In our recent report on the cost of the counterfeit economy, NetNames estimated that the value of fakes in the consumer electronics sector is now $169 billion – the second most affected market segment behind pharmaceuticals (which is worth an estimated $200 billion). The collision of globalization and the right conditions for the online economy to blossom has created an ideal environment for counterfeiters. With no barriers to entry, low overheads, easy distribution, few risks of being caught and a worldwide shop window, it’s not hard to see why the trade in fake consumer electronics continues to be a major issue for brand holders. But what people may not realize is the huge risks they’re taking by using counterfeit electronics.
This time last year, the must-have present on the Christmas lists for those of a certain age were hoverboards. However, after a string of household fires and injured users, over 500,000 units were recalled, with the London Fire Brigade asking residents in the UK capital to “avoid Christmas hoverboard horror” by not buying the products after more than 15,000 had been seized by Trading Standards and assessed as unsafe.
Trading Standards has again been doing some great work in the run-up to Christmas, focusing its attention on counterfeit phone chargers that are used with Apple devices. At this point, it’s very important to stress these are not Apple phone chargers – Apple’s rigorous health and safety testing processes ensure that items they put the famous logo on are fit for use. Trading Standards’ investigation found that 99% of chargers it examined that claimed to be Apple products – or at least compatible with Apple products – failed a basic safety test.
Apple is fully aware of the problems it faces in trying to eliminate these counterfeit products from online marketplaces. Earlier this year, it started legal action against one seller who was found to be selling poor quality, dangerous goods under the Apple brand. However, trying to police thousands of websites and online marketplaces that sell these counterfeit items is a complex and time-consuming process, with the satisfaction of taking down one infringer often short-lived as another jumps into their place. Creating customer-education programs to explain not only the reasons why a consumer should buy genuine products, but also what could happen if they choose to purchase a counterfeit item is now an essential component of any brand-protection strategy.
Our insatiable thirst for acquiring the latest technology, coupled with a predicted one billion more mobile users by 2020, makes consumer electronics a rich picking ground for counterfeiters. An estimated 2.5 million UK consumers have either knowingly or accidentally bought a fake electrical item in the past 12 months. The worry here is the contingent who know exactly what they’re buying but are prepared to take the risk to save a few pounds. In a survey of UK consumers back in 2013, consultancy firm PwC found that 26% bought counterfeit items because the genuine products were overpriced, whilst 18% felt that the counterfeit product “did the job”.
Counterfeit items such as mobile handsets and chargers do not just damage the revenues and reputations for major brands, they also pose a serious risk to the health of users. At this time of year, many consumers will be looking for bargains, but it’s important that they do not compromise safety and quality for the sake of a few pounds.