In April, a California man was arrested in connection with a $72 million scheme which involved illegally importing merchandise and trafficking counterfeit electronic goods, the Orange County Register reports. The same month, U.S. Customs and Border Protection (CBP) in International Falls Port of Entry seized around $715,000 worth of counterfeit electronics, including amplifiers, earbuds and cables, wireless headphones, and 57 cartons of sandwich boards and touch lamina.
For every criminal who gets caught trying to smuggle millions of dollars’ worth of counterfeit cellphone components into the country, there are hundreds of other organizations and individuals working under the radar in the industrial and consumer electronics counterfeiting markets. Here’s what Uncle Sam, Amazon, and other organizations are doing about it:
New memo aimed at international online marketplaces. In April, President Trump signed the Memorandum on Combating Trafficking in Counterfeit and Pirated Goods into law. Aimed squarely at marketplaces like Alibaba, Amazon, and eBay, the memo zeroes in on suppliers, intermediaries coordinating the sales of the goods, and the marketplaces hosting the goods, CNN reports. In addition, it emphasizes the need for more data related to the counterfeit supply chain. “The memo instructs the Department of Homeland Security to compose a report in conjunction with the Commerce Department, the attorney general, and other federal agencies,” CNN adds, “with recommendations to combat counterfeit goods in the American marketplace within 210 days.”
Amazon’s Project Zero. Powered by Amazon’s machine learning (ML), Project Zero uses automated protections to continuously scan its platform and remove suspected counterfeits. Brands provide key data points about themselves (e.g., trademarks, logos, etc.), the company says, and then Amazon scans more than 5 billion daily listing update attempts to ferret out suspected counterfeits. The invitation-only project allows companies to remove the counterfeit listings themselves (previously, those company would report the problem to Amazon which, in turn, would take action).
“We’ve been testing these automated protections with a number of brands, and on average, our automated protections proactively stop 100 times more suspected counterfeit products as compared to what we reactively remove based on reports from brands,” the company states in “Amazon Project Zero - Empowering brands to drive counterfeits to zero.”
DARPA Jumps into the Fray. According to Defense Systems, the Defense Advanced Research Projects Agency (DARPA) is also sharpening its pencils and attacking counterfeiters where it hurts. As part of that mission, DARPA is investigating solutions that can track and authenticate computer hardware components as they are manufactured, shipped, and assembled around the globe, Defense Systems reports. Through its Supply Chain Hardware Integrity for Electronics Defense (SHIELD) program, for example, the agency is using hardware solutions to verify the integrity of integrated circuits and microchips that are used in electronic equipment.
The initiative uses "dielets” (tiny chips no larger than 100 microns a side) placed inside electronic devices or attached to individual components. “Parts and components are first ‘enrolled’ in a database,” the publication reports, “and given a unique ID number that can later be queried via a radio frequency wand.” And while—like most DARPA innovations—this one is being developed with the Department of Defense in mind, it could also “easily be applied to similar problems at civilian agencies and in the private sector,” Defense Systems point out.
Verify and Monitor
There are things that electronics buyers can do to stem the flow of counterfeit products into their own organizations. According to The Reshoring Institute’s Rosemary Coates, the only way to control counterfeiting is to maintain control over your entire worldwide supply chain and enforce discipline in verifying supply chain partners and products.
“This means verifying and monitoring all parts suppliers, distributors, subcontractors, and contract manufacturers,” Coates advises in “Counterfeits Are Still a Major Problem.” “Go to China often and review the production of parts. Make sure all supply chain links are verified and overseen regularly by you or your staff. Take nothing for granted. Know your supply chains from start to finish. Verify and monitor every step of the way.”
