Dark Truth About the Counterfeit Black Market
This weekend news emerged of a police raid on the ever-growing Canal Street counterfeit bag market. As the scale of this Lower Manhattan ‘market’ has continued to grow and encroach on our sidewalk space, you would think that police intervention would come as a relief New Yorkers. But frustratingly, for some including former state assembly member Yuh-Line Niou, it was an opportunity to instead paint the effort as a low-priority waste of time. Unfortunately the sad truth is that sidewalk counterfeit sales are anything but a simple nuisance. It’s instead one of the most insidious criminal enterprises contributing to child labor, environmental toxins and the funding of terrorist cells — to name just a few implications.
Never Just a Handbag
Perhaps it’s tempting when you walking in an area such as Canal Street and stepping over fake goods to consider it somewhat harmless when compared to the other serious crimes the city is forced to fight. But this is exactly why it’s so lucrative and easy to implement: people think these sales are harmless and only hurt big industry and/or that law enforcement should focus elsewhere. So, in other words, it is easy money.
In fact, the counterfeit trade industry covers every vertical of goods and is worth an estimated $500 billion globally (source: Organization for Economic Cooperation and Development). Criminals can also feed fake goods into legitimate supply chains providing them with ‘clean’/laundered money. Not only does this present a challenge to anti-money-laundering efforts, but also endangers users who may be duped.
Beyond just funding criminal enterprises, counterfeit goods also pose real risks to consumers, the environment and vulnerable workers worldwide.
Serious Personal & Societal Risks
For a while I worked closely with the luxury handbag industry and had a front row seat to the consequences of the counterfeit marketplace. And while it’s easy to dismiss this problem as only protecting a industry that creates luxury goods, it’s the wrong take by a long shot. The industry creates hundreds of thousands of jobs up and down the supply chain and can see the safeguards they have helped put into place for consumers, the environment and workers, destroyed by criminals and inaction by law enforcement.
Health Consequences
Knockoff products are unlikely to have undergone rigorous safety testing and the materials used may contain toxic chemicals like lead. Then there are the many stories of other category of products providing deadly such as counterfeit phone chargers exploding and causing fires or defective toys harming children. Counterfeit cosmetics have also been found to contain harmful substances, while counterfeit electronics might not meet safety standards, leading to potential hazards.
Overall unregulated products made in haste and for a quick, illegal profit are unlikely to be safe.
Child Labor & Worker Exploitation
There are also major ethical concerns around the counterfeit industry which relies heavily on child labor and sweatshop-like working conditions to produce their unregulated goods. Investigations have revealed factories with workers as young as 10 years old working excessively long hours in dismal conditions.
No Climate Justice
One of the ironies of some of the critics of the NYPD employing resources to remove counterfeit goods from the street is how many of them are focused on ‘climate justice.’ But the environmental impact here is significant.
Counterfeit products are often produced in unregulated environments. Lack of proper oversight can mean that environmentally harmful production methods are used, leading to excessive emissions, wastewater discharge, and resource wastage.
Counterfeiters aim to produce goods as cheaply as possible, which often means using low-quality materials. These materials can be more polluting to produce and, when disposed of, can be non-biodegradable or release harmful substances into the environment.
Because counterfeit goods are often of subpar quality, their lifespan tends to be shorter, leading to quicker disposal rates. This contributes to increased waste in landfills. Furthermore, to escape detection, counterfeiters frequently destroy unsold or confiscated products, further contributing to waste.
Manufacturing units producing counterfeit goods might discharge untreated waste into rivers and oceans, affecting marine and freshwater ecosystems. Toxic chemicals, dyes, and metals can harm aquatic life and contaminate water sources.
Due to the clandestine nature of the counterfeit trade, goods may be transported using inefficient routes to avoid detection, leading to higher carbon emissions. Additionally, the unchecked manufacturing practices of these operations can have a higher carbon footprint compared to legitimate manufacturers who may have adopted eco-friendly measures.
Intellectual Property and Industry
Finally, counterfeiting does deprive genuine brand of rightful revenue and that should not be minimized. Brands invest a considerable amount of time, effort, and money into research, design, marketing, and quality assurance. Counterfeit goods, on the other hand, piggyback off this hard work, leading to significant losses for original manufacturers.
Counterfeiting undermines the very essence of intellectual property. It discourages innovation and creativity by sending a message that anyone's ideas or creations can be stolen and replicated without any repercussions.
And if that doesn’t convince you…it can put you in legal jeopardy as well. Possession or distribution (gifts, etc) of counterfeit goods is illegal in many places and can lead to severe penalties (and even arrest).