Faked Out

"It's not just the damage in dollar terms, but a quality issue also," says Anne Putz, corporate public relations manager for Adidas. When a company's name or logo is connected with a low-quality, defective or even dangerous counterfeit, the company's image suffers--an image that corporations have spent countless advertising dollars to perfect.

"It becomes a big consumer-confidence issue. Consumers buying a product, thinking it is a legitimate Nike product and after one washing, the labeling comes off...that reflects badly on the company," says Vada Manager, director of global issues management for Nike. "If the product is counterfeit and the consumer thinks it's a legitimate item, you may lose a consumer for life because they've had a bad experience with the brand."

Nike, a popular target among counterfeiters, has been copied in everything from fake sneakers to Nike-logo jewelry to Swoosh-embroidered yarmulkes. "We make performance product," Manager says, "but a yarmulke's not necessarily, with all due respect to the religious symbolism, a performance athletic product." Nike, like many manufacturers, has a brand protection unit that teams up with local authorities and sometimes even other manufacturers to expose fraudulent practices.

While searching for counterfeits I found several kinds of Nike knockoffs, and purchased a Nike practice jersey that looked legitimate, even going as far as a registered Nike tag with serial numbers sewn into the collar of a jersey. Nike personnel examined the item and determined it was counterfeit.

"We have very specific labeling requirements, types of labels, care and content labels that, in most cases, the counterfeit garments do not have. So it's relatively easy to make an identification based on either the lack or improper label being in there," says Dave Simpson, Nike's director of security. "There's huge money to be made in counterfeit goods, and it's being made by a lot of people. Unfortunately, the people that should be making it aren't, and the consumers are being ripped off in the process."

The mix of illegal counterfeits with legal--but possibly trademark infringing--knockoffs and look-alikes can make for a confusing shopping experience. "Both are of equal concern because in both instances, what a trademark does is identifies a source," says Michael Heltzer, manager of external relations at the International Trademark Association, a 125-year-old organization devoted to the promotion and protection of trademarks. "If it's an infringement or a counterfeit, the consumer's confused as to the source."

Peritz says that while most shoppers know when they're buying a fake, some get burned. "We had some phone calls from our initial purse raid from older folks...saying that they had purchased a...$200 purse up there on Harry Hines, believing it to be a discounted real deal," Peritz says. "As most rational folks would know, surely it's not. But some of these older folks thought they were getting a discounted genuine item. Those are the people that are truly hurt on these deals."

The large number of consumers who want high-end accessories compared with the smaller number who can actually afford them is the perfect formula to support the counterfeit trade. "It's just a pure profit motive, you know, making money with very little investment," Heltzer says. "That's what really characterizes these counterfeiting operations--low investment, high profit."

The companies and the protection agencies aren't prepared to give up yet. "I think what we're fighting is an ongoing battle," Heltzer says. "The key is enforcement of existing laws, a periodic review of those laws to make sure they are doing what can be done and keeping pace with counterfeiters."

Devices such as holograms, smart cards, biometrics and digital watermarking, as recommended by the Counterfeiting Intelligence Bureau, are incorporated into products to deter replication of trademarked items, but as security science has progressed, so has reproduction technology. "It's a difficult challenge, but one that we have to continue to combat as the world becomes more globalized," Manager says. "The counterfeiters we have found can buy sewing machines with automated facilities the same as our authorized suppliers or even Nike itself can supply," he says. "The line between counterfeiters and authorized merchandisers gets closer and closer every day."

The Dallas County Sheriff's Department, though new to the far-reaching field of merchandise counterfeiting, intends to continue the pursuit. They have set up surveillance on more shops, hoping to uncover crooked vendors. "We've never gone after counterfeiters before now," Peritz says. "If we uncover one group that funded a terrorisorganization or an organized crime group, we've been more successful than we could possibly hope for."