- Article
Gray Market: The Rise of Luxury Goods
The luxury gray market of authentic goods is growing fast thanks to steep discounts. It’s a lucrative practice, yet original brands don’t usually take part in the game....
Counterfeit goods create health, safety, and environmental risks. They are dangerous for consumers and harmful to brands.
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The variety of goods that are counterfeited is astonishing and keeps on growing.
The counterfeit problem affects more than luxury goods – it targets everyday consumer products. In short, if there is money to be made, there are those who will manufacture and distribute fakes.
Low-quality products pose significant threats.
Both fake and genuine goods can create risks: health, safety, environmental, or a combination of the three. The many potential dangers drive governments to set standards and monitor the market.
Naturally, governments are concerned with risks associated with products not subject to set standards and testing regardless of intellectual property (IP) rights.
With genuine goods, legislation and regulatory bodies oversee and identify unsafe products.
When goods are sold in a territory, they must meet specific safety standards. In the EU, goods deemed to create more risks, such as toys, electrical equipment, and medical devices, require CE marking.
The US Food and Drugs Administration is authorized to regulate food products, cosmetics, and pharmaceuticals.
Counterfeits are not subject to the same inspections and are less likely to meet health, safety, and environmental standards than products by original manufacturers.
Instead, they are unregulated, unlicensed, and lack oversight.
Fake pharmaceuticals, food products, and children’s toys can create health risks; Counterfeit automotive parts and batteries pose safety risks; Illicit pesticides and other chemical products – both health and environmental risks.
Fake prescription drugs, for example, may look exactly like the real deal and yet contain toxic ingredients.
Genuine prescription drugs, on the contrary, comply with strict regulations.
In the US, the FDA sets requirements for drug approval, manufacturing standards, labeling, marketing, and other aspects of the drug manufacturing to consumption cycle.
Although fakes tend to be of lower, dangerous quality, it is not always the case. Brands see an increase in superfakes: goods that look practically identical to the genuine products. Yet even superfakes do not adhere to safety standards or undergo inspections.
Counterfeits free ride on original products: their safety approval, testing, reputation, marketing efforts, and customer service.
Gray marketing, also called parallel importing, refers to genuine goods diverted and sold outside legitimate supply chains without the consent of the intellectual property owner in that market.
It results in unlicensed products entering into a territory, products that were not subject to evaluation by the regulatory agency in the market and never approved.
Gray marketing also increases the risks associated with original products that were licensed in the territory.
Post-production handling, storage, and transportation can affect safety and efficacy.
When medications that require refrigeration are not handled correctly, they can endanger patients or lose their potency and become ineffective.
Counterfeit pharmaceuticals, personal care, food, and beverages can affect consumer health. These effects can be mild, and they can also be life-threatening.
Counterfeit pharmaceuticals can affect patient health in various ways.
Fakes can have toxic ingredients, incorrect amounts of active ingredients, or none at all.
When a prescription drug for cancer does not contain the active ingredients to help the patient, it can have severe consequences, including death.
In recent years, the trade in counterfeit medicines has been growing due to the rising popularity of online pharmacies that have increased the threat of illicit medical products. Read more here: Fake Medicine Online
Fake cosmetics and perfume can also endanger consumer health.
Reports in the US show counterfeit cosmetics contain substances such as arsenic, mercury, and rat droppings, and expired cosmetic products can cause skin or health problems. Read more here: Counterfeit Makeup and Cosmetics
In the case of alcohol, the trade in fakes is driven by taxes imposed on alcoholic beverages that make it lucrative for criminal organizations to be involved in.
Counterfeiters smuggle products, including genuine ones, between territories because of price differences. They also produce and distribute substandard products.
During one weekend in 2021, it was reported that counterfeit alcohol claimed 34 lives in Russia.
See more about the fake wine epidemic.
Counterfeit toys, electronic equipment, outdoor recreational equipment, automotive parts, and personal protective equipment can be unsafe, causing injuries and even death.
Let’s examine a few categories.
Substandard quality, choking hazards, toxicity, electric shocks, and burns are some safety dangers children face from counterfeit toys.
Illicit, unsafe toys are everywhere, and too many are offered on online platforms.
Such toys are unregulated and do not comply with the safety standards and regulations designed to protect children.
