Stroll down New York City’s Canal Street and you’re bound to stumble on one—or more like 20—vendors peddling counterfeit apparel and accessories: “Louis Vuitton” purses, “Rolex” watches and “Apple” devices. Armed with a keen eye for detail, these entrepreneurial salesmen and women are the masters of (illegal) capitalism, but soon they may be forced to outfit their stands with a lot less merchandise.
U.S. Customs and Border Protection is cracking down on counterfeits in record numbers, according the group’s latest report on “intellectual property rights” seizures at U.S. borders unveiled this week. And just how many faux luxury goods—handbags, watches, consumer electronics and shoes—is that? There were 22,848 overall seizures, or an average of 66 per day, in the CBP’s 2013 fiscal year—7 percent more raids than in the previous year. And talk about a lot of Louis; the goods’ estimated cash value increased by 38 percent to more than $1.7 billion.
Much of that is thanks to more careful analysis of counterfeits on behalf of the CBP. “We’ve worked hard to step up special operations at the ports of entry,” says Therese Randazzo, director of CBP policy and programs on intellectual property rights. “We’ve targeted shipments that come in with major sports events like the Super Bowl and World Series, and performed our first special operation with China customs.”
Chinese vendors continue to manufacture the majority of counterfeit goods—68 percent of them.
At least superficially, the goal of seizing fakes is to promise that U.S. vendors can maintain control over buying, selling and marketing their own products. But in reality, it’s about much more than that. In its report, the CBP pitches its efforts as a way of protecting “the health and safety of American consumers, our economy and our national security”—that is, to be sure that hazardous materials or drugs don’t make their way past officers inside the goods.
Trolling for fake Louis Vuitton bags and MacBooks at the country’s 328 ports of entry is a difficult task; the sorts of products entering the country and their volume varies widely. And it is increasingly harder to determine the real from the fake. Asked about last year’s biggest wins at the border, Randazzo cites nine different seizures of Hermès handbags (together worth $210 million) made between June and September 2013 at an L.A. seaport. There were also raids that netted $62 million of Rolex, Tag Heuer and Omega watches made in November 2012 at Newark airport, and $3.5 million of counterfeit Viagra last June in Miami. Overall, handbags and wallets accounted for 40 percent, or $700 million, of all seizures.
U. S. Customs and Border Protection Officers and Import Specialists Seized Counterfeit Bags, Belts & Wallets. Seen here is a counterfeit Louis Vuitton handbag. When you buy that designer handbag you want to be confident that it is the actual designer handbag. This is one of the reasons why U.S. Customs and Border Protection (CBP) seeks to prevent the entry of counterfeit merchandise into the United States.
It’s important that the CBP partner with Chinese customs administrators, as Chinese vendors continue to manufacture the majority of fake goods (68 percent of them). And while products exported from Hong Kong last year accounted for 25 percent of all seizures, or double the portion from 2012, Randazzo says they were likely originally produced in mainland China. “Every year you have better enforcement of laws, but you get more and more professional counterfeiters,” Doug Clark, an intellectual property lawyer in Hong Kong, said of the Chinese counterfeit market to the FT in November.
While luxury goods traditionally came by boat or mail, they increasingly arrive at ports via express carrier facilities, like those of DHL, FedEx and UPS, which means that packages don’t always come in large shipping containers. ”The reason for that is the growth of the Internet,” says Randazzo. “Small businesses can now go online and place smaller orders from abroad.”
Customs Counterfeits Poster
Manufacturers’ ability to hawk their goods to consumers directly is the reason why the CBP is doubling down on its more specified efforts. Last year, the organization bolstered its 10 so-called “Centers of Excellence and Expertise Information,” which work specifically with members of the trade community and individual copyright holders to better identify counterfeits. Randazzo sees these centers as integral to the future of the CBP, especially since the volume of fakes attempting to enter the country isn’t diminishing anytime soon. “I don’t think there are going to be fewer counterfeit goods coming in,” she says. “But because of resource constraints, we have to make a choice as to whether we pursue larger shipments that come from overseas, or those smaller shipments of one to two pieces sent to an individual consumer.”
If anything, counterfeits are only diversifying, making the job of the CBP even more difficult. “One of the trends were going to see is a broadening of products being seized,” Randazzo says. “Last year, we seized counterfeit chainsaws and airbags. There’s a host of new products that we don’t think of as being counterfeit.”
