Counterfeit Goods: Impacts on Consumers and the Economy

We all like to feel like we are getting value-for-money on anything we purchase, but sometimes a bargain can leave us feeling cheaper than expected when it turns out to be a counterfeit, sub-standard imitation of the real thing.

Questions are raised about the multiple perspectives involved in the operation of the movement of these illegal products and how societal roles and conforming to pressures contribute to the damage being done to individuals and the economy overall.

The pandemic saw a shift in the way UK consumers carry out their day-to-day business, with many former technophobes (including myself) finding the joy of next-day delivery and internet banking. Prior to coronavirus, I never entertained banking apps or contactless technology, electing instead to receive paper statements and utilise telephone banking to carry out remote business.

But alas, sometimes circumstances push us to change our thinking about products and services, encouraging us to broaden our horizons, try and trust new things, in my case switching about 80% of my own consumer activity to online methods.

According to BRC/KPMG Retail Sales Monitor¹, non-food sales in 2021 were 15.6% ahead of the previous year – a period that included the height of the pandemic, when many of us were reliant on delivery services and online retailers.

As the consumer has moved further towards online services, so too have the trading operations of suppliers of counterfeit and substandard goods who previously plied their wares from fold-up tables in marketplaces and on street corners.

This movement online has not only further anonymised the process for the sellers of these goods but has also served to raise questions about why consumers will resort to buying from unauthorised and risky suppliers.

Why do people knowingly choose counterfeit goods?

Two researchers from the Beijing Technology and Business University investigated the relationship between group motivation, ego, and unethical behavioural intention from a broader perspective, looking at the potential driving factors for being complicit in these often-illegal activities².

Their findings indicate the collective adoption of a ‘no-harm, no-foul’ mindset in which the consumer does not explicitly see the impact of their involvement in the criminal activity, and as a result, are more likely to participate. However, many are also likely be involved in the purchasing of counterfeit and sub-standard products without even being aware of the situation.

With additional pressures from society to conform to standards of beauty and through the perpetual bombardment of images which extol the false image of perfection via social media channels and through popular culture, it is inevitable that those within society without the resources to achieve these ideals through legitimate means turn to alternatives to do so.

Fashion and beauty trends evolve over time, as do expectations for the consumer to adapt to them, and it seems that little that can be done to alter this. However, questions need to be asked regarding the damage that can be caused by purchasing ‘knock-off’ goods online, even under the guise of ‘just saving money’.

Online Shopping Fraud

According to the Consumer Harm Report (2021), published by the National Trading Standards (NTS) for the UK, National Trading Standards Teams dealt with over £51m in consumer and business detriment in 2021/21³. Their consumer protection work highlighted the many unsettling situations in which people are misled, defrauded, and bullied by criminals, and how this can be particularly troubling for targeted, vulnerable people with long-term and debilitating health conditions, or older people living alone.

Earlier research from the Anti-Counterfeiting Forum⁴ estimates that the proliferation of counterfeit goods has resulted in a cost of £30bn (or the equivalent of 14,800 jobs) for the UK economy. Even more startling, according to The Anti-Counterfeiting Group, the 2018 EU Customs Report⁵ estimates that of all counterfeit border seizures, 34% had the potential to harm consumers.

Increased Seizure of Counterfeit Goods

In 2018, the seizure on counterfeit goods increased by 9% on previous annual figures and may suggest two possibilities – that border control teams are becoming increasingly effective at the identification and seizure of such items, or alternatively, that those dealing in fake goods are taking increased risks with regards to public safety.

The ‘no harm, no foul’ mentality surrounding counterfeit culture still puts consumers at genuine risk. Many do not even realise that they have purchased counterfeit goods, thereby unwittingly putting their loved ones and themselves at risk.

Risks of Counterfeit Goods

Counterfeit goods can pose serious risks to the health and safety of those purchasing the items, and to others, such as family members, including children that ultimately use these products.

Often untested and produced to a lower-quality standard than legitimate items, there are many potential hazards associated with counterfeit goods –

Counterfeit fragrances and cosmetics may contain harmful chemicals that may cause skin irritation, burning or even permanent disfigurement if applied to the skin.
Counterfeit toys and children’s products may contain high levels of chemicals such as boron, and present choking hazards with loose buttons, stuffing, and small parts.
Counterfeit electrical goods can be made with poor quality components that present fire risks, as well as limiting the lifespan of the products.

What to watch out for

Consumers can avoid unknowingly purchasing counterfeit goods by –

Only purchasing goods from reputable suppliers and websites.
Checking the contents of products for unusual ingredients or high levels of dangerous chemicals – if unsure, do not purchase.
Checking packaging for manufacturer stamps and stickers – if at all unsure, do not purchase / use these products
Looking for evidence of product testing and the standards / levels to which the products have been tested (usually UK and European Standards – e.g., for cosmetics – ‘Regulations (EC) No. 1223/2009’ or the Kitemark with ‘ISO 9001:2015’ for safety items). Avoid untested and unregulated products.

Supply and Demand

Where there is a demand, inevitably, the supply will follow. Ultimately, questions need to be asked of both the online traders and their motivations, and the changing moral values and societal pressures placed on people, that are potentially increasing the demand for cheaper items from dubious sources. What we can do is limit the damage by avoiding knowingly purchasing counterfeit items. By identifying fraudulent practices and subsequently reporting traders, progress can be made.

If you believe you have been sold counterfeit or substandard products and need more advice on the matter, you can contact consumeradvice.scot.

consumeradvice.scot is Scotland’s national consumer advice service, launched in April 2019 and funded by the Scottish Government following the devolution of consumer powers. Free advice is available to everyone in Scotland on consumer issues including scams, holidays, utilities, travel, deliveries, insurance, counterfeit goods, and refunds. Consumers can seek support in different ways: by calling freephone 0808 164 6000 (Monday to Friday, 9am-5pm) and online, through email and web chat at www.consumeradvice.scot.

The service also provides a ‘Quick Reporting Tool’ for people in Scotland to report scams. This can be accessed through www.scamwatch.scot.

You can follow us on social media – Twitter: @advicedotscot , Instagram: @advice.scot and Facebook: www.facebook.com/advice.scot/, or get ahead by visiting out knowledge centre at www.consumeradvice.scot.

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