Digital Technology Spurs World of Fakes

Every morning, you scrub on your favorite soap, lather in your best shampoo and finish it all off with a spritz of your preferred fragrance … or at least you think you do.

Increasingly, some say, there's a chance many of the products you believe are genuine are actually phony.

It's not just pirated CDs, DVDs, videos and faux Rolexes on the street corner anymore, according to people who monitor product fakes.

Virtually everything from the mundane — such as auto parts, pharmaceuticals, children's toys and shampoo — to the exotic — such as vintage wines, artwork and airplane parts — is being knocked off more easily these days, in many cases thanks to easily available, home-based digital technology.

"It's now possible to fake everything," said David M. Hopkins, co-author of Counterfeiting Exposed: How to Protect Your Brand and Market Share. "It's not just the contents. It's the ability to fake the packaging. It's the ability to fake the labels. In some cases, it's certificates of authenticity. Everything is fake."

Someone Makes It, Someone Else Fakes It

Nailing down firm numbers on this loosely monitored, underworld trade policed by numerous agencies is difficult, but it clearly is "a rapidly increasing problem," said Hopkins, director of international business programs in the Daniels College of Business at the University of Denver.

"We reckon that counterfeiting accounts for about 5 to 7 percent of world trade every year, which equates to a figure of approximately $350 billion," said Peter Lowe, assistant director of the International Chamber of Commerce's Commercial Crime Services unit in London, which monitors the problem for corporate clients.

Besides the easier availability of home computing and printing equipment, the emergence of the Internet as a networking, sales and how-to channel also may be fueling the increase in counterfeit products, Lowe said.

The problem can be potentially dangerous. According to Lowe, a counterfeit bolt is suspected in a 1989 plane crash in Scandinavia that killed 55 people, and tainted medicine blamed for the 1990 deaths of dozens of children in Nigeria might have been counterfeit, though neither case could be conclusively documented.

Some products have particularly bad problems. For example, estimates suggest as much as 50 percent to 90 percent of sports memorabilia on the U.S. market could be bogus, according to a San Diego FBI official, whose office led a crackdown on faux sports memorabilia called Operation Bullpen.

U.S. Fakes

Though the general problem of counterfeit goods appears more common overseas, counterfeit items circulate in the United States, too.

Last year, for instance, the U.S. Food and Drug Administration and the drug company Amgen warned pharmacists and others to beware of counterfeit Epogen, a drug to treat anemia. According to the FDA, the fake version's active ingredient was 20 times weaker than it was supposed to be — which perhaps could cause consumers not to get their proper dosage.

(The FDA posts warnings about fake drugs online at

To watch out for other fakes, people should look carefully for obvious signs like misspellings and typographical errors, incorrectly colored packaging or computer type fonts slightly different from familiar brand logos. They should be aware that increasingly, companies are attempting to protect their copyrights with security features similar to those on currency, experts say, so they should look for those if they know they exist elsewhere.

And people should be especially mindful of where they buy products. "If you buy the product on the street or a flea market … you should not be surprised if the product is a fake," Lowe said.

For various reasons, even legitimate stores might occasionally sell fakes, Lowe said, as product counterfeiters — increasingly connected to organized crime and terrorism because of "high profit" and "low risk," he believes — try "to get products into legitimate supply chains."

One method involves so-called parallel-traded goods, experts say. Authentic goods can be sold in different parts of the world for different prices. Opportunists might divert goods from less-pricy markets back into expensive ones like the United States and Europe, assuring merchants that they are diverted, but authentically made, goods.

But, at some point, Lowe said, they could start slipping in counterfeit items.

Hard to Tell Apart

"Some can be quite deceptive," Hopkins said. "If [alleged Microsoft software] you're buying is packaged in something that looks authentic, shrink-wrapped … you don't know for sure whether that's authentic software or not."

Even experts can have a tough time telling the real from the fake.

"Some manufacturers have said to me that we can't really tell the fake from the genuine unless we really take them to bits and examine the pieces," Lowe said.

"There's a recent case in the U.K. where Johnnie Walker Black Label whisky was counterfeited," he added, describing meticulously copied boxes, labels and bottles. "It actually contained methanol, which is a harmful substance. The fake was actually a fairly convincing one. … You could only really tell the slight differences when you had the genuine and the fake articles side by side."

Check Your Money

Such attention to detail is not always standard with currency counterfeiters.

Like the U.S. Bureau of Engraving and Printing, U.S. currency counterfeiters traditionally have plied their trade using offset printing equipment. But the percentage of counterfeits done with digital, computer-aided equipment is believed to have risen from about 1 percent of fake bills in 1995 to 40 percent in 2002, according to federal estimates.

Generally, officials say, the offset-printed fakes are more convincing, with a better chance of approximating genuine bills' security features — which include colorshifting ink, watermarks and embedded security threads.

A redesigned $20 bill to be circulated later this year will have even more safeguards, including improved "optically variable ink," which changes color when viewed from different angles, variable tints to paper stock, and more printed color and graphics. The features are highlighted at

But there's a factor that can make all the security measures in authentic currency irrelevant: A gullible public.

Because many people don't look closely, counterfeit money does not always need to have the security features of the real thing. A slapdash bill scanned on a computer and printed on the right paper stock might only have to feel good enough to pass casual muster at the local convenience store or fast-food joint.

"If somebody knows what features to look for and how to authenticate their genuine currency, the chances of them ever being taken by a counterfeit note are extremely remote," said Richard Stein, acting special agent in charge of the U.S. Secret Service's counterfeiting division. "Counterfeiters do attempt to duplicate the security features, but nobody has truly been able to duplicate the features."

If there's a sucker born every minute, there was almost $82 in counterfeit money passed last year for each one of them, according to a federal estimate. Put another way, about $43 million in counterfeit money was passed to the public in 2002, and about $130 million was seized before being passed, Stein said.

In contrast to the apparent rising rate of product counterfeiting, Stein believes the dollar amount of currency counterfeiting has been relatively stable in recent years, even with more legitimate money in circulation — about $650 billion worldwide.

Uneven Penalties?

Unfortunately, if someone falls for an ersatz bill, they likely are stuck with the loss. There is no reimbursement, and knowingly trying to pass it off to somebody else is a federal crime.

Counterfeiting sentences can be as long as 20 years in prison, Stein said.

On the other hand, some who monitor product counterfeiting — which is policed piecemeal by numerous federal and local agencies — complain penalties frequently are lighter than they should be. Often, it's up to companies holding copyrights and trademarks to pursue fakers, they say.

"The penalties have been pretty light," Hopkins said. "There have been some jail sentences, but quite honestly those have been few and far between. … If they spend a year in prison, which is unusual, they would be making a very good salary [off the fake products] for that year in prison."