Tackling Illicit Trade: Smuggling And Counterfeiting

Counterfeit products are widespread in the market, and people often buy them at significantly lower prices than the original ones. For instance, a person may purchase sunglasses with “RAYBAN” or belts with GUCCI embossed. Similarly, counterfeit cigarettes are also available in the market, which are easily recognisable by the lack of health warnings on the packs. Ironically, such products are considered less harmful due to the absence of graphic health warnings instead of the realisation that the proceeds from the sale of such products often make their way into funding organised crime, terrorism, and other such anti-national activities. Some consumers actually look for such goods with a clear intention to strike a good bargain and get the goods at a fraction of the cost of genuine goods. However, it is essential to accept the fact that contrary to popular belief, smuggled and counterfeit goods are not always being sold to gullible consumers.

It is this mindset that must change. It is time to realise that counterfeits and fakes cost much more than what we save in buying them instead of genuine products. While counterfeit goods like handbags and footwear may not cause direct harm to the consumer, they hurt the entire economy and dilute the credibility of the genuine brands in circulation. The repercussions are more serious when spurious goods like nutritional supplements, medicines, cosmetics, and beauty products are actually ingested or applied to the skin. It creates unfortunate consequences that may lead to permanent damage to the skin and other organs or chronic physical ailments and allergies in case of lesser exposure.

A category that is much exploited and rarely talked about is that of alcoholic beverages. Bootlegging is rampant due to differences in duties across porous borders. In fact, the problem is not just due to differences in tax structures. A recent raid at a high-end pub exposed the nefarious activity of filling low-priced and poor quality liquor in bottles of imported brands to make a quick buck at the cost of the consumer. Such instances create a sense of being cheated as the consumer who is paying full value for a branded product is being given an inferior product even at the cost of his health.

The proliferation of e-commerce has further facilitated trade in counterfeit goods. The online platforms provide the benefit of anonymity to unscrupulous sellers who use the online marketplace to sell fakes and then route the sale proceeds into criminal activities by using the dark net, cryptocurrencies, NFTs (Non-Fungible Tokens that imitate the physical product in the online world such as Hermes Berkins Bags, Vehicles such as Hummer used in online games etc., and they can be traded online like any other commodity) and other unauthorised activities which are making enforcement to fall short of the ingenuity with which anti-social elements are brazenly committing the crimes.

NFTs and Metaverse are a whole new challenge for which the international community is gearing up. The recent judgement in the case of Hermes International vs Mason Rothschild (wherein NFTs of Berkins handbag of Hermes was launched online by Mr. Rothschild with an intent to make a fortune riding on the brand value of the iconic handbags) is a step in the right direction. The court held Mr. Rothschild guilty of trademark infringement, brand dilution and cyber-squatting and imposed a fine of USD 133 000. Quick delisting of NFT counterfeits when they are identified and sending them to burn addresses to prevent further trading can make a difference. Also, the concept of free accounts should be eliminated to create transparency and accountability for the seller listing the goods in the online marketplace.

The proliferation of fakes in online space has made the phenomenon international as the tentacles of this kind of trade and terror funding are making its presence felt all across the globe, thus making it important for government agencies to make concerted efforts and share more intelligence to prevent such activities. The money from such activities invariably finds its way into funding the activities of extremist and separatist outfits, which rouge it into money laundering, illegal arms trade, trade in narcotics and contraband and are a threat to peace and global order.

Many technological advances have also been made to differentiate between genuine and fake goods. The use of holograms on the packaging of genuine goods is one such step by industry to distinguish their goods. Other examples are better supply chain and logistics management to prevent pilferage and entry of counterfeits in the end market. Technology such as Blockchain and Artificial Intelligence are also being used by these government bodies to identify patterns of illicit trade and use data analytics to prevent such activities.

There has been much effort at an inter-government level to cooperate for seizures and create a better enforcement network to check the menace of smuggling through porous borders. Regular awareness programs are also conducted with enforcement agencies, customs officials, brand owners, industry bodies and other stakeholders to create awareness regarding the impact of smuggling and counterfeit trade.

The cooperation at the international level to report and take down domain names and websites that are operating in an unauthorised manner has resulted in several successful legal actions by multinational companies and vigilant brand owners who approach the designated regional dispute resolution Centres under the Uniform Domain Name Dispute Resolution Policy (UDRP) and in India by National Internet Exchange of India (NIXI) under the Indian Domain Name Dispute Resolution Policy (INDRP).

Several private agencies are working with multinational companies and online platforms to check the flow of counterfeit goods. Enforcement through judicial intervention and police action has led to many raids and resultant confiscation and destruction of counterfeit goods to instil confidence in the consumers regarding the authenticity and quality of the goods available in the market. In online sales, too, the government has come up with guidelines to regulate dark patterns to protect consumers. Awareness programs are being conducted to reach out to consumers and sensitise them to the new ways illicit trade may be happening around them to guard them against falling prey to such nefarious activities.

The onus of making our country secure is as much on us as on the government. Our robust economic indicators reflect the direction in which the country is progressing. We are looked upon as thought leaders and solution providers today. It is our duty to provide the right impetus to our economy by plugging all possible leakages into the parallel economy and assisting in realising the dream of a resilient India. Instead of taking pride in fake goods of international brands, let us protect trade from illicit activities and create value for the entire supply chain. These efforts will lead us to achieving the USD 5 trillion economy that is the next big Indian dream.

While government bodies and international organisations like the World Customs Organization, INTERPOL, WIPO, etc., are creating an environment of collaboration and intelligence sharing to curb the menace, we as individuals can make a massive difference by implementing simple practices that can prevent the sale of smuggled and counterfeit goods. We must pledge to buy genuine goods and ensure that the same are sold to us against a proper invoice. Fake goods should be reported immediately, and we must create awareness in our respective circles against the malicious activities funded by illicit trade. In our quest to save money, we should not unwittingly be funding anti-national activities or terrorism and separatism.

Author: Puja Tiwari

Link: Tackling Illicit Trade: Smuggling And Counterfeiting – Trademark – India (mondaq.com)