Where Looks Are Deceiving: The Counterfeit in Your Bin

Government agencies and suppliers wage an ongoing war against substandard, potentially deadly products marketed as the real deal.

By Jane Alexander, Deputy Editor

Questioned about their work-related experiences with the “seen and unseen scourge” of counterfeit products in this month’s “For on the Floor” column (pg. 12), most responding MT&AP Reader Panelists reported no exposure. The trouble with this response, of course, is that counterfeit detection is all about being able to distinguish between the real thing and a highly realistic fake. As our Panelists and others acknowledge, counterfeiters have become so skilled it’s difficult to know if you’ve seen their work or not.

Counterfeits reflect an insidious, ever-growing, global enterprise. Encouraged by extraordinary profits, those who make counterfeits have managed to infiltrate almost every area of the supply chain with their products. These include a host of consumer goods in the fields of fashion, cosmetics, pharmaceuticals, diet supplements, pet food, baby formula, automobile brake pads, small appliances and others, along with industrial items like electronic components, bearings, instrumentation, tools, valves, hoists and rigging, crane parts, fire extinguishers and flanges. And the list is probably much longer.

Industry-Specific Anti-Counterfeiting Resources

—The Anti-Counterfeit Product Initiative (counterfeitscankill.com) is a joint effort of two electrical-industry-association publications, ELECTRICAL CONTRACTOR and TED magazines. The goal is “to bring the serious consequences of counterfeiting to the attention of every player in the $130 billion electrical industry,” according to the Website. Among other things, the site is a go-to source for learning about and contacting government agencies and industry associations that are in the fight against counterfeits. These include the U.S. Consumer Products Safety Commission, Underwriters Laboratories, Inc., the International Trade Commission of the U.S. Department of Commerce, the National Association of Electrical Distributors and others.

—Stop Fake Bearings (stopfakebearings.com) is a World Bearing Association (WBA) initiative supported by the American Bearing Manufacturers Association, the Federation of European Bearing Manufacturers’ Associations, and the Japan Bearing Industrial Association. Sponsors include bearing makers SKF, Schaeffler, NSK, FAG, Timken, Koyo and others. According to the WBA, members and sponsors work as a team to help raise awareness about counterfeiting and help buyers, end-users and distributors. Website visitors can access tools and informational resources, as well as subscribe to news about anti-counterfeiting activities around the world.

Who tracks counterfeits?
Ferreting out fake products is the responsibility of U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HIS). These are agencies within the Department of Homeland Security that are charged with the enforcement of intellectual property rights (IPRs). Protecting America from illicit trade in counterfeits and pirated goods is a daunting task. More than 11 million maritime containers arrive at U.S. seaports each year. Another 10 million come in by truck and three million by rail at other points of entry. Millions of dollars worth of cargo also enter the country by air and through postal and express packages.

According to a recent CBP/HIS report, the number of IPR seizures in fiscal year 2013 increased nearly 7% over the same period in 2012 (up from 22,848 to 24,361). During that period, tactical collaboration with the National Intellectual Property Rights Coordination Center led to 693 arrests, 411 indictments and 465 convictions for IPR crimes. In addition, 1413 domain names distributing counterfeit merchandise were seized; 35 exclusion-order enforcement actions were completed; and 20 shipments of circumvention devices were seized.

Robust as the above numbers look, however, CBP acknowledges that they represent only a fraction of the counterfeits moving through the supply chain. And while the number of industrial products seized represents only a small percentage of all seizures (which are dominated by consumer goods, especially items like fake designer purses), the authorities admit they miss more than they catch across the board. Each group’s connection with counterfeits imparts a cost to users and the economy, the full impact of which can only be guessed at.

Whatever they are—wherever they are—counterfeit industrial parts pose grave dangers for unsuspecting operations. These substandard products (and what end-users don’t not know about them) can do more than cause production shutdowns. They can kill.

Industrial hot spots
Two especially worrisome categories of industrial fakes are electrical components and related equipment (especially wiring, circuit breakers, fuses and tools) and bearing products (including seals and greases). Given the ubiquitous nature of these items in industry and their criticality with regard to safe, reliable operations, the fact that end-users can still be fooled by counterfeits in these areas only underscores the skill of today’s product replicators.

