Counterfeit goods

The backs of pirated DVDs are often purple or dark blue while genuine discs are silver in colour. If the film is still showing in theatres, you should be suspicious that the copy may be a pirated version. (Damian Dovarganes/Associated Press)

Once the domain of flea markets and street vendors pedalling knock-off T-shirts and watches, the counterfeit industry has bloomed to include electronics, luxury items, even medicine — a global trade worth an estimated $700 billion Cdn.

Counterfeited goods account for between five and seven per cent of world trade in 2006, according to the International Anti-Counterfeiting Coalition.

High-end phoney iPods and Bluetooth devices are marketed on online auction sites while determined shoppers scour the side streets and basements in places like Chinatown to procure knock-off Prada and Chanel handbags.

In Canada, the counterfeit industry has grown tremendously over the past few years, rivaling the illegal drug trade in its size, authorities say.

The RCMP conducts more than 400 investigations into counterfeit goods each year across the country, while Canadian industry estimates the knock-offs cost it as much as $30 billion annually.

Police have intercepted shipping containers stuffed with counterfeit clothes and raided small manufacturing plants across the country. Canada has also become a leader in producing pirated DVDs for worldwide distribution.

Often don't meet safety standards

While many Canadians see purchasing knock-off goods as a harmless means of getting more for less, anti-counterfeiting officials warn of safety concerns.

You might save some bucks by buying a counterfeit cellphone, printer cartridge or circuit breaker, they say — but you have no guarantee that the product meets Canadian safety standards.

These days, the counterfeiters often attach fake safety labels to products that haven't been tested, experts warn.

Nearly one million pairs of knock-off Nike sneakers were incinerated in Germany, following what was touted as the world's largest bust of counterfeit goods. Customs officers in Hamburg intercepted a total of 945,384 pairs of counterfeit Nike sneakers, 105,000 fake Adidas and Puma shoes, 76,760 phoney watches and 1,454 toys were seized, worth about $490 million US. (Kai-Uwe Knoth/Associated Press)

Lorne Lipkus, the chair of the education committee for the Canadian Anti-Counterfeiting Network, said consumers put their health in jeopardy when they buy untested, substandard goods such as knock-off printer ink-jet cartridges.

"They've copied the package, they've copied the cartridge that the ink comes in but they have not been able to duplicate the quality of the ink," he said.

"Of course that presents a particular concern because nobody is testing the ink for toxicity."

Legitimate businesses hit hard

Pirated and knock-off goods have had a devastating impact on legitimate businesses, some of which have laid off staff or folded completely, the experts say.

"If you would ask people in business in Canada what they'd be able to do with their business [without counterfeit goods available in the marketplace], they would tell you they'd be able to employ more people," Lipkus said.

"They'd be selling a lot more legitimate products and they would therefore be increasing the amount of taxes and other government revenues that are paid."

Businesses also suggest that innovation suffers, as counterfeiters cut into profits intended to fund the research and development of future product lines.

Authorities say organized crime is the largest beneficiary of the counterfeit trade, reaping the proceeds from the sales.

The RCMP says the counterfeit trade is proving attractive to many criminals as the high-profit goods are relatively easy to produce and import.

Also, a drug dealer who is caught will serve jail time, while a counterfeiter will be penalized with a monetary fine.

2 in 5 Canadians bought counterfeits: poll

Phoney products, like this counterfeit Nike shoe, are popping up across the country, everywhere from street vendors and online retailers to high-end malls. (CBC)

Despite all of these considerations, a recent Pollara poll found that two in five Canadians said they purchased counterfeit goods.

Lipkus notes that an apparent apathy in Canada is in large part related to a lack of understanding as to how the counterfeit trade operates.

He said people tend to compartmentalize criminals, thinking that people who sell knock-off purses are not as bad as people who produce phoney heart medication.

In fact, he says, they're likely to be one and the same.

"The counterfeiters don't seem to specialize in a particular product — they specialize in counterfeit," he said.

'Deplorable' working conditions in counterfeiting factories

Keeping pace with counterfeiters can be exceptionally difficult, Lipkus said, noting that they work quickly, collapsing their operations within hours of being discovered.

In one recent raid in Markham, Ont., an investigator found a team of workers sewing brand-name labels onto knock-off clothes.

Lipkus said while the investigator was contacting police, one of the counterfeiters pulled a van up to the plant to take the goods away.

"The landlord was contacted on the facility and when they opened up the doors there was not a stitch of anything in [there]," he said. "They had moved everything, lock, stock and barrel within two hours."

While officials were not able to determine the working conditions or wages of the workers at the Markham plant, Lipkus said counterfeiting factories in Asia are typically shocking.

"I keep hearing from time to time how people get upset when large, well-known North American, European companies employ underage labour in factories in Asia," he said.

"Raids in Asia in counterfeit plants disclose deplorable conditions that would boggle your mind. We're talking [about] four-year-old kids mixing chemicals in factories. … I mean it's just absolutely deplorable."

Most counterfeit goods are produced in China, he said.

What you can do

The Canadian Anti-Counterfeiting Network encourages consumers to make their purchases carefully.

The following tips will help you separate the phoney from genuine:

• Beware of products that are suspiciously marked down to bargain prices. Luxury goods rarely go on sale — be wary if you find a Coach or Louis Vuitton purse marked down to $25.
• Check for spelling and grammatical errors, and shoddy packaging materials.
• Where are you buying the product? Phoney goods are sometimes sold on online auction sites where you'll have less chance to scrutinize and inspect the product. Be aware that many counterfeiters don't issue receipts or charge sales tax.
• Check the product for CSA International certification. If you cannot find the safety agency's logo, check its website for its log of certification records.
• Is the DVD movie you are buying still showing in the theatres? Is it packaged with pixilated artwork that does not match the movie's promotional theatre posters? Is the back of the disc dark blue or purple? If so, the vendor is probably trying to sell you a pirated copy.

If you suspect you have purchased a counterfeit item, contact police and tell them where you made the purchase.

The Canadian Anti-Counterfeiting Network notes that it is not a criminal offence to possess counterfeit goods in Canada if the owner has no intention to distribute.

Lipkus also warns consumers not to be fooled into thinking counterfeiters are small-time, harmless operators.

"At the level of manufacturer, these are very organized people who are only interested in money," he said. "They don't abide by any laws and they're only in it for a buck. It's just pure greed, and those are the people that we're helping by buying these products."