Counterfeits make lousy holiday gifts

There's little doubt that most shoppers on the prowl for a Coach bag, Oakley sunglasses, Callaway golf clubs, or other name-brand goods would jump at the chance to land them at deep discount. But would you buy them from a street vendor or through an online auction? Are the risks of getting stung with a fake worth the possible rewards?

Some consumers, frankly, don't care. Consumer Reports' survey findings reveal that many of those who knowingly bought fakes in the past did so because the merchandise was easy to find and was cheap in comparison to the genuine article.

Counterfeits are everywhere, especially this time of year. From sports jerseys to iPhones, and movie DVDs to footwear, there's nothing unscrupulous sellers won't try to pass off as legitimate. Luxury items are the most common, of course, because they are the most valuable. And the problem is getting worse.

Learn how to spot a counterfeit product before you buy, and beware of counterfeit tires which can pose a consumer risk.

Federal agents seized nearly 23,000 shipments of fake consumer goods over a one-year period ending in September 2013 (the latest data available), up 7 percent from the previous year. While 68 percent of counterfeits came from China and 25 percent from Hong Kong, the Department of Homeland Security confiscated knockoffs from more than 70 other countries as well. Counterfeiting—the theft of intellectual property—is estimated to cost legitimate companies as much as $250 billion a year worldwide.

While there's no telling how many fakes eluded detection, consider some of these recent high-profile busts:

• Customs and Border Protection officers working the docks in Houston/Galveston, Texas, intercepted more than 200 phony Prada, Christian Dior, Michael Kors, and other designer women's handbags. The stash also contained around 50 boxes of faux Lego building blocks.
• In Jersey City, N.J., officials working at the International and Bulk Mail Center discovered more than 185 counterfeit Gibson, Les Paul, Paul Reed Smith, and Martin guitars. The officers suspected the guitars were fakes because of poor craftsmanship and packaging, among other telltale signs. In another haul at the same facility, customs agents found counterfeit guitars bearing the Epiphone, Fender, Taylor, and Ernie Ball brands.
• At Los Angeles International Airport, agents discovered 215 watches bearing counterfeit Rolex, Louis Vuitton, Cartier, and Omega trademarks.

Counterfeiting isn't a victimless crime. "People selling you a $20 purse aren't scrappy entrepreneurs," an international intellectual property enforcement expert told us.

In 2008, we reported on the industry's dark underbelly, which supports child and sweatshop labor, prostitution, human trafficking, the illegal-drug trade, gang violence, and organized crime, among other illicit activities. Customs and Border Protection officials say that still holds true. In addition, fakes can pose safety issues. Low-cost items like extension cords, holiday lights, and power stripes, for example, have been sold with phony Underwriters Laboratories labels. Fake prescription drugs and auto parts could be deadly as well.

Counterfeiting is such a problem that many of the companies whose goods have been targeted by fraudsters feature explicit warnings on their websites.

Tiffany, for instance, advises customers to purchase goods exclusively from Tiffany.com, Tiffany & Co. stores and catalogs, and authorized retailers. Callaway, maker of Big Bertha golf clubs, recommends that customers who suspect they're being duped tap a key or coin against head of certain woods. If they detect a pinging sound, the club is likely fake because real woods are made with expensive carbon material—not metal—and emit a softer sound.

What you can do

• The easiest way to avoid counterfeits is to deal with reputable retailers. Stick with authorized sellers. It's the only ironclad way to protect yourself. Legitimate businesses are anxious to convey that they are a credible outlet for particular brands. The information should be available on the the manufacturer's site. 
• Be wary of brand new name-brand products—especially designer goods—sold via street vendors, Internet auctions, independent boutiques, flea markets, or house parties. Don't fall for imaginative stories that attempt to justify below-market prices, such as "I won the golf clubs in a raffle." The tales are designed to deceive potential victims.
• Don't trust serial numbers. Just because a product has one doesn't mean it's legitimate. A Coach representative told us that fraudsters often copy numbers off of legitimate goods.
• Check the fit and finish. Counterfeits often display shoddy workmanship, though the quality of many fakes has improved. But image-conscious brands would never distribute goods that cheapen the brands' reputation, such as Nike Air Jordans with sloppy glue jobs, Gucci bags with erratic stitching, and designer jeans with missing logos and nameplates—which is what we eyeballed when we examined various fakes.
• Inspect labels and packaging. Unfamiliar or flimsy packaging for big-brand goods, missing or broken seals, and misspellings should send up a warning flag.

If you suspect a merchant of selling fakes, you can report it to StopFakes.gov.

—Tod Marks

Source: 2013 Seizure Statistics, U.S. Customs and Border Protection, Office of International Trade. Estimated Street Value is based on the retail price of the counterfeits seized if sold new as the legitimate goods. The column at right reflects by category the hierarchy of faked goods. For example, handbags and wallets constituted 40 percent of all counterfeit goods confiscated by the government, by dollar volume.