Counterfeit products are increasingly being sold online and it is never a “victimless crime”. Our legal trainee Isabella Savela wrote a blog about poly-criminality behind counterfeit products.
When looking at the street vendors who are selling counterfeit goods, it might seem as if they are all individual sellers with no real connection to each other. In reality, selling counterfeit designer goods is a big industry controlled by international organized crime. Consumers don’t tend to think about what consequences there are to buying fake designer goods. It is understandable, since many lack the knowledge of how dangerous it actually is.
Generally, buying fake designer goods is assumed to be a “victimless crime” where the only ones getting hurt are big corporations. You might think it’s harmless and just saves you money. However, counterfeit goods do not only hurt big corporations, but it also affects numerous individuals such as sweatshop workers (who are usually children) with no legal protection, underpaid factory workers working in dangerous conditions and consumers themselves.
How fraudulent drugs are harmful
Fraudulent drugs and foods are very dangerous as they usually contain many harmful chemicals that can lead to irreversible health complications or even death. Since the making of counterfeit goods is only about getting profit, the products are not made with people’s safety in mind. For example, counterfeit clothing is often of poor quality, and they might not meet safety standards such as fire resistance. Fake make-up and beauty products can contain various potentially harmful ingredients. These can cause severe allergic reactions and possible long-term harm to skin, eyes, and hair.
In 2006, a Chinese chemical manufacturer sold diethylene glycol which is also known as the active ingredient of antifreeze, as pharmaceutical-grade glycerin to a European company and distributed it in Panama (Bogdanich W, Hooker J. New York Times. May 6, 2007. From China to Panama, a trail of poisoned medicine). Those who consumed the poison often swallowed it in cough syrup as the solvent, causing acute kidney failure. According to the Panamanian government, 219 people have died of kidney failure caused by diethylene glycol poisoning. The Ministry of Health and WHO believe that the confirmed deaths are probably only a fraction of the total deaths as more than 60,000 bottles of cough syrup and some lotions were contaminated.
There are 2 categories of counterfeit drugs: falsified or substandard products. Falsified drug products falsely represent their composition, source, or identity. Drug products that fall short of quality standards and specifications are substandard drug products. There could be any number of reasons why this happens, including improper manufacturing or storage, or expired drugs.
More than 10,000 laboratory assessments of drug products from low to middle-income nations around the world were evaluated by the World Health Organization (WHO) in November 2017. The number of falsified or substandard drugs was 33.6% in hypertension, cancer, epilepsy, and analgesic classes. Regarding infectious diseases the percentages of drugs being either falsified or substandard were as follows: human immunodeficiency virus 4.2%, antibiotics 7.2%, tuberculosis drugs 6.7% and antimalarial drugs 11.8%.
Counterfeit goods: a lucrative business
According to Europol, the top European law enforcement agency, the global fake goods market in 2016 was worth $461 billion, or 2.5 percent of global trade. An updated Europol report (2020) shows that European organized crime gangs involved in lucrative intellectual property crimes do more than just commit intellectual property crimes: they commit other felonies alongside IP crimes to keep their businesses afloat, also known as "poly-criminality." A number of ancillary crimes are committed alongside IP violations, such as cybercrime, tax evasion, fraud involving the documents, drug production, drug trafficking, forced labor, bribery and terrorism. These crimes either facilitate or are committed in conjunction with IP violations. For instance, product counterfeiters may use their profits to finance drug trafficking and sell both counterfeits and illegal drugs through the same sales channels.
The report “IP Crime and Its Link to Other Serious Crimes”, by Europol examines specific examples of IP crime cases the agency and its member states cracked in 2016. The report aims to demonstrate that rather than being a 'victimless crime', IP crime is committed in combination with other crimes. Furthermore, this report provides policymakers with a new approach to drafting laws aimed at dealing with these complex issues.
Producing and consuming counterfeit goods
In any case, consumer demand and the making/selling of counterfeit goods goes hand in hand. Consumer demand for legitimate goods stimulates counterfeiters to manufacture and sell fake goods. Although majority of shoppers have no desire to buy counterfeit goods- and are in fact also deceived by it - there are many who do so in order to save money.
Buyers purchase counterfeit goods for two general price-related reasons. Often, consumers choose a knockoff over the authentic version because they cannot afford the price of the real product, or they choose the fake because they believe it is a wise shopping decision. No matter what the reason is, the decision to buy a counterfeit product makes the consumer indirectly an accomplice to illegal activity by funding international organized crime. Buying counterfeit goods indirectly supports international organized crime’s other ventures such as human trafficking. According to the United Nations, counterfeit goods are one of the most lucrative criminal activities for transnational organized gangs. Counterfeiting legitimate goods is not a victimless crime, it hurts the economy, puts individuals in harm and funds criminal organizations.