Everyone loves a bargain, but can we always be sure that what we think is a fantastic deal isn't actually a paper tiger? The image of the harmless Del Boy type selling genuine' top quality products at rock bottom prices couldn't be further from the truth. Chances are, if your genuine fake doesn't maim you, then the cash you paid for it could be filtered down to a drug dealer or even a terrorist. Counterfeiting is big business and it's not only the high value luxury goods market that's the target. According to the EU Commission, anything that's bought or sold can be counterfeited, or more importantly, as Ed Chicken, chairman of the UK's Trading Standards Institute, says: "Anything that has a brand image is a potential target." In fact, luxury products now make up only 1% of the total number of goods intercepted and the EU's Taxation and Customs Union says traffickers no longer prefer high value goods, they target mass-produced items. That means fmcg products, and copycats are as likely to churn out fake razor blades as Armani jeans. "We're starting to see a shift," says Unilever's trademark counsel Harry Smeltkop. "Exclusive products will always be counterfeited, but it may be there's a tendency to move away from exclusive products into other areas, like food." His company has fallen victim to the counterfeiters with its tea and perfume products. "With the teabags, it's actual tea leaves, and it's using the reputation of the premium brand to sell an inferior product." The use of real tea, however, is something of an exception, according to John Anderson of the Anti-counterfeiting Group. It is most likely to be the sweepings from a tea factory floor, but there are far more horrifying examples. "You have people sticking industrial alcohol in a bottle and slapping a vodka label on it, batteries that leak and destroy equipment, razor blades that shatter ­ after all, none of these goods is passed through any kind of quality control." Even more horrifying are the counterfeit pharmaceutical products that at best do nothing, but at worst can kill. Counterfeiters are out to make a quick buck and are not necessarily looking for repeat business and often don't care what goes into their products, as Chicken points out. "There was an incident where someone got hold of some Lever Brothers washing powder packaging and filled it with white powder. That powder turned out to be industrial degreasant and it only came to light when a woman's skin started peeling off after using it." It is situations like this where the idea of counterfeiting being a harmless bit of enterprise falls down. "If you're buying a £5 pair of branded trainers then you know they're not real, but when it comes to things like fake medicines, forget those old arguments that you know what you're buying. I'm afraid you don't," says Marie Patullo, legal affairs manager at AIM, the European Brands Association. One of the biggest problems is the public attitude to counterfeiting. The culprits are not market traders, cheekily diverting funds away from the multinationals' overflowing pockets. Patullo says the money the consumer pays for his counterfeit products is most likely to end up in the hands of organised crime, drug dealers or terrorists. "It's been proved that the World Trade Centre bombing in 1993 was partly funded by the sale of counterfeit T-shirts. In Italy there used only to be protection rackets but now, instead of demanding cash, the racketeers demand that shops sell their counterfeit products. People need to remember what happens to their money." Public education is an important part of combating the counterfeiting problem, says Anderson: "The public regard it as a bit of a loveable rogue type of crime that the multinationals can afford. But you can't have degrees of crime, I can't kill a poor man because he's not as important as a rich man." The Anti-counterfeiting Group is now working with Crimestoppers in the UK on a campaign to promote awareness of the dangers of buying counterfeit products. But what makes a brand a target? Chicken says the equation for a criminal is simple: "You or I could set up an organisation to make fizzy pop which we could sell for 20p a can, but if we call it Coca-Cola then we can sell it for 40p a can and that's what makes it attractive." High profile and popular brands have good reputations and that's what makes them a target to someone who wants to profit from that reputation. Gillette is one company that has found its razor blades and batteries regularly faked by the counterfeiters, and spokesman Paul Fox says it's something it takes extremely seriously. "It's a global problem for us, but it's difficult to gauge exactly how widespread the problem is because it's conducted underground. "We're made aware of it when the products surface, either in retail outlets, car boot sales and markets or if they're seized by Customs." Fox says once they have discovered a counterfeit product it will be seized and investigations carried out to trace the source. "Counterfeits aren't good news for anyone; it's not good news for the consumer because they don't get what they think they're getting, and it's not good for the retailer, trader or manufacturer because the consumer's trust in them is undermined." Nestlé has also suffered at the hands of the counterfeiters. Spokesman Francoise Perroud says: "Every single major brand of ours has been copied and it's a big problem. We consider our brands to be our biggest assets and they are put in jeopardy by counterfeiters, that is why we will pursue them vigorously." Brands being undermined is one of the biggest dangers to any company, and it certainly makes the issue a sensitive one as a manufacturer suffering from a high degree of counterfeiting may find consumers avoiding its brand rather than risk buying a fake product. There are fears that a stigma can be attached to a product in consumers' minds when news leaks out that a brand has been copied. So some companies are reluctant to admit they've fallen victim. There is no getting away from the fact that if a counterfeited product gets on the market, the brand reputation will suffer. Richard Puddyphett, director of brand protection with Allied Domecq, says: "Consumer protection is uppermost. Counterfeiting is serious, not because of volume but because what goes into the bottle is often of dubious quality. It has the propensity to do enormous damage and can even kill people. If people are injured or damaged then brands will be damaged." Fortunately, in the UK the likelihood of a consumer unwittingly buying a counterfeit product from a legitimate retailer is slim as most source their products direct from the manufacturer, and even the smaller retailers will only deal with a reputable wholesaler. But there is a danger area of which all retailers must be aware and that's parallel trading, or sourcing products on the grey