Faked Out

Looking for counterfeit goods, sheriff's deputies go bargain hunting

Digging through piles of nondescript hats, T-shirts and sweatshirts at T-N-T Sports Wear, I soon struck shopper's gold. It came in the form of a baby-blue knit cap bearing that famous Ralph Lauren insignia, the tiny polo player so beloved by Yuppies. Only $2.50--a steal of a deal. At least it would have been, except for one nagging problem. The tiny pony stitched into the cap was either an unusually well-endowed stallion or a mutant.

Which leads us to our first tip for shopping the discount stores that cluster near Harry Hines Boulevard: Horses have four legs, not five.

Here's another: caveat emptor.

If it looks like a Nike and says Nike, is it really Nike? Not really.
If it looks like a Nike and says Nike, is it really Nike? Not really.

Just weeks after Dallas County sheriff's deputies raided the first of two neighborhood shops on January 22 on suspicion of dealing in counterfeit merchandise, the Dallas Observer visited several stores in the Northwest Dallas bargain-hunter's Mecca to see how large a dent the officers had made in the sale of ersatz goods. Deputies had confiscated $500,000 worth of allegedly counterfeit designer purses and apparel at Purse Mart and Royal Sports Wear, but was that enough to slow the trade in counterfeit and near-counterfeit goods elsewhere? Not a chance.

"It's difficult, because it's proliferated in the Dallas area for so long, to get all these people shut down," says Sheriff's Department spokesman Sergeant Don Peritz. "It's impossible to do so. There's no way. If we had every person in the department involved in it, there's no way we could shut them all down."

Most of the stores claim to be on the straight and narrow, such as Broadway Bargains, a boutique in the same shopping center as the recently raided Purse Mart. "Never, never, because we are very clean," says Broadway Bargains employee Nisha Charnye to customers who request counterfeits. "They ask, but we said we don't do all that. We have never done that before, so they know." Yet other stores are crammed with "almost counterfeit" merchandise--T-shirts, jackets, hats, handbags and watches emblazoned with logos similar to big-name designer brands. Though these items aren't strictly considered counterfeit, they base their value on the brand recognition, bordering on trademark infringement. Knockoffs such as the five-legged Polo pony skate close to the edge but remain within the boundaries of legal merchandise. In addition to the mutant pony, my shopping trips found "Adiaas" and "Ekco" T-shirts. For another $70, I scored a "Tommu Sports" wind suit, a "Timmy Girl" T-shirt, a "Didas" hoodie, a "Tipfany & Co." bracelet and a "Barley-Davidson" belt buckle.

The bargains seemed unbelievable, especially in the Shopper's Alley strip mall near Harry Hines and Royal, where several of the sportswear items were on sale. There were even better bargains to be had at T-Point and T-N-T Sports, since they didn't seem to charge sales tax when I paid by cash. (T-Point and T-N-T Sports and four other shops were closed indefinitely after damage from a fire on February 6.)

High demand for these products makes counterfeiting and knockoffs a booming business. Authorities and manufacturers annually seize millions of unauthorized products all over the globe; Adidas alone confiscated more than 6 million pieces in 2001, and the numbers don't seem to be improving. Counterfeit goods accounted for 5 to 7 percent of world trade--or $359 billion--in 2001, according to estimates by the Counterfeiting Intelligence Bureau, a division of the International Chamber of Commerce.

Despite the well-publicized raids at Purse Mart and Royal Sports Wear, the department has yet to file formal charges in either case and is continuing to assess the evidence. Peritz says that raiding every small-time vendor is not the department's ultimate goal. "We want to try and get the volume people and follow the money back to its origins, follow the product back to its origins and see where it leads us," he says.

Some authorities suspect that the trail might lead to organized crime syndicates and terrorist organizations. The International Anti-Counterfeiting Coalition, a Washington, D.C.-based group that combats counterfeiting, reports that criminal groups originating in China, Vietnam and Northern Ireland have all sold counterfeit goods to support their activities. It also claims that the sale of fraudulent merchandise may have financed the 1993 bombing of the World Trade Center. Though the Dallas County Sheriff's Department has not focused on counterfeiting until recently, heightened concerns about homeland security prompted it to investigate. As the information came to us that there was the possibility that some of these type of organizations may fund organized crime or terrorist organizations, we became interested," Peritz says. "We have yet to find an affirmative link in any of these [businesses] between organized crime or terrorist organizations."

Consumers may not be aware of these worries, or maybe they just don't care. The appeal of owning a "name brand" product at a fraction of the price can outweigh whatever moral dilemma shoppers feel when considering a counterfeit purchase. Or shoppers may believe they are undermining big businesses that are out to rip them off. If the motivation is the latter, it's working. Industries vulnerable to faking--apparel, computer technology and software, film and music--report losing billions of dollars per year in potential revenue; plus, companies spend millions actively combating illegal wares.

"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."

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