Press Release

October 13, 2021
 
Media Contact: media@buysafeamerica.org 
 

Counterfeit Goods Put Consumers at Risk, Cost U.S. Economy Billions

Buy Safe America Coalition report highlights the negative effects of online counterfeit sales on the U.S. economy

 
Washington, DC – Today, the Buy Safe America Coalition, a diverse group of retailers, consumer groups, manufacturers and law enforcement who support efforts to combat organized retail crime and protect consumers and communities from the sale of counterfeit and stolen goods, released a study revealing the devastating impact the sale of fraudulent goods has on the U.S. economy, businesses large and small, and American consumers. 
 
“The Counterfeit Silk Road - Impact of Counterfeit Consumer Products Smuggled into the United States” sounds the alarm on a hidden danger for millions of consumers shopping online this upcoming holiday season. Counterfeit goods, most of which are being shipped directly to doorsteps from China, are flooding the U.S. market by way of third-party marketplaces that require little to no accountability to ensure the products they sell are legitimate, and more importantly, safe. 
 
Data indicates that $1.5 billion worth of counterfeit toys were imported into the U.S., along with $6.8 billion worth of counterfeit cellphones. The sheer volume is disconcerting alone, but recent news stories confirm just how harmful counterfeit goods like batteries, toys, and N95 masks can be to consumers. Failing car seats, exploding batteries, and even dangerous drugs have unfortunately become commonplace on third-party marketplaces due to the lack of oversight. 
 
“At a time when supply chains are already strained, it should concern every American that third-party marketplaces are providing a gateway for counterfeit producers to enter our markets and are ultimately allowing these illicit goods to make their way into our homes,” said Michael Hanson, spokesperson for the Buy Safe America Coalition. “This holiday season, we want consumers to be able to shop with confidence that the gifts they are buying are safe for their families. Policymakers can support that goal by passing legislation that ensures transparency and accountability on third-party marketplaces.” 
 
The Buy Safe America Coalition is leading efforts to address the growing problem of counterfeit and stolen goods sold online by urging Congress to pass the INFORM Consumers Act. This bipartisan legislation would modernize consumer protection laws and require online marketplaces to collect and verify basic business information from sellers, making it harder for con artists and foreign enterprises to target American consumers with fake products on leading e-commerce platforms. 
 
“We have to make it harder to hide behind fake screen names and bogus business accounts, and that starts with better transparency on marketplaces like Amazon and Facebook,” said Hanson. “These platforms have failed to protect consumers, and it’s time for Congress to act.” 

“At the same time that 3M has increased production of N95 respirators during the COVID-19 pandemic, the company launched a global effort to combat fraud, counterfeiting and price-gouging to help protect the public from those who try to exploit the demand for critical 3M products,” said Kevin Rhodes, 3M Senior Vice President and Deputy General Counsel. “To date, 3M, in collaboration with law enforcement officials worldwide, have seized over 52 million counterfeit respirators and secured the removal of more than 25,000 fraudulent e-commerce listings.” 

In addition to consumer danger, the economic harm that has been caused by the online counterfeit industry is equally alarming: 

• 21 product types account for over 60 percent of all of contraband goods entering the U.S., and these illegitimate imports alone cost domestic retailers nearly $54.1 billion in sales.

• The smuggling of counterfeit goods costs the United States government nearly $7.2 billion in personal and business tax revenues.

• It’s estimated that over 39,000 jobs in wholesaling and 280,000 retail jobs, paying over $13.6 billion in wages and benefits to workers, were lost because of counterfeit production. 

In addition, analysis from the study highlighted the counterfeit industry’s adverse impact on American innovation. Data shows that bad actors in China have been targeting U.S. intellectual property for years. The study reveals that in 2019, intellectual property rights (IPR) violations intercepted from China totaled $1.12 billion. It also highlighted that the growth in IPR seizures tracks closely with the growth in e-commerce shopping over the last decade. In fact, a significant increase in these shipments began in 2014 when Amazon launched its Marketplace for third party sellers. 

“Counterfeits put consumers at risk and hurt local businesses who sell legitimate products online and in their stores,” said Jeffrey Hardy, Director-General of the Transnational Alliance to Combat Illicit Trade (TRACIT). “This problem is only going to get worse until Congress steps in and demands transparency and accountability from online marketplaces.” 

“The Counterfeit Silk Road - Impact of Counterfeit Consumer Products Smuggled into the United States” is one of the few in-depth reports into the impact of counterfeit goods that exists on public record, and was spurred by the rise in counterfeit sales on online platforms in recent years. The study was developed in partnership with John Dunham & Associates. 

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The Buy Safe America Coalition represents a diverse group of responsible retailers, consumer groups, manufacturers, intellectual property advocates and law enforcement officials who support efforts at all levels of government to protect consumers and communities from the sale of counterfeit and stolen goods.