More than 24 million containers enter the U.S. each year: 11 million of them arrive by sea, another 10 million by truck, and 3 million arrive by rail. An additional quarter billion cargo, postal, and express consignment packages arrive via air. Of all products coming into the country last year, the U.S. government seized 28,865 shipments containing counterfeit products — items that infringe on U.S. trademarks and copyrights. 24/7 Wall St. reviewed the nine counterfeit products most often seized by authorities.
Based on U.S. Customs and Border Protection (CBP) seizures, the volume of counterfeit products entering the U.S. market increased by 25% from fiscal 2014 to 2015. In an interview with 24/7 Wall St., Cynthia Whittenburg, executive director of Trade Policy and Programs with the CBP, said the increase in seized counterfeits is due to both the overall rise in all shipments as well as to improved enforcement techniques.
The existence of fake items is in part the result of demand for certain products. The top four most counterfeited items, which together represent 60% of all counterfeited products, are all luxury goods. “These are items that in our society are associated with being prosperous,” Whittenburg said. Because many of these highly coveted luxury goods are also out of reach to many Americans, a market for non-genuine versions emerged.
The distribution of these knockoff products, which are more affordable but often far lower quality or even dangerous, devalues the brands associated with the genuine items. Not only does the prevalence of counterfeit products have clear economic consequences and other harms, but also many of the dangers are unknown.
“The public may have the perception that purchasing counterfeit goods is a victimless crime,” Whittenburg added.
Counterfeit pharmaceutical and personal care items, for example, do not merely damage the bottom lines of companies in the industry. Fake medicines also pose serious risks to consumers, who may be persuaded to purchase drugs that at best do not work and at worst are harmful.
Similarly, counterfeited computer goods and electronics pose threats beyond the economic harms. According to Whittenburg, these products make up a smaller share of products seized, but the impact could ultimately be greater and more severe than it is for other fake items. This is because counterfeit computer components have been unknowingly incorporated into national defense systems in recent years, and because of their lower quality they may pose threat to national security.
Even the seemingly harmless purchase of a counterfeit bag could indirectly result in more serious consequences. Beyond the damage this does to the U.S. economy, purchasing counterfeit goods contributes to what Whittenburg described as “the downstream effect of putting funds in the hands of criminals for other nefarious activities.”
The vast majority of counterfeited items originate in Hong Kong and China. According to the U.S. government’s annual report on foreign trade, greater attention will be given to the enforcement of trade secrets in China. In recent years, players affiliated with the Chinese government have been accused of stealing data and intellectual property from U.S. companies.
To identify America’s most counterfeited items, 24/7 Wall St. reviewed fiscal 2015 data on shipments seized by U.S. Customs and Border Protection (CBP), a law enforcement organization controlled by the U.S. Department of Homeland Security. The ranking is based on the number of shipments seized — each shipment may contain any number of products. The CBP tracks seizure of products, which infringe on U.S. trademarks and copyrights or are unlawful based on exclusion orders from the United States International Trade Commission, on an annual basis. These products make up the 9 largest shares of total seizures. The manufacturer’s’ suggested retail price (MSRP) of these counterfeit products — their total value had they been sold legitimately — also came from the CBP.