Counterfeits Pose Significant Economic & Safety Threat Report Finds

Washington – Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.) today released a bipartisan committee report studying counterfeit goods sold online and their effect on U.S. businesses and consumers. The report found that improved information sharing between U.S. Customs and Border Protection (CBP) and its private sector partners would aid efforts to identify and curtail the sale of counterfeit imports, some of which may pose significant health and safety threats to consumers.

 

“Knockoffs not only violate intellectual property rights; they also threaten the economy and consumers. And as consumers rely more on online marketplaces, bad actors are finding new ways to exploit legitimate channels to box out businesses and dupe consumers with bogus products. As chairman of the Judiciary and Finance Committees, I’ve worked to promote cooperation between government and the private sector to better combat counterfeits. This investigation identified areas where Congress can improve this cooperation,” Grassley said.

 

“In 2019 the issue of counterfeit goods isn’t about knockoff purses sold out of the trunk of a car, it’s about dangerous, bogus products shipped from abroad directly into Americans’ hands. It’s clear that without additional tools, Customs and Border Protection is going to fall short in helping American businesses confront the sale of harmful counterfeits, so Congress should make sure it gets that authority. Protecting American consumers and the American brand at the same time is a no-brainer,” Wyden said.  

Counterfeiters are increasingly exploiting the global marketplace, particularly as e-commerce platforms, such as third-party online marketplaces, offer a widening variety of goods. Knockoff products accounted for $509 billion – an estimated 3.3 percent of world trade in 2016. Domestically, counterfeits cost an estimated $29 billion to $41 billion annually. Some counterfeit products such as toys, batteries, pharmaceuticals and other health products may also pose health and safety risks to consumers when they are not manufactured according to established standards.

 

The report found that while e-commerce platforms provide some tools to combat counterfeits, the burden of policing the marketplace largely falls to the owner of the intellectual property being targeted. Small- and medium-sized businesses often don’t have the resources to effectively identify and address counterfeits listed on e-commerce platforms.

 

CBP is tasked with helping to identify counterfeit products entering the country. However, current laws and regulations limit its ability to share information with businesses, e-commerce platforms and the common carriers that ship the products to consumers. The report recommends amending existing laws to allow for greater information sharing by CBP to these entities to help identify counterfeiters’ products and shipping practices. Information sharing between CBP and its private sector partners would better protect intellectual property rights and create a more secure supply chain.

 

The report, titled “The Fight Against Fakes; How Statutory and Regulatory Barriers Prevent the Sharing of Information on Counterfeits,” can be found HERE.