Read more about counterfeit toys.
Performance and reliability are critical for outdoor safety gear.
Outdoor products include safety-related gear, such as crampons, helmets, carabiners, and ropes.
Outdoor tech, like water filters, external battery chargers, and head torches, should be of a quality to be trusted.
Read more about fake outdoor products.
Electronic components are also counterfeited and may have serious consequences. Semiconductors, for example, are used in a wide range of products.
The semiconductors industry has seen counterfeits before, but the problem has been exacerbated by the Covid-19 pandemic, which created shortages in the semiconductor industry, among others.
Fake semiconductors in products – from medical devices to household appliances, can be dangerous.
Read more about counterfeit semiconductors.
Although consumers are aware of the critical importance of automotive parts to their safety, the automotive market for replacement parts is booming.
Substandard counterfeits and salvaged parts include airbags, brake pads, body parts, tires, and batteries – all critical to safety.
See additional answers to questions on counterfeit automotive parts.
Other goods may seem harmless but are associated with safety risks: Jewelry can contain toxic metals such as lead and cadmium.
The risk is enhanced when children put them in their mouths. Watches, especially watch straps and cases, can also have toxic heavy metals.
Even seemingly harmless goods like apparel can be made with toxic materials or create fire and choking risks.
Similar safety issues are also associated with other textiles containing unsafe dyes and other substances.
Substandard fakes can impact not only consumers but also the environment.
Counterfeiters can harm the environment in the manufacturing stage (such as by using toxic dyes and other hazardous materials), through unregulated and harmful disposal of chemicals, and unregulated air pollution.
Counterfeit pesticides and agrochemicals are big business.
Counterfeit pesticides are unregulated, untested, and unsafe. Since they do not adhere to regulatory requirements, they may use the wrong ingredients or formulations, affecting their safety and efficacy.
Or they may contain cheaper or toxic ingredients. As a result, they can be dangerous to consumers, harm farming communities, destroy crops, pollute the soil, and contaminate water sources.
Read more About the dangers of counterfeit pesticides.
Counterfeits harm consumers.
The damage goes beyond unknowingly purchasing poor-quality goods for the price of genuine products, it can involve exposure to health and safety dangers.
Further economic risks include the effects on governments that lose on unpaid taxes and then must spend more on enforcement.
And there are the economic risks to intellectual property owners.
Counterfeit products, especially dangerous counterfeits, affect brands in various ways, lost revenue being the most obvious.
Yet counterfeits damage brands in other ways as well. Fakes undermine consumers’ confidence in brands’ safety and effectiveness.
When consumers believe they are buying a genuine item just to find out they have a fake, they may turn to the original brand’s customer service and find out they are not covered.
In other cases, they blame the genuine brand for the product not meeting their expectations.
Customers who have bad experiences with a counterfeit product are likely to form a negative opinion about the original brand.
The result is all-to-often damaged reputation. Not only did the genuine brand lose the sale, but now its reputation is also damaged.
Brands should let their customers know that they are concerned about counterfeits and take action to protect them.
Fakes have broad effects on consumers, businesses, economies, and governments.
Wiser Market offers a quick and cost-effective way to fight online brand abuse and counterfeiters.
At Wiser Market, we work to eliminate the online sale of counterfeits for our clients by applying a brand protection strategy and custom-tailored solutions.
Our anti-counterfeit solutions include advanced monitoring technology, followed by analysis to construct the best means for counterfeit removal and elimination.
Our team of brand protection analysts has years of experience protecting online intellectual property from brand abuse and gray marketing in both B2B and B2C industries.
Our advanced, scalable enforcement solution helps you fight fakes with quick, effective results.
Systematic takedown actions and continuous monitoring take counterfeit items off and eventually discourage counterfeiters from continuing their fraudulent activities against your brand.
With Wiser Market, your brand will have a complete intellectual property protection solution.
Want to protect Your Brand?
Contact us for a Free Demo:
Which fakes are likely to be the most dangerous?
Automotive parts, prescription drugs, safety equipment, and toys are probably the most dangerous counterfeit.
How to avoid buying counterfeit products?
Do I get a warranty for counterfeit products?
Companies only warranty genuine products and usually do not cover products from unauthorized retailers.
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