A counterfeit product is an item that closely resembles another one, an original, in order to trick customers into making a purchase. Even today, with officials and authorities trying to control the activities of the criminal organizations that are producing and marketing counterfeit goods, this business is one of the largest underground industries.
Negative effects of the counterfeit business
- Impact on businesses
Many consumers do not realise the impact of purchasing counterfeit products on legal businesses. For instance, in the US only, companies lose approximately $200 billion in revenues per year due to these duplicates. According to a research, on a larger scale, it accounts for more than half a trillion dollars every year.
- Impact on unemployment
Counterfeiting has a huge impact on unemployment in various countries across the word. With more people buying counterfeit products, businesses are experiencing an increase in costs and loss of productivity which lead to them laying off their workers. Research analysts advance that approximately 2.5 million jobs worldwide have been dismantled by counterfeit black markets. The numbers in the US are 750,000 and in Europe, there are 300,000 job losses every year. Increasing unemployment rates caused by counterfeit markets have devastated the personal financial situations of many families and they burden state and federal welfare programs. It is predicted that more people will lose their jobs if the counterfeit business keeps growing.
- The electronics industry
One of the industries greatly impacted by counterfeit goods is the electronic sector. While counterfeiters produce fraudulent electronic components, reputable companies are faced with threatening statistics and decreasing sales due to these duplicate parts. The worst part is that these products are making their way into general distribution supply chains. Oneida Research Services in the United States advance that counterfeit parts cost the global electronic industry $100 billion (U.S.) annually.The fact that these items are being distributed in stores accessible to the public is a threat to consumers. Paying cheap prices for an item can have an impact on their health and well- being. For instance, faulty batteries or poorly designed transformers are explosive under certain conditions.
- Counterfeit products and the Internet
The sale of counterfeit products on the Internet is rapidly increasing. This is because e-commerce marketplaces, like eBay, have no warranties with regards to authenticity and quality control is practically non-existent. Consumers are advised not to use online auction sites because they can potentially harm legitimate merchants. Moreover, trading on the internet involves risks of uncertainty and lead to consumer confusion.
- Counterfeit medicine
This is one of the most serious and fast-spreading threats of the counterfeit sector, not only to the health and safety of consumers. Like other retail items, they cause various problems for legitimate drug manufacturers by undermining their reputations and revenues. Moreover, they undermine the credibility of health and safety authorities
An estimate of 10% of medicines across the world are counterfeit. The increasing demand for cheap products and low production costs has resulted in the counterfeit drugs business becoming a vast and extremely lucrative market. Almost all pharmaceutical formulations can be counterfeited. For instance, you can find duplicates for drugs treating erectile dysfunction, fat reducers and sleep remedies and pain killers, among others, in the market.
If you wish to protect your business from counterfeiting issues, Intellectual Property can help you out. Get in touch with our firm for more information about how you can benefit from IP and the steps to take.