Counterfeit goods

Alongside dodgy designer knock-offs, sophisticated copies are being sold online - and they're that much harder to detect.
 
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01 .The real thing?

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Knock-off products are no longer easily identified by misspelled logos and shoddy craftsmanship, as counterfeit investigator Phill Arnold discovered for himself. He’s still unsure whether his pair of Adidas shoes is genuine or fake - he bought them at an upmarket mall in China, where he paid a little bit less than he would have for a pair of genuine Adidas shoes. The salesperson said they were counterfeits, but when Arnold asked someone at Adidas they couldn’t tell. 

While the quality of counterfeit products appears to be improving, the counterfeiters are also getting smarter at marketing their products. Techniques such as paid search results ads and search engine optimisation are being used by counterfeiters to lure consumers to their sites, and dodgy sellers sometimes use images from a brand’s most recent advertising campaigns to boost their credibility. Online auction houses like eBay specify that counterfeit products are not to be sold, but it doesn’t stop the counterfeiters. These days it's easy to fake tags, receipts and authenticity cards. The fact that online auction houses also sell genuine products means it’s hard for consumers to know whether or not they’re getting the real deal. Online trade portals, which are business-to-business sites for importers and distributors, are often infiltrated by counterfeiters, according to Arnold. Individuals wanting to make a buck are also known to purchase knock-offs on these trade portals and resell them for a profit on online auction houses.

Parallel lines

Counterfeiters have become so sophisticated that it seems even retailers might be being duped. Target, which is owned by Wesfarmers, is facing court action for allegedly placing fake MAC cosmetics on its shelves last year. MAC Cosmetics (an Estée Lauder brand) has said it tested the products and found they were counterfeit. While Target has not admitted the cosmetics were fake, it did not order the product through official channels. 

Sourcing legitimately branded products through unofficial channels, also known as parallel importing, is legal in Australia (with some exceptions) and is something that, in principle, CHOICE agrees with. Parallel imports can be a powerful way to reduce costs for consumers through increased competition - however, it should be noted that importation through unauthorised channels and supply chains may increase the risk of consumers being exposed to unsafe products. Parallel importation does not necessarily mean products are fake, or a safety concern, and parallel imports sold in Australia are subject to the same safety regulations and standards as legitimate products. However, there is a risk of counterfeit products posing as parallel imports, a Unilever spokesperson told CHOICE. 

Late last year, a 40-tonne shipment of counterfeit Omo laundry powder from China was prevented from reaching the Australian market when it was seized by customs. Unilever, which owns Omo, says all products are tested so they are safe for consumers, whereas counterfeit products may not be. “Counterfeit stock can contain cheap untested ingredients that aren’t as effective as those found in genuine products. At worst, these ingredients can damage clothes and have the potential to cause skin irritation in people with sensitive skin,” warns Mary Weir from Unilever. 

Parallel imports are becoming increasingly common in Australia, with supermarkets such as Woolworths looking into sourcing more products this way because it can be more cost effective. “When we know we are not getting a good deal locally, we are willing to take up parallel importing opportunities where there can be a guarantee on quality, supply, regulation and standards compliance,” said a Woolworths spokesperson. However, Woolworths would not supply information to CHOICE on how it would protect its supply chains from counterfeits.

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  • Shopping using online auction houses and taking advantage of parallel imports are potentially riskier methods than buying direct from authorised suppliers. However, both are opportunities for consumers to get a good deal. Be careful and do your research. 
  • If buying a particular brand, seek out information about replicas and fakes online before purchasing so you know what to look out for.  
  • Ask the seller questions about the item and also ask for extra, non-generic pictures. 
  • If buying from auction sites such as eBay, use payment methods that will refund you if a product turns out to be fake. PayPal provides protection for purchases up to $20,000 if an item doesn’t match the seller’s description. PayMate also offers protection on purchases up to $3000 where goods differ substantially from what was described. Credit card companies also have a chargeback function if a cardholder has unknowingly bought counterfeit goods or goods that were not as described. 
  • Under the Australian Consumer Law (ACL), goods you buy must match the description provided by the trader and the trader can’t make any false or misleading representations about the goods they are selling. This covers online purchases (including online auction houses) provided you buy from an Australian business and not a private seller. 
  • Check that the company’s name is registered in Australia on the Australian Securities and Investment Commission’s business register. Also check out the seller’s reputation on online forums. 
  • Use the “Buy It Now” function if it’s offered as it gives you all your rights under the ACL, unless it is a private seller or a one-off sale.

Have you been duped?

  • First of all, try to sort it out with the retailer. 
  • If that doesn’t work and you bought the product from an Australian retailer, make a complaint to the relevant fair trading or consumer affairs office. 
  • If you bought the product from overseas, you can make a complaint on the international reporting site for online scams. You can also try dealing with the fair trading bodies in the relevant country. 
  • You can also report it to the police or Crimestoppers as an intellectual property crime.

While a knock-off designer handbag probably won’t kill you, there are plenty of counterfeit products that may pose a significant risk to health and safety.

Sporting equipment: Cases of dodgy golf clubs, where the head has fallen off, and tennis rackets that contain lead paint number among those that have been reported to the Counterfeit Alert Network, run by the Australian Sporting Goods Association.

Electronics: Fake electricals can contain inferior components that can be very dangerous. UK consumer group Which? issued a warning about this issue in 2011. It found fake Nintendo Wiis with bad wiring, and fake phones and laptops which were at risk of overheating.

Pharmaceuticals and cosmetics: Many pharmaceuticals sold online are unregulated and may be produced in unsanitary conditions. During an international crackdown last year, Australian Customs seized 37,000 pills in one week that had been purchased online and had the potential to be counterfeit. Counterfeit perfumes can cause skin allergies, burn the skin, trigger respiratory problems and stain clothes. 

Some fakes simply may not do what they claim. For example, sunglasses could have UV claims that are irrelevant, or toothpaste may not contain an active ingredient.

Extent of the problem

The value of counterfeit products intercepted in Australia reached an all-time high last year, with the Australian Customs and Border Protection Service seizing more than 700,000 counterfeit products with a total estimated value of $48.5m (based on the equivalent value of genuine goods). Globally, counterfeits are estimated to account for about 2% of world trade, amounting to $272bn, according to the Organisation for Economic Cooperation and Development. Meanwhile, the International Chamber of Commerce has higher estimates, saying the global counterfeit trades accounts for five to seven per cent of world trade and is worth around $600bn. 

Customs’ figures show the majority of fake products entering Australia come from South-East Asia. Experts we spoke to see China as the hub, with 67% of counterfeit seizures globally between 2008 and 2010 having been manufactured there, according to the World Customs Organization. Australians have taken to online shopping with a vengeance and our fervour shows no sign of abating. While there are many benefits to online shopping, consumers are more exposed to the risks of counterfeit products. 

A study based on US and European consumers found that as many as one in five people looking for a bargain online were duped into buying counterfeit products. According to Phill Arnold, the rise in online shopping is responsible for the increase in counterfeits. “Things have escalated in recent years due entirely to the internet,” he says.

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