True Costs of Fake Goods – #77

The 100% fail safe guarantee against fake goods can only be achieved through having your OWN quality control at the manufacturing point and at the receiving point – costly in terms of having to add these increase to the price of the Consumer having to pay these added costs as the end user. The popular slogan goes like this “If you can make it, they’ll fake it”, the litany of fakes include cheap and smart phone batteries and chargers that could overheat or catch fire; substandard appliances, extension cords, and holiday lights with phony “UL” labels and marks, motorcycle helmets that won’t provide adequate protection in a crash, knockoff brand-name prescription drugs like Ciala and Tamiflu, substandard auto parts, plus the thousands of parts that vary from the specifications that were originally required.

The problem is expensive to fix, and should have a $ accountability throughout the distribution chain, a fix must be implemented now.  This problem is huge and one that CUTS ACROSS ALL INDUSTRIES and it keeps on ripping off American industries.  Add fake goods cost to the billions of dollars of intellectual property stolen every year and you can start referring to unmeasurable dollars as reality.  Bruce Faucart, Director of the National Rights Coordination center was recently as saying; the distribution of illicit auto parts is growing at an alarming rate, the parts are typically smuggled into the country and sold to independent stores, sometimes knowingly, sometimes not.  At best these parts will not perform as well as authentic ones.  At worst, they can fail catastrophically with potentially fatal consequences.

You are likely not to get burned by counterfeits if you stick with established and legitimate Customers. However, please perform the recommended activities NOW to see what steps you will have to implement to enforce discipline in verifying supply chain partners and products.

Management Lesson:  Immediately, do a random pull of products that you are reselling, a random pull of all parts that go into the products you are manufacturing, to see if they are up to specifications as to quality, installation and other original specifications.  Check your service records and identify any unusual parts failures in warranty time and length of normal use time.

This timing of supply-chain investigations are critical because China is experiencing a tough economy due to tariffs being imposed by the U.S. and other Western Countries.  Margins are decreasing every day in China (they were already low due to government subsidies), and since I have tons of counterfeit experience, it won’t take long, if not already in play, for them to try to improve Chinese margins through the use of counterfeit products. The true brand loses millions if involved in counterfeit sales. Report all your negative comments and observations regarding Fake Products to your local Federal Government location.

If you transport, warehouse or fulfill counterfeits, your services fall under the Lanham Act, 15 U.S.C. #1015 et seq. This Act assures that strict liability is the imposition of liability on a party without a finding of intent.  This means that even if your company had no idea that it was transporting, warehousing, or fulfilling orders with counterfeit goods, you can be found guilty of violating the Landham Act and lose a lawsuit with fines and penalties.  Your business could easily go bankrupt trying to fight a legal battle, if you violated a law.  Avoid this at all costs, if we can help, please call or e-mail.