Consumers and supply chains face serious effects from counterfeit electrical goods and measures are being taken by the wider electronics industry to thwart the influx suspect, counterfeit and fraudulent products – and to target authenticity
Manufacturers and trade associations have devoted much attention to the effects of counterfeit electrical products on consumers and how to protect the supply chain and customer from these potentially harmful parts. In many instances, counterfeit products appear to be genuine, but they are unable to meet minimum performance specifications. Manufacturers of counterfeit products often use inferior materials without regard for meeting published ratings or safety. These ‘knock-offs’ consistently fail independent certification testing from organizations such as Underwriters Laboratories (ULT). Instead, counterfeit product manufacturers rely on deception and prices that are below market levels to find their way into our homes, businesses, and electrical infrastructure. Counterfeit circuit breakers can result in product malfunctions or failures, and can also cause serious bodily injury, including electric shock, electrocution, and even death. Counterfeit circuit breakers are also capable of significant property damage.
Circuit breakers are designed to provide circuit protection for power distribution systems and to safeguard people and equipment. A breaker failure leads to loss of production, possible equipment damage necessitating costly system analysis and replacement, and the increased risk of worker injury at the time of failure or during maintenance. The financial liability of such an incident will fall on those who participated in the supply and distribution of the counterfeit products.
Dangerous implications
In addition to safety, counterfeit electrical products can add additional costs in the purchasing process. If a buyer is shopping for price alone, without regard to traceability of the product or the nature of the channel it is purchased from, it is only later in the procurement process that issues can even be identified. These issues can cause delays during shutdowns or significantly increase the costs of the products because of short-term delivery requirements or expediting freight and shipping.
If the safety hazards and financial liability posed by counterfeit products fail to attract attention, the economic consequences should. These include layoffs due to unfair competition and reduced customs and sales tax revenues, resulting in greater financial burdens for businesses and individuals. Worldwide, counterfeiting costs the electrical products industry $600 billion annually. In the U.S., that figure is $200–$250 billion. Because of the revenue “stolen” from lawful companies, counterfeiting reduces U.S. employment by 750,000 jobs each year, according to the International Anti-Counterfeiting Coalition (www.iacc.org). These issues are compounded by the production, sales, and importation of counterfeit electrical goods, which are soaring at alarming rates. According to the Department of Homeland Security, over 3,400 seizures of “consumer safety and critical technology” products accounted for a street value of more than $146 million two years ago, which is a 143 percent increase from the year before.
Combatting counterfeiting
Stopping the sale of counterfeit products is everyone’s responsibility. This includes manufacturers, distributors, resellers (authorized and unauthorized), governments, and customers alike. Collaboration will be key in stopping counterfeit electrical products.
Aware of the dangers of counterfeit electrical products to consumers, manufacturers are taking measures to help prevent counterfeits from entering the supply chain. For example, Eaton’s electrical business has adopted a strict policy for counterfeiting and is committed to anti-counterfeiting technologies and programs. This includes enhancing products with labels and markings to make them easier to identify and thwart counterfeiting, building awareness among consumers of the dire consequences of using inferior goods marked deceptively under brand names of reputable companies, and engaging with government and law enforcement to create stronger deterrent penalties and take action against illicit manufacturing, importers, and brokers of counterfeit electrical products.
Industry efforts
Organizations, such as the National Electrical Manufacturer’s Association (NEMAT), enable member companies in the electrical industry to focus their collective efforts on identifying ways to stop counterfeiting. Industry representation by NEMA can be used to promote laws, regulations, or government directives. Other industry organizations such as the Electrical Safety Foundation International (ESFiT) rely on engagement from the electrical industry supporters to promote consumer awareness of counterfeit electrical products. These collaborative efforts carry a stronger message to the public.
Government enforcement
In order for governments to be effective at blocking the proliferation of counterfeit products at customs and borders, laws need to be enforceable while supporting the victims and not the criminals. The engagement of the government to create stronger deterrent penalties, especially where safety issues are concerned, is crucial to stopping counterfeiting. The government also needs the industry’s support and collaboration to be effective. A high degree of brand holder engagement with law enforcement is key to enforcing intellectual property rights (IPR) laws successfully and taking criminal action against illicit manufacturing, importers, and brokers of counterfeit electrical products.
Proactive consumers
As the last step in the supply chain, customers can help combat counterfeiting by educating themselves on how to identify a counterfeit electrical product and avoid purchasing it. The first step in identifying a counterfeit electrical product is to recognize that they are difficult to identify. Many counterfeit products are hard to detect because they contain the trademark or service mark of the genuine brand or use the appearance of a well-recognized article, which may not include the tags or labels.
An example of a counterfeit circuit breaker, together with a genuine circuit breaker, is shown in Figure 1. While the physical differences between the two circuit breakers are nearly undetectable, Eaton’s circuit breaker authentication tool can help identify that the circuit breaker on the right is the fake one. In order to avoid these safety hazards and unnecessary costs, it is important to know how to spot a counterfeit electrical product at the very beginning of the purchasing process. There are many possible precautions for decision makers to take to become more confident that their facility is free of counterfeit products. First and foremost, the best way to avoid counterfeit electrical products is to purchase products from the manufacturer’s authorized distributors or resellers. There is a higher risk of counterfeits if one cannot trace the path of commerce to the original manufacturer.
Purchase decision makers can also use tools provided by the original manufacturer or certification organizations to verify that electrical products are authentic, such as Eaton’s circuit breaker authentication tool mentioned previously. It is also advised to scrutinize labels and packaging for certification marks and suspicious additional labeling not applied by the original manufacturer and make sure that all parts are present, including the owner’s manual and product registration card. If a product is suspected to be counterfeit, it is recommended to contact the brand owner. This will allow authentication of the suspect product and ensure that the potentially unsafe product is removed from the marketplace.
Counterfeit electrical products are a real danger to personal safety, businesses and the economy. The counterfeiting industry is overwhelming, but that is no reason to give up and let it continue. With collaboration among manufacturers, industry organizations, resellers (authorized and unauthorized), consumers, government organizations, and more, real steps are being taken to combat the issue – but there is more to be done.
By Tom Grace
Eaton