market. John Anderson says: "In the grey market area there are huge problems. There are so many fake goods, right across the board, even reputable retailers have to be careful." It's certainly something the retailers take seriously. Tesco is well known for its grey market trading and a spokesman comments: "We have strict procedures in place to deal with this. We have a team that check on a number of levels to make sure all the products coming in are genuine. "We check with the manufacturers that the products are genuine and check the paper trail to see where the product has come from. When we first started trading on the grey market we were offered a lot of fake stuff, but we've managed to build up a reputation for being strict and counterfeiters tend to avoid us now. It's not in our interest to have even the suspicion of counterfeit goods in our stores." And Tesco is not alone. The Co-operative Group is also extra vigilant when it comes to sourcing on the grey market. Simon Muster, head of non food, says it uses an independent company of solicitors which checks out the legitimacy of the products the group is preparing to buy. "The supplier can submit sensitive information to the third party solicitors which we won't see. The solicitors also contact the manufacturers to check the products are genuine. Although manufacturers are not keen to help us when it comes to the grey market, they generally regard it as the lesser of two evils." Despite all these checks though, there's still the danger that someone can mix a number of counterfeit products in among the genuine brands. However Muster says they counter this by checking one in 10 of each delivery against genuine samples, which acts as a deterrent to anyone out to make a quick buck. "We occasionally have opportunist people come along and offer a great deal, but when they realise what they have to do, we never hear from them again." But counterfeiting is not limited to the UK and for the big multinational manufacturers the problem is global. Although having varying degrees of difficulties in various countries, Procter & Gamble's biggest problem area is China, where between 15% and 20% of some of their products on store shelves are counterfeit. William Dobson, vice-president of global external relations, says: "We believe we are losing around $150m in potential sales a year in China alone. "The problem is across all of our product lines but focuses mainly on the more popular brands. Shampoo is big over there but we've also found bars of soap. It's across the whole spectrum." To combat the problem, P&G takes a multi-pronged approach, using education to try to raise awareness of the problem among consumers and also spending between $2m-3m a year on private investigators who trace counterfeiters and gather evidence against them. The company is also a member of the Quality Brands Protection Committee which has more than 60 companies as members and works to put pressure on the Chinese government to step up the attention paid to the problem. "We have had some success recently and the government has declared it a priority, but there's a long way to go before the laws change and the rules are put in place to provide effective prosecution and punishment." An effective deterrent is something that is needed on a global basis. As AIM's Marie Patullo says, counterfeiting needs to be taken more seriously: "From a criminal's point of view, if they import cocaine and get caught, they're going to get sent down. "If they get caught with counterfeit goods, they'll get a slap on the wrist and told not to be a naughty boy. It's not risk free, but it's risk favourable." However that could be about to change, at least in the UK where the government is considering the Copyright and Trademarks Bill, which is expected to become law sometime this year. Michael Clinch, head of dispute resolutions with Picton Howell, says the bill will mean three changes: "It increases penalties for copyright theft, increases power for searching and increases power of forfeiture." Offenders will face a maximum of 10 years in prison and an unlimited fine; magistrates will be able to issue search warrants on the basis that there are reasonable grounds to suspect an offence has, or is about to be committed; and the brand manufacturers will be able to seize and destroy the goods more easily. But do brand manufacturers take the risks seriously enough? Trading Standards' Chicken warns: "Counterfeiters are opportunists and they'll seize any opportunity. People are only going to rip off the most successful brands and brand image is very important. "How much are people prepared to pay to protect their most important asset? Companies need to work in advance to protect against it, not wait for a problem first." A spokeswoman for confectionery giant Masterfoods says that because it had not experienced any problems with counterfeiting it did not have anyone keeping an eye on the issue. She did, however, add that if a problem arose, it would put systems in place. Gillette, Unilever and P&G are all working hard to combat the problem, seeking out fake products and tracing them to the source, and they're not afraid to work together on the issue. As Allied Domecq's Puddyphett says: "It's a non-competitive issue." Other companies try to cut the risk of counterfeiting by making their products difficult to copy, or use specialist technology to authenticate their products, but the counterfeiters are only one step behind. After all, the use of holograms to prove a product was genuine was quickly copied by the criminals. But is there any solution to the problem? Picton Howell's Clinch says that while increasing the legal penalties is not a bad thing, it will have little effect on the source of counterfeit products because the vast majority are produced outside the UK. "We should be looking at increasing international co-operation with foreign authorities. When the goods have been imported, most of the work has been done." Unilever's Smeltkop agrees: "It is very difficult to battle, but I think one of the ways forward is to fight it politically. We are a trademark owner, but in some countries that is of no consequence. Political power needs to be used to get these countries to recognise the legality of the trademark." The World Trade Organisation's agreement on trade-related aspects of intellectual property, or TRIPS, is a step in this direction, committing members to observe basic standards on the registration of trademarks, and obliging them to take enforcing steps against infringement. But for now, the counterfeiting trade continues and remains a difficult beast to conquer. As Chicken points out: "Each year, in terms of seizures, we take out between £70,000m and £80,000m worth of fake goods, but it still carries on. "So it must be pretty robust to take that sort of hit and carry on." n {{COVER FEATURE }}