The trade in counterfeit products is reaching epidemic proportions, reports Gaelle Walker


Nothing is safe. From razor blades to helicopter parts, alcohol to food, almost every product with a commercial value is at risk of being counterfeited. Even drugs designed to slow the spread of cancer, or prevent organ rejection, are being faked.
Many of the operators behind counterfeit goods rings are organised criminals who often use the money made from fakes to fund other illegal activities but, for the trade, of equal concern is that these flawed products are now corrupting the legitimate supply chain and creeping onto respectable retailers' shelves.
The results can be fatal. In 2003 a Scottish woman died after drinking counterfeit vodka. The illicit 'Vodka Russia' had contained dangerously high levels of methanol. Another counterfeit vodka brand put a Manchester woman in a coma for 11 days. And in February, illicit vodka made from industrial strength alcohol was discovered in the Berkshire borough of Slough. The vodka, labelled '1806 Christoff 100% Pure Grain', came from an illegal manufacturing plant in Cardiff, and posed a serious threat to human health. Despite efforts by the police and trading standards, a number of bottles are still in circulation.
The Intellectual Property Crime Report, published in December 2007 for the UK by the Intellectual Property Office, cited multiple reports of the discovery and seizure of counterfeit alcohol in the past two years. And the problem appears to be even worse with cigarettes.
Addressing shareholders at the company's last Annual General Meeting, British American Tobacco chairman Jan du Plessis said: "One of our biggest global competitors today, behind Philip Morris, ourselves and Japan Tobacco, is a growing body of criminals who are turning the illicit trade in tobacco products into a global industry."
A recent survey by the Tobacco Manufacturers' Association (TMA) revealed that of the 67.5 billion cigarettes smoked in the UK in 2006, 3% were counterfeit - that's almost two billion cigarettes.
In the wider market, the European Commission's last annual report on counterfeit goods revealed that in 2006 EU customs officials intercepted more than 128 million such products in more than 37,000 different seizures.
And those are just the figures for products that were intercepted by customs. Many millions more may have slipped through the net.
With volumes of this magnitude to contend with, it's not surprising that fakes infiltrate the legitimate supply chain, and retailers' stockrooms.
Perhaps the biggest problem is that fraudsters are exploiting technological advances in printing, scanning and 3D modelling to manufacture virtually flawless fakes, meaning that it's almost impossible to tell a counterfeit product from a genuine one - until it's consumed. "Counterfeit packaging has become incredibly sophisticated," says Imperial Tobacco trade and communications manager Iain Watkins. Watkins recalls how, a few years ago, a tiny spelling mistake was accidentally made in the small print on legitimate packs of Golden Virginia tobacco. "Just one week later, the counterfeiters had picked up on this tiny flaw and were reproducing it on fake packs."
And the criminals apply their copy-making expertise to more than just products. They even produce convincing paperwork and documentation making it possible, although not easy, for fakes to creep into cash and carries, and from there into stores.
In January 2006 independent retailer Atul Raithatha was accused of selling two bottles of counterfeit Smirnoff vodka. The claim devastated him as he was adamant that he had bought from his usual cash and carry.
Atul had probably fallen victim to a "bring back" scam - in which counterfeit products had been brought into the cash and carry by someone pretending that they were "overstock". Once in, the fakes could have been put back on the shelves and unwittingly mixed with the genuine product. The charges against Atul were later dropped due to a lack of evidence.
Another way that counterfeit products could be pervading stores is through their employees, warns Brian Lewin, lead officer for counterfeiting at the Trading Standards Institute. "In a few cases that I've worked on, it turned out that an employee was stealing the legitimate product and then refilling the genuine packaging with a lower-grade substance," he says.
"In another case which involved a forecourt store, a customer who had filled up with petrol claimed to have forgotten his wallet. He left the retailer with half-a-dozen packs of a well-known cigarette brand as surety while he went to collect it. Needless to say, he never returned, and the retailer ended up putting the cigarettes on his shelf, believing them to be real."
However, both Lewin and Watkins agree that the most common way counterfeit products find their way into a store is when a retailer switches his or her normal route of supply. "What usually happens is that someone visits a store posing as another trader or supplier. They claim that they have too much stock and ask the retailer if they would like to buy it from them at a reduced rate," says Lewin.
Counterfeit products are even being pushed through the retail trade by criminals who justify the sale to retailers by saying the stock is 'flood damaged'. And some retailers have even been known to unwittingly buy counterfeit goods believing them to be genuine, but smuggled.
Lewin says: "The idea of cheaper stock could prove tempting to a retailer who is struggling to compete with today's tough trading conditions, and the packaging looks so real that they could be fooled into thinking they are getting a good deal."
The reality of the matter is that stocking counterfeit products is anything but a good deal. A retailer convicted of the crime can face high financial penalties, trading restrictions and even anti-social behaviour orders, not to mention the irreparable damage to his or her reputation.
Lewin's message is simple: "Stick to your normal route of supply, retain control of your business and ensure that you really know who is working for you."
Fortunately, efforts are being done to tackle the counterfeiting problem. In October 2007 the TMA introduced new technology to make the counterfeiting of cigarettes more difficult. All cigarette packs manufactured by the TMA's member companies (British American Tobacco, Gallaher, Imperial Tobacco and Philip Morris) for the UK duty-paid market now bear a covert security feature which allows HM Revenue & Customs to instantly verify a product's status.
This kind of covert security technology is also being introduced to other product categories commonly targeted by the counterfeiters.
The government is doing its bit, too. In May 2007 it announced its Assets Recovery Plan, which further extends the Proceeds of Crime Powers. The new powers allow for the seizure of a convicted criminal's assets, taking the profit out of the crime and disrupting the criminal's business empires. Assets Recovery Agency director Jane Earl says: "Working closely with our partners across law enforcement means we are now hitting criminals where it hurts the most - in their pockets."
In March 2007 a confiscation order worth £191,000 was secured against a man convicted on eight counts of possessing and offering for sale almost 6,000 counterfeit designer clothes. The defendant's company was also convicted of a further nine counts. He was sentenced to 18 months' imprisonment and his company was fined £9,000. The confiscation order was secured in March 2007, with the benefits declared at £273,398.
This man, as well as the hundreds of others who have been caught in the intervening months, has learnt a very important message: crime, particularly counterfeit crime, really doesn't pay.

The dangers of fakes


Just a selection of the horrors unearthed by the authorities:

A recent independent laboratory test conducted on counterfeit cigarettes found that they contained up to 160% more tar, 80% more nicotine and 133% more carbon monoxide than their genuine counterparts
Tests were conducted on fake perfume after a shopper complained of skin rashes. They revealed that urine had been used as a stabiliser
Counterfeit suncream which claimed to offer a SPF of 15 was found to have had an actual SPF of 1.1, resulting in serious sunburn for the wearer
Fake disposable razors have been found with blades so blunt that they have caused serious facial abrasions
Counterfeit mobile phone batteries and appliances which explode when plugged in have been found in the UK
In April 2007, Felixstowe Customs seized fake designer sunglasses worth £2.5m. The fake versions of brands such as Armani had no UV protection from sunlight
In July 2007 thousands of counterfeit condoms which offered little protection against STDs and pregnancy made their way into the British supply chain
Counterfeit washing powder has been found in the UK with such high levels of caustic ingredients that it caused skin burns.

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