacturers operate outside the law, they frequently circumvent all labor safety standards. The counterfeit goods may be manufactured by children, or in conditions that fail to meet even the most basic safety standards. The chemicals used to treat vinyl or leather in counterfeit manufacturing facilities are also exceedingly hazardous, and may contain toxic levels of lead even after arrival.
The profits from the counterfeiting industry may support a wide range of dangerous elements. Organized crime groups, drug cartels and terrorist organizations are among those that use counterfeit goods to finance some of their operations. Because of all these scenarios, supporting the fakes industry is not a decision to be made lightly.
Counterfeit goods are like any other online scam. You need to take steps to protect yourself against being shortchanged. If you’re worried about buying counterfeit goods online, take these steps.
1.) Watch the price
It’s possible that a vendor is selling goods at an impossibly good deal. If you’re buying from last year’s stock of brand name goods, or if the goods are returned or were previously opened, you might get 40% off the retail price. If you’re seeing a brand name good for 10% or less of its retail price, it’s got to be too good to be true.
2.) Check the label!
Most counterfeit goods are made to pass an initial visual screening. Manufacturers will put as much effort as possible into making the knock-off item shiny, with the logo being highly visible. They hope to distract consumers from exercising more careful scrutiny.
One of the most common errors in counterfeit goods manufacturing is the manufacturer’s address. Counterfeiters will use the corporate headquarters address, while manufacturers will list the location the goods themselves are manufactured. Minor errors in spelling or formatting of care instructions can also serve as red flags for counterfeit goods.
3.) Evaluate your source
Reputable vendors want nothing to do with counterfeit goods. The brand has value to the retailer as well. If asked, vendors should be able to clarify their supply chain. They should take steps to ensure their goods are legitimate.
If you’re buying something pre-owned, it can be difficult to keep the same level of scrutiny up. Check labels and serial numbers as carefully as possible. If an item has survived one owner, odds are good it’s not counterfeit.
When shopping online, stay away from auction sites like eBay, which are rife with counterfeit goods. Look for authorized retailers or online versions of brick-and-mortar stores. These retailers are more likely to have those supply chain controls in place.
Many cities also have places that are infamous for selling counterfeit goods. Trust your instincts if you’re on vacation. If an area is surrounded by street vendors selling normally expensive branded merchandise, find another place to shop.
4.) Pay your taxes
One of the most common ways criminals get caught is through the IRS. If you’re concerned with the authenticity of a retailer, ask for a receipt. If you don’t get one, that’s a huge red flag. If you do, look for sales tax. Because counterfeiters are already breaking the law, they don’t bother to report their sales or pay sales tax. This exclusion also reflects part of the “incredible deal” they are able to offer on brand name goods. If a store is paying sales tax, odds are good they’re on the level.