How to Avoid Counterfeit and 'Gray Market' Products

The growing problem of counterfeit IT gear finally gained crucial attention from U.S. law enforcement agencies after counterfeit goods started showing up in the Defense Department supply chain.

According to a 2010 Government Accountability Office report, DOD unknowingly procured counterfeit products, in part because of a lack of a departmentwide definition of “counterfeit” and a lack of databases for reporting counterfeit items.

Federal law enforcement stepped in after someone purchased counterfeit Cisco Systems gear through a Chinese online seller with the intent of reselling it to DOD. Agencies targeting sales of counterfeit IT hardware — including the Justice Department, FBI, Immigration and Customs Enforcement, and Customs and Border Patrol — have obtained more than 30 felony convictions and seized more than $143 million worth of fake Cisco products. Counterfeit gear can put mission-critical networks at risk of failure.

For years, leading manufacturers have implemented measures to discourage counterfeiting and deter activities such as “gray marketing,” the unauthorized dealing in genuine branded goods diverted from authorized channels into unauthorized third-party retailers. Measures taken by many IT vendors have made it increasingly difficult to obtain genuine goods outside of authorized channels. This is where some gray marketers intentionally — and some inadvertently — began dealing in counterfeit goods. Today, unauthorized online retail and gray-market supply chains are the main contributors to the spread of counterfeit goods.

Purchase Protection

There are simple ways to reduce the risk of acquiring fakes. Buyers can eliminate the risk of acquiring counterfeits almost completely by purchasing only from authorized resellers that originally bought directly from manufacturers or from authorized distributors.

The Alliance for Gray Market and Counterfeit Abatement is committed to helping buyers protect themselves from inferior goods by educating buyers about how to identify nongenuine products.

Buyers should follow four guidelines:

• Be wary if the price is extremely low or significantly lower than what is normally offered by an authorized reseller. Remember, the bitterness of poor quality remains long after the sweetness of a low price is forgotten.
• If buying online, buy only from a trusted and verified supplier.
• Inspect packaging for damage, poor quality, repackaging or poor print quality.
• When in doubt, record a product’s serial number or other unique identifier and verify it directly with the manufacturer.

Don’t just ask if a reseller is authorized — get proof and verify it with the manufacturer. Unauthorized resellers will tell you anything you want to hear, and some even provide forged documentation.

Taking these steps can reduce the risk of acquiring fakes. If all buyers and resellers agreed to conduct transactions entirely within the authorized supply chains — and take steps to ensure goods are genuine — they can jointly ferret out fakes from supply chains for good.