Counterfeiters satisfy our love for a bargain

Intellectual property theft is booming. Covering copyright and trademark infringements to software piracy, this global ‘industry’ leeches money from governments, harms consumers, reduces legitimate employment and keeps illegal workers in dangerous conditions. There is also evidence that fake goods sold on the streets of Europe bankroll international crime and terrorism. Yet all too often the costs are invisible to consumers looking for a bargain.

In 1998, the Organisation for Economic Co-operation and Development (OECD) conducted a major study into the cost of intellectual property theft. It concluded that the global value of intellectual property theft was 5-7% of world trade. It is difficult to measure the extent of the problem. But Ilias Konteas, a legal advisor at UNICE, the European employers’ federation, thinks the situation has "definitely got worse". Globalisation, where goods, people, money and ideas move faster and are more interconnected, has had just as much impact on illegal transactions as legitimate ones. For instance, last year in the UK, customs officials seized 350 kilograms of fake medicines that had come from China via the United Arab Emirates; the consignment was bound for the Bahamas, having been ordered over the internet in Canada.

As this case shows, counterfeiting is not just about luxury designer brands. While fake luxury textiles, such as knocked-off handbags and t-shirts, continue to be the largest category of seized goods, there has been a significant increase in everyday products. The range is startling. Over the last year, European customs officials have seized iPods, training shoes, cutlery, toiletries, washing powder, car parts, cancer medicine, Christmas lights and a lot more besides. There has also been a large increase in the number of artificial food and drink products caught by officials. This shopping list of fakes even extends to tea and waffles.

The Commission is particularly concerned about products that pose a risk to consumer safety, such as medicines with no active ingredients, alcoholic drinks that poison people and children’s toys with razor sharp edges. Last year, officials seized a batch of fake cardio-vascular medicines, consisting of brick dust, yellow paint and furniture polish.

Anti-counterfeiting groups agree that the scale of counterfeiting indicates the involvement of organised crime. Fake goods are often produced on an industrial scale in ramshackle shanty factories. Interpol has stated that counterfeiters have "extensive involvement" in organised crime and terrorist groups. It is widely believed that counterfeited goods helped to fund both the 11 September attacks and the Madrid bombings. An official at the Commission said "these claims are mostly hearsay and you cannot prove the link", but added he had "no doubt" that counterfeiting has funded terrorism. Eighteen months ago, customs in Denmark officials seized a consignment of fake toiletries where one person implicated had an Al-Qaeda link. But this type of case is rare, as it can be difficult to prove the connections.

There should be no misconceptions that counterfeiting is a victimless crime. László Kovács, the commissioner for taxation and customs union, wants to raise awareness about the links to organised crime. "The cheap, fake holiday bargain is a dangerous illusion," says the Hungarian commissioner. But not everyone in the sector thinks the message is getting through. John Anderson, chairman of the Global Anti-Counterfeiting Network, thinks that national governments are not doing enough.

"Governments regard consumers as voters and if government comes down too hard on counterfeiting…they will be perceived as attacking a consumer perk." He adds: "There is a long-standing perception that intellectual property theft only affects business…it is much more difficult to get into a soundbite that this is having an effect on employment and is possibly going to harm people". In one poll by Ipsos Mori, four in ten people admitted that they would buy fake goods.

Of course, many bargain hunters also act in good faith. Cornelia Kutterer at BEUC, the European consumers’ organisation points out that online sales, where fake goods can be offered at the same price as the original, can turn innocent consumers into victims. But it is only by slashing the demand for counterfeit goods that this source of revenue for criminal gangs will be cut.

Intellectual property theft is booming. Covering copyright and trademark infringements to software piracy, this global ‘industry’ leeches money from governments, harms consumers, reduces legitimate employment and keeps illegal workers in dangerous conditions. There is also evidence that fake goods sold on the streets of Europe bankroll international crime and terrorism. Yet all too often the costs are invisible to consumers looking for a bargain.