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Counterfeit Crimes

Fri, 07/02/2010 - 7:03am
David Mantey, Editor, PD&D

It’s more profitable to sell counterfeit electronic components than it is to sell narcotics.

When it comes to counterfeit products, the limelight has been focused on counterfeit DVDs, music, Gucci purses and Hermes scarves. The proliferation of counterfeit components in the electronics industry receives little attention, but poses a greater threat to public health and safety.

Electronics are embedded in everything from anti-lock brakes to the space shuttle, and the market for counterfeit components is quite lucrative. 

“It’s more profitable to sell counterfeit electronic components than it is to sell narcotics,” says Robin Gray, the executive vice president of the National Electronic Distributors Association (NEDA). “The penalties are significantly less with probably no jail time and typically a fine. That’s why organized crime is involved in it.”

According to Gray, the military is extremely concerned, because they are not only worried about bad part failure causing the crash of a billion dollar missile or plane, but also providing trap doors for other governments to have access to military information.

Counterfeiting has become so prolific that even the Royal Canadian Mounted Police (RCMP) has been forced to seek NEDA’s advice. The RCMP arm responsible for marine enforcement and accident investigation recently contacted NEDA when counterfeit navigation maps and GPS units with bad maps began to surface.

“The [RCMP] didn’t realize the seriousness of counterfeit product,” says Gray. “They have begun to ask all marine accident investigators to check for counterfeit parts as a cause in accidents. Whether ships are running into the ground because of faulty navigation aids, or the ship sinks because it has a bad part in the bilge pump, the practice is now [top of mind].”

Counterfeiters have become as good as the manufacturers at making a product look like the real deal. As a result, visual inspections have become a joke — unless it’s an obvious fake — and random testing has become ineffective because counterfeiters now salt genuine product with counterfeit parts.

“If you have a reel with 1,000 parts on it, the first 200 might be the real part and the remaining 800 might be counterfeit. Are you going to pull off number 201, test it and then rewind the reel?” asks Gray.

NEDA, in collaboration with many partners, is working on initiatives to prevent counterfeit parts from not only entering the authorized supply chain, but also keeping them from entering homes.

Semiconductor Industry Association (SIA)

As a partner with SIA on an anti-counterfeiting task force, NEDA has an active role supporting SIA’s efforts to gather data, share information and educate customs on how to spot counterfeit product. When a customs agent seizes or is suspicious of a product, he/she may call the manufacturer and ask for verification.

SIA has helped individual semiconductor companies become more organized, and hire law firms to gather information or evidence on counterfeiters in the United States. The law firms then turn it over to law enforcement officials to prosecute.

“Law enforcement is always stretched thin with resources so it certainly helps prosecutors to have the evidence and case built for them,” says Gray. “SIA has been very successful with that.”

According to Gray, SIA was involved in recent arrests and prosecution related to counterfeit routers.

U.S. Chamber of Commerce

The U.S. Chamber of Commerce’s effort is much broader in scope and covers counterfeiting issues across the entire economy.

“The Chamber has been a great resource for information,” adds Gray. “They have a lot of resources to throw at the problem, and they have helped pass legislation through Congress to fight counterfeiting.”

SMTA & CALCE

The Surface Mount Technology Association (SMTA) and Center for Advanced Life Cycle Engineering (CALCE) at the University of Maryland hold an annual Symposium on Avoiding, Detecting and Preventing Counterfeit Electronic Parts.

The symposium brings together government officials, the academic world and businesses to increase awareness about current counterfeiting methods. NEDA holds a position on the symposium technical committee. This year’s event will be held June 8 through 11 in Phoenix, AZ.

Above & Beyond

  • NEDA provides the National Institute for Standards & Testing (NIST) with information to help set standards for industry and government, particularly on fighting counterfeiting.
  • The organization files comments with the Government Accountability Office on proposed rulemaking regarding government procurement of electronic components and parts.
  • By assisting the U.S. Department of Commerce Bureau of Industry & Security, NEDA has helped attain solid data on the amount of counterfeit product currently in the Department of Defense supply chain. According to Gray, it may be the first definitive study that has compiled statistics on the number of incidents and the types of counterfeit products in the supply chain.

Check out more on the red flags of counterfeiting.

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