INDUSTRY NEWS

Feds Release 2012 Counterfeit Seizure Statistics

by Robert L. DiLonardo

DiLonardo is a well-known authority on the electronic article surveillance business, the cost justification of security products and services, and retail accounting. He is the principal of Retail Consulting Partners, LLC (www.retailconsultingllc.com), a firm that provides strategic and tactical guidance in retail security equipment procurement. DiLonardo can be reached at 727-709-6961 or by email at rdilonar@tampabay.rr.com.

U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) recently released results of ongoing efforts to protect America from the trade of counterfeit and pirated goods in the annual Intellectual Property Rights (IPR) Fiscal Year 2012 Seizure Statistics Report (www.cpb.gov). The agencies’ expanded efforts lead to 691 arrests, 423 indictments, and 334 prosecutions in the fiscal year ending September 30, 2012.

In recent years the Internet has fueled explosive growth in the numbers of small packages of counterfeit and pirated goods shipped through express carriers and mail. In fiscal year 2012, the agencies heightened efforts against the sources of these small shipments—the websites involved in the trafficking of counterfeit and pirated goods.

In recent years the Internet has fueled explosive growth in the numbers of small packages of counterfeit and pirated goods shipped through express carriers and mail. In fiscal year 2012, the agencies heightened efforts against the sources of these small shipments—the websites involved in the trafficking of counterfeit and pirated goods.

A total of 697 such sites were taken down by ICE, with CBP handling the forfeitures. Although seizures dropped by 7.8 percent to 22,848, the agencies believe the strategy of pursuing the sources of counterfeit goods will provide long-term results in decreasing the flow of counterfeit merchandise into commerce. The value of seized merchandise increased 13.5 percent year-over-year to $1.26 billion. The average seizure value was about $10,450.

The three most confiscated category of items in 2012 were handbags and wallets; watches and jewelry; and wearing apparel and accessories. The 24/7 Wall St. blog (www.247wallst.com) recently published a list of the ten most copied merchandise categories based upon seizure value (listed below). 1. Handbags/Wallets (Value = $511.2 million, or 40% of the total)—It should be no surprise to this audience that handbags and wallets were by far the most counterfeited item in terms of MSRP, with the total value of the seizures up 142.2 percent compared to 2011. The CBP credits a portion of the large growth in seizures to “successful interagency-coordinated enforcement operations,” including

Operation Market Day, which was primarily a sting operation, coordinated in conjunction with ICE. Of the approximately $511 million worth of handbags and wallets seized in 2012, more than $446 million worth originated in China. 2. Watches/Jewelry (Value = $187.0 million, or 15% of the total)—Seizure value rose by 8 percent from $173 million in 2011. The number of seizures rose by over 43 percent to 2,197, up from 1,491 in 2011. Once again, China was most responsible for these counterfeit items with $91.3 million in retail value seized by the federal government. In addition, 98 percent of counterfeit items smuggled from Singapore were watches and jewelry, with an estimated MSRP of $9.2 million. 3. Wearing Apparel/Accessories (Value = $133.0 million, or 11% of the total)—Counterfeit clothing and accessories were the most seized items in 2012, with more than 7,800 seizures, or about 29 percent of all seizures. But, the number dropped from nearly 8,100, and the total retail value also dropped from $142.3 million in 2011. About 73 percent of seizure value in 2012 originated from China. 4. Consumer Electronics/Parts (Value = $104.4 million, or 8% of the total)—Last year consumer electronics seizures were 10 percent of total value. About $71.5 million in seized merchandise originated in China. Of all counterfeit products originating from Hong Kong, consumer electronics were the most seized; 23 percent of all seized items from the country.

Seizures of knock-off smartphones and tablets have risen exponentially in the last couple of years. 5. Footwear (Value = $103.4 million, or 8% of the total)—The federal government seized more than $103 million worth of footwear in 2012 in nearly 1,900 seizures. While most of the footwear that was seized used to be athletic shoes, knock-offs of high-end dress shoes are becoming more common. The vast majority of footwear seized in 2012 originated in