“It’s becoming increasingly more difficult to detect counterfeit electrical products in the field,” admits Tom Grace, Brand Protection Manager of Eaton’s Electrical Sector Americas. His advice for the best way to avoid them? “Purchase products directly from a manufacturer’s authorized distributors or resellers.” But addressing the larger problem of how to stem the tide of incoming counterfeit electrical parts, he says, is not so simple. “This requires industry organizations, manufacturers, customers and government bodies to work together to raise awareness and enact measures that will lead toward more effective detection of counterfeit products.”

Grace points to its sponsorship of the Anti-Counterfeit Products Initiative as an example of the type of collaboration needed.  Formed in 2009 by two electrical-industry publications (see Sidebar) and with support from other industry sponsors (Alcan Cable, Fluke, General Electric, Siemens and Square D), the campaign was intended to “make certain an anti-counterfeit message is disseminated to the broadest audience possible of professionals in the distribution, specification, purchasing and installation of electrical products,” according to its Website (counterfeitscankill.com). Grace says that thanks to this campaign and a new Eaton educational effort called “I Didn’t Know,” electrical-industry professionals “are becoming aware of the growing problem of counterfeit electrical products. But more education is required to help them identify and report fakes found in the field.”

In Simple Terms: The Problem with Counterfeits

The World Bearing Association and its sponsors put the problem with counterfeits in simple terms for unsuspecting purchasers or bargain-hunting end-users:

•   When you purchase a counterfeit, you don’t get what you paid for.
•   Counterfeits can pose a danger to operations, finances and to human life.
•   It can be hard to tell the difference between a genuine part and a counterfeit.
•   Counterfeit parts are the result of illegal and unethical practices.

To learn more about counterfeit bearings or obtain promotional material (posters and brochures) to inform others about the risks of using fake bearings, visit stopfakebearings.com.

In the bearing market, counterfeit products are an issue for all branded manufacturers, says bearing maker SKF. They exist in all geographical markets and industrial segments, and for all bearing types and sizes. Moreover, they’re often sold to buyers for about the same price as genuine products, thereby removing one of the more reliable ways—an unrealistically low price—to spot a possible counterfeit. With manufacturing operations around the globe, SKF has noticed a rise in the number of counterfeit bearings entering the United States. According to one project manager, fake bearings are now “basically arriving in brown boxes at your front door.”

As in the electrical industry, SKF is but one of many bearing makers tackling the counterfeit problem. They’re joined by Timken, Schaeffler, NSK and other members of the American Bearing Manufacturers Association that have conducted seminars at various U.S. Custom locations across the United States to inform agency personnel about counterfeit bearings, their dangers and the red flags to look for with regard to seizing shipments. The stakes are high. In 2013 alone, U.S. Customs seized 55 shipments of counterfeit SKF bearings valued at about $3 million, says Timothy Gifford, Senior Vice President, General Counsel and Secretary of SKF USA, Inc.

According to Gifford, when SKF identifies a seller of counterfeit bearings, the company launches an investigation that may result in civil litigation or, in rare cases, criminal prosecution. He says the company works closely with U.S. Customs and the National Cyber Forensic Training Alliance (NCFTA) on such incidents. With two embedded U.S. Customs officers and two FBI agents to help with counterfeit subject matters, NCFTA is “a very effective organization,” says Gifford, and a strong indicator of how important the problem has become. To learn more, visit ncfta.net. MT&AP

Think You Can Spot a Counterfeit?

Well, you probably can’t, says Craig Crosby, publisher of The Counterfeit Report(thecounterfeitreport.com), an online resource that carries reviews and news updates mostly on counterfeit consumer products, but also on some for industry. Posted photos show real and counterfeit products side by side, which support Crosby’s claim that most are indistinguishable. He warns that counterfeit products are routinely found for sale on popular Websites like eBay and Amazo, where unsuspecting shoppers “looking for a bargain are handing over good money for bad products at prices near retail,” he says.