• Compliance
  • Supply Chain
  • Traceability

The Consumer Risks of Counterfeit Products in the Supply Chain

Written by Dustin Caudell
April 25, 2016

By buying counterfeit products, consumers could be supporting criminal enterprises.

By buying counterfeit products, consumers could be supporting criminal enterprises.

Businesses often look at the dangers of counterfeit products from their own point of view. Knock-offs not only steal away sales, companies could also receive negative reviews or public relations problems from items they didn’t actually create.

Counterfeits are a serious problem. The Global Intellectual Property Center reported the trade of counterfeits costs the global market $250 billion on a yearly basis. Companies need to implement supply chain logistics management solutions for the sake of their bottom lines and to benefit their consumers.

Recognizing how counterfeit products hurt consumers helps businesses communicate with the public. By highlighting the importance of seeking out name-brand goods and offering information about counterfeit dangers, companies can benefit themselves and their customers.

Stuck With What you Get

A successful manufacturer does more than just create a top-quality product. Most competitive organizations offer customer service, technical support and return policies. Industry Week said consumers that buy counterfeit goods deny themselves access to business services to keep products running and manage their finances.

Many counterfeiters – especially those operating online – try to use vague terms to create confusion about whether or not their products are made by popular brands. It’s not uncommon for customer care centers to receive calls from consumers who bought knock-offs thinking they were the real thing. Businesses should collect the details of such interactions to create public educational materials. With the right information, a company can prevent future customers from buying a product that doesn’t work and they can’t return.

Putting Safety at Risk

When a counterfeit television doesn’t work, it’s a problem but it’s probably not dangerous. On the other hand, when a customer consumes the wrong pharmaceutical product or drives a car built with faulty parts it puts his or her life – and possibly the lives of others – in danger.

While pharmaceutical companies, automakers and other product manufacturers may be used to safety regulations in their inventory management, Consumer Reports said fraudulent products may introduce dangerous elements into items not as strictly regulated. Many people remember the scare a few years ago when lead was found in children’s toys. Also, health and beauty products may contain carcinogens when manufactured without oversight.

Supporting Unfair Practices

It’s not uncommon for consumers to avoid products tested on animals or manufactured in defiance of eco-friendly standards. When a customer buys a product built without regulations, they may be supporting pollution, criminal enterprises or slave labor.

ShareAmerica, a civic information resource, said buying counterfeit products punishes business that practice fair manufacturing and labor practices and rewards those that don’t. Fraudulent clothing and accessories are often constructed in sweatshops by people earning a fraction of what major companies pay their employees. Counterfeiters often steal supplies to make their fraudulent products and ignore the consequences of their production’s pollution.

Informed consumers usually prefer companies that provide data on how they help their communities and environments. By communicating exactly what a business does to benefit its surrounding area, consumers know they buy more than a product or service; they buy social betterment. This can be a difference that overcomes the money saved from doing business with less-honest merchants.

What Companies Can Do

Utilizing data collection solutions during manufacturing, warehouse management and supply chain movements allows a company to show exactly what went into an item’s creation and delivery. Businesses should do their part to show customers a purchase is safe and of the quality they’re expecting.

Businesses should strive to be more than suppliers for their customers. A modern company that presents itself as a dependable partner encourages repeat sales and positive word of mouth that can attract future audiences. Being accurate with data separates honest companies from counterfeiters and demonstrates why that distinction is important.