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Supply Chain News: The Enormous Cost of Counterfeit Goods to US Manufacturing


eCommerce has Fueled Tremendous Growth in Sales of Counterfeit Products

Nov. 10, 2021
SCDigest Editorial Staff

If you want to understand the impact of counterfeit goods to US manufacturers, you can start with Nite Ize, Inc., a manufacturer of mobile, pet and key accessories, as well as hardware, lighting and other products.

Supply Chain Digest Says...

“Manufacturers need real, actionable, innovative policy solutions that reverse the rising tide of counterfeit product,” NAM concludes.

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According to a recent post on the web site of the National Association of Manufacturers (NAM), the small manufacturer worked to take down 75,000 counterfeit product listings and websites in 2019 alone.

The overall problem is massive financially. According to NAM’s research, fake and counterfeit products cost the US manufacturers $131 billion and 325,000 jobs in 2019 alone.

But it is also important to note that counterfeits also hurt US consumers as well as businesses, as those consumers are not receiving what they thought they paid for. What’s more, often counterfeit products can risk a consumer's health or safety.

NAM says that in practice, many on-line platforms have not been held liable for counterfeit products sold on their web sites. The only response manufacturers can make is asking the platforms to remove the listing.

Meanwhile, a huge percentage of counterfeit goods sellers are located in China and its Hong Kong territory (see graphic below, based on 2018 data).

It is not easy for US companies to take legal action against the counterfeiters in either jurisdiction, even if they are fortunate enough to have accurate seller contact information.

What can US companies do? NAM says most have been forced into a piecemeal strategy that includes:

• Using software tracking services to find fraudulent trademarks and images

• Working with third-party sites to remove listings for knockoff merchandise

• Bringing lawsuits against counterfeiters where possible

• Coordinating with the International Trade Commission.



Counterfeit Goods Sellers are Overwhelming from China and Hong


However, those tactics are challenging for lots of manufacturers but especially so for small and medium-sized companies that have limited resources but can be badly damaged financially if their products are ripped off.

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What can the Federal government and other parties do? NAM recommends the following actions:

Requiring e-commerce platforms to reduce the availability of counterfeits – but just how would seem to be the question. NAM recommends as a start more vetting of potential vendors, among other measures.

Modernizing enforcement laws and tactics to keep pace with counterfeiting technology – a big process and funding challenge. NAM wants ecommerce platforms to be held more accountable for sales of counterfeit goods. It also recommends legislation better clarifying what is a counterfeit product.

Streamlining government coordination – good luck. NAM calls for a new Federal agency focused on the counterfeiting issue, it also says the government should provide better information on bad-faith actors as well as on trusted importers.

Improving private-sector collaboration, with calls for brand owners, on-line marketplaces, third-party search providers, shippers, customs brokers and payment providers and others to work together to tackle the issue – even as many players actually benefit from counterfeit goods.

Empowering consumers to avoid counterfeit goods
, including providing tools to avoid purchasing them in the first place. NAM says Congress should pass legislation requiring platforms to notify online shoppers about actual or potential purchases of counterfeit goods

“Manufacturers need real, actionable, innovative policy solutions that reverse the rising tide of counterfeit product,” NAM concludes.

What are your thoughts on this issue? What can be done?Let us know your thoughts at the Feedback section below.


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