Counterfeit Goods

Information and statistics about counterfeiting and the sale of counterfeit goods. Estimated losses from counterfeits, markets where fake goods are sold, and other piracy statistics are collected from criminal justice programs and public information sources.

According to a news report in Tampa, Florida, the profit margin for selling a single counterfeit lipstick from popular makeup company MAC could be as high as $10.

The investigative news team for ABC Action News in Tampa bought a MAC lipstick off of eBay for $13. According to MAC employees, the lipstick was fake. The legitimate version sells for $15 in MAC retail stores.

When the reporters contacted the counterfeit lipstick seller on eBay, she directed them to the name of a website from China where she bought her inventory. On that website, the price to purchase the lipstick from China was less than one dollar.

Source:  Adam Walser, “Counterfeit MAC makeup prevalent in Bay area,” ABC Action News, November 21, 2013.

The news program Four Corners in Australia reported that human smugglers sell passports and visa documents to Australia for $15,000 (16,000 AUD). The black market sellers claimed that a recent customer purchased a valid visa and passport issued by Bahrain, and was able to use the documents to board a plane to Australia.

The smugglers tell their customers to rip up the passport and visa on the plane before landing in Australia. Once on Australian soil, the person is able to apply for asylum.

(Additional prices of black market goods.)

Source: Sarah Ferguson, “People smugglers selling asylum seekers passports and visas for entry to Australia by plane,” Australian Broadcasting Corporation, November 19, 2013.

In 2012, the major professional sports leagues in the United States lost over $13 Billion in revenue due to sales of counterfeit jerseys and apparel.

Merchandise of the National Football League (NFL) had the most losses to counterfeits, with nearly $3 Billion of the total, according to The Licensing Letter.

Authentic “elite” jerseys, which are similar to the jerseys worn by NFL players on game day, retail for $250. Sellers of the counterfeit jersey, with the Nike logo, NFL hologram, and other key indicators, sell for $75.

Source:  Allan Brettman, “NFL, Nike fight to keep counterfeit products off the market,” Orgonian, November 16, 2013.

Everyday there are five million searches on Google for music  and song lyrics, according to the National Music Publishers’ Association.

Over half of the lyrics that are displayed is shown on websites that do not have a license to show the lyrics. These websites show the lyrics, which are protected by copyright, and earn revenue based on the ads that are displayed next to the lyrics.

Source:  Ben Sisario, “In Music Piracy Battles, Lyrics Demand Respect Too,” New York Times, November 11, 2013.

On average, criminal justice programs in South Africa record 26 busts of counterfeit goods from entering the country through ports of entry each day.

In 2013, a total of $251 Million (2.6 Billion South African Rand) was seized by security services in South Africa. Among the items seized were replica clothing worth $14.9 Million (155 Million Rand) and pirated DVDs and CDs worth $64 Million (671 Million Rand).

Source:  “South Africa Wages War On Pirated Goods,” Bernama, November 12, 2013.

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Wine industry experts estimate that up to 20 percent of all wine bottles sold worldwide are counterfeits. Previously, it was reported back in 2010 that 5 percent of wine bottles sold were fake.

In court documents rleased in the United Kingdom, it was reported that wine connoissuers in Britain paid up to $11,148 (£7,000) for fake bottles of vintage French wine.

Source:  Henry Samuel, “Fifth of wine sold worldwide is ‘fake’,” Telegraph, November 1, 2013.

Government officials in Cameroon stated that the country losses $2 billion a year due to counterfeit goods and pirated products.

A report by the Voice of America stated that most customers at a market are simply under the assumption that the items the purchase are fakes. One may stated that shoes that he bought lasted just two days.

The textile industry faces the biggest impact with most of the counterfeited fabric entering Cameroon from neighboring Nigeria.

Source:  Moki Edwin Kindzeka, “Counterfeiting a Major Problem in Cameroon,” Voice of America, October 31, 2013.

The director of the Tax and Customs enforcement agency in Colombia stated that the profit margin for criminals selling counterfeit drugs is between 500 to 1,000 percent. For example, a fake Viagra pill that costs $1 to manufacture can be sold for $5 to $10.

Intelligence analysts state that cost of the counterfeit drugs being sold in Colombia was manufactured in Ecuador, Panama, Peru and Venezuela.

From 2012 to the middle of 2013, the various agencies of the criminal justice system in Colombia seized over 5 million fake and contraband drugs. These medicines included drugs past its expiration date, drugs that were falsely labeled, and other drugs filled with flour or cement.

The United Nations Office on Drugs and Crime estimates that 30 percent of the drugs sold across Latin America are counterfeits.

Source:  Natalie Southwick, “Colombia Pharmaceutical Trafficking ‘Has 1,000% Profits Margins’,” Insight Crime, October 28, 2013.

According to a survey of game developers in the United Kingdom, 57 percent of developers stated that piracy is a problem for their business.

10 percent of the developers stated that stricter enforcement against piracy was the best option in dealing with the problem, while 87 percent stated that creating new business models was the best option.

67 percent of developers stated that pirating activities is much more active on Android platforms versus the iPhone. In an example, one game developers found that the game was being pirated 10 times for each copy that was being sold in the Google Play store.

Source:  Stuart Dredge, “Games piracy: 57% of UK developers say it hurts, but only 10% want legal crackdown,” Guardian, October 28, 2013.

In an interview with TorrnetFreak, an online pirate who uploads movies to streaming sites explained how he makes money.

According to the individual, a person uploads content such as movies or television shows to a file-hosting site. Users who watch the movies are also show advertisements. The file-hosting website has affiliate programs where ad revenue that is generated is shared with the person who uploaded the movie. On average, the payout to the person who uploaded the movie is around $1 to $2 for each 1,000 views that the movie or tv show generates.

(Cash payments reported from under the table jobs.)

Both the file-hosting site and the person uploading the movie both benefit from having more people view the content. Thus, streaming link sites exist. These sties collect links to the file-hosting site in a way similar to how search engines work. The more streaming links there are, the more people are able to view the movie and thus increase revenue for the person who uploaded the movie.

The pirate who was interviewed by TorrentFreak has uploaded 30,000 movies and television shows on to the Internet using 12 different file-hosting websites. In order to drive traffic and views to those movies, he has added over 200,000 links to streaming link sties that direct people to the pirated content.

Source:  Andy, “Making Money from Movie Streaming Sites, an Insider’s Story,” TorrentFreak, October 19, 2013.