Witnesses Say Counterfeit Products Endanger Both Consumers, Economy
WASHINGTON – Counterfeiters are endangering both our health and our
economy by producing fakes of everything from designer handbags to
pharmaceuticals.
“We have scores of examples of counterfeit, expired and adulterated
medicines,” Novartis global corporate security chief James Christian told the
House Energy and Commerce Subcommittee on Commerce, Trade and Consumer
Protection. “In one case, our anti-counterfeiting efforts interdicted millions
of yellow tablets of a popular painkiller that were virtually indistinguishable
from the genuine product – including the company logo. These tablets were made
of boric acid, floor wax and lead-based yellow paint used for road markings.”
According to U.S. Customs Service estimates, counterfeiting activity costs
the United States more than $200 billion annually and has resulted in the loss
of 750,000 American jobs. And the Federal Trade Commission recently reported
that eliminating counterfeit automotive parts could create 200,000 new jobs in
the U.S. auto industry.
“Counterfeiters have attempted to sell fake baby formula, counterfeit
pharmaceuticals and phony aircraft parts to turn a fast buck. Those are
frightening revelations that should alarm all of us,” said U.S. Rep. Cliff
Stearns, chairman of the Energy and Commerce Subcommittee on Commerce, Trade and
Consumer Protection. “The World Health Organization (WHO) figures that more
than 10 percent of the world’s medicines are counterfeit, with percentages
reaching as high as 60 percent in the developing world. There also have been
product recalls involving consumer products like shampoo and life-style
pharmaceuticals.
“Deaths and injuries are inevitable if the current rate of counterfeiting
continues,” Stearns said.
Steve Arthur, vice president of government affairs at the Grocery
Manufacturers Association, warned that counterfeit products do more than produce
a quick buck for street vendors.
“Organized crime and terrorist groups use the sale of counterfeit goods to
raise money for illegal activities and violence,” Arthur said. “The Los
Angeles Sheriff’s Department testified that many arrested for counterfeit
product crimes in Los Angeles are Hamas and Hezbollah sympathizers and
supporters. Most alarming is that those who aim to terrorize United States
citizens look to counterfeiting to help them achieve their deadly goal: Seized
al Qaeda training manuals recommend the sale of fake goods as a financing source
for its terrorism.”
One witness talked about a China-based Web site that is a marketplace where
both authentic and counterfeit products are traded, undermining legitimate
e-commerce.
Sellers are “explicitly seeking worldwide distributors for their
counterfeit goods, including software, prescription drugs, golf clubs, apparel
and even batteries,” said Steve DelBianco, a vice president with the
Association for Competitive Technology. “Small retailers depend heavily on
customer trust and respect, whether they’re selling on Main Street or online,
but in the growing world of e-commerce, establishing and maintaining trust is
even more challenging,”
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