The sale of fake goods in the UK is big business. A survey by the Alliance Against Intellectual Property Theft, a coalition of British trade associations and industry enforcement organisations, found that the UK counterfeit goods market was worth more than £10bn in 2004, with the figure for 2005 expected to be even higher.
Like any business, counterfeit crime is evolving. Instead of selling cheap and fairly obvious imitations down the market, criminals are investing time and money in advanced imitations of ordinary consumer goods, which they are selling at normal prices.
Forget your Gucci bags, the latest products to strut their stuff down the counterfeit catwalk are washing powder, sun cream, batteries and cigarettes.
They're not just fooling consumers, but also the most experienced grocery wholesalers and retailers. Just two months ago, one of Scotland's largest cash and carry outlets, United Wholesale Grocers, was fined £1,500 for selling counterfeit packs of Bold 2-in-1. (The Grocer, February 4, p12). MD Mohammad Ramzan illustrates how easy it is to get caught out. He says: "We bought a consignment in good faith from our buyer, who purchased it from a secondary source. We have been trading for 30 years and never had this problem before."
Everyone is a potential target. But the threat of coming into contact with counterfeit goods is markedly higher for smaller independents, as they often have more supply chain hoops to jump through and fewer safeguards than their larger rivals.
Trading Standards say there is a lot that smaller retailers can do to ward off the threat. Brian Lewin, head of Trading Standards at Northamptonshire County Council, recommends sticking to the principle of the three Ps: price, person and place. "Retailers should question the identity of the person they are buying from, how they were approached, and where the goods have come from. If they are in any doubt, they should not take the risk," he says. "Generally, if it looks too good to be true, it probably is."
'Check, check and check again' is Tony Wright's motto. Wright is MD of The Grocer Top 50 Independents CTN chain Maynews. "We carry out regular checks on all our products. That, and buying only from dedicated sources, is all we can do to control it and be confident that the stock that goes on our shelves is 100% bona fide."
The Anti-Counterfeiting Group, a UK-based coalition representing more than 200 manufacturers in 30 countries, has compiled a list of some of the most hazardous fake consumer goods seized by enforcement officers over the past couple of years. It makes sobering reading.
The knock-offs include fake Johnnie Walker Black Label, found to contain elevated levels of methanol, which can cause blindness and even death; perfume that contained urine; razors that have caused serious facial abrasions; and washing powder with ingredients so caustic they cause skin burns. And the list is growing. However, it is not just consumers and retailers that are being put at risk, but also the legitimate manufacturers whose products are being ripped off.
As a spokeswoman for the Alliance Against IP Theft points out: "With losses of this magnitude, there is a real possibility that innovation will be stifled. Why should legitimate businesses pay millions in developing and marketing new products only to find that the expected profits are wiped out by counterfeiters?"
Lewin says: "The trade in fake goods is becoming an epidemic. The people behind it are serious organised criminals with access to the raw material, packaging equipment, manpower and distribution channels."
Many of these criminals are using returns from counterfeit goods to fund more serious crimes, such as drugs, money-laundering, pornography and even terrorism. A BBC report claimed that profits from fake T-shirts have been linked to the funding of al-Qaeda.
The link between counterfeiting and organised crime is further highlighted in the National Criminal Intelligence Service's UK Threat Assessment (UKTA), which describes the threats to the UK from serious organised crime. The report states: "The most successful organised criminals have an excellent and dynamic understanding of criminal markets. Like any businessman, they regularly identify new opportunities for making money. Their ability to exploit these opportunities will be limited only by their calculations."
Meanwhile, anti-counterfeiting groups are lobbying for more widespread use of the Proceeds of Crime Act 2002, which greatly increases the penalties for criminals by activating an asset recovery system.
And just last week the government announced the completion of the biggest- ever crackdown on counterfeit criminals in the UK, following a six-month investigation into benefit fraud and counterfeit CDs, DVDs and computer games.
The raids, carried out in the Liverpool, Sefton and Skelmersdale areas, culminated in the arrest of 29 suspects and exposed five major duplicating factories.
It is understood that 70% of the gang's fakes were being sold in what the Department for Work and Pensions calls Liverpool's worst piracy hotspots: Stanley Dock and Walton Market, with another 30% sold elsewhere in the Liverpool area. The DWP estimates that an average counterfeit stall was turning over £4,000 a day.
Efforts are being made to raise awareness of the implications of buying counterfeit goods, says Shaun Woodward, chairman of the Northern Ireland Organised Crime Task Force: "Many people are lured into becoming customers, thus helping criminals make profits. We want to reverse that trend."
With tougher laws and growing awareness, the days of these nice little earners may soon be over.
says Gaelle Walker