Suspect, counterfeit and fraudulent electrical product: targeting authenticity

April 11th, 2014, Published in Articles: Vector

by Tom Grace, Eaton

Counterfeit electrical products are a real danger to our safety, businesses and economy. The counterfeiting industry is overwhelming, but that’s no reason to give up and let it continue.

Fig. 1: Counterfeit and genuine product are almost identical.

Fig. 1: Counterfeit and genuine product are almost identical.

In many instances, counterfeit products appear to be genuine, but they are unable to meet minimum performance specifications. Manufacturers of counterfeit products often use inferior materials without regard for meeting published ratings or safety. These “knock-offs” consistently fail independent certification testing from organisations such as Underwriters Laboratories (UL). Instead, counterfeit product manufacturers rely on deception and prices which are below market level to find their way into our homes, businesses and electrical infrastructure.


Dangers

Safety

Counterfeit circuit breakers can result in product malfunctions or failures and can also cause serious bodily injury, including electric shock, electrocution, and even death. They are also capable of significant property damage. Circuit breakers are designed to provide circuit protection for power distribution systems, and to safeguard people and equipment.

A breaker failure means the loss of production, possible equipment damage necessitating costly system analysis and replacement, and the increased risk of worker injury at the time of failure or during maintenance. The financial liability of such an incident will fall on those who participated in the supply and distribution of the counterfeit products.

Unexpected costs

Counterfeit electrical products can add additional costs to the purchasing process. If a buyer is shopping on price alone, without regard to traceability of the product or the nature of the channel purchased from, it is only later in the procurement process that issues can even be identified. These issues can cause delays during shutdowns or increase the costs of the products significantly because of short-term delivery requirements or expediting freight and shipping.

If the safety hazards and financial liability posed by counterfeit products fail to attract your attention, the economic consequences should. This includes layoffs due to unfair competition and reduced customs and sales tax revenues, resulting in greater financial burdens for businesses and individuals.

Worldwide, counterfeiting costs the electrical products industry $600-billion annually. In the United States, that figure is $200-billion to $250-billion. Because of the revenue “stolen” from lawful companies, counterfeiting reduces US employment by 750 000 jobs each year, according to the International Anti-counterfeiting coalition (www.iacc.org).

These issues are compounded by the production, sales and importation of counterfeit electrical goods, which is soaring at an alarming rate. According to the US Department of Homeland Security, over 3400 seizures of “consumer safety and critical technology” products accounted for a street value of more than $146-million in 2012, which is a 143% increase from 2011.

Combating counterfeiting

Stopping the sale of counterfeit products is everyone’s responsibility. This includes manufacturers, distributors, resellers (authorised and unauthorised), governments and customers alike. Collaboration is going to be key to stopping counterfeit electrical product.

Manufacturers

Aware of the dangers counterfeit electrical product on consumers, manufactures are taking measures to help prevent counterfeits from entering the supply chain. For example, Eaton’s electrical business has adopted a strict policy for counterfeiting and is committed to anti-counterfeiting technologies and programmes. This includes enhancing products with labels and markings to identify and thwart counterfeiting more easily, building awareness among end-users on the dire consequences of using inferior goods marked deceptively under brand names of reputable companies and engaging with government and law enforcement to create stronger deterrent penalties and to take action against illicit manufacturing, importing and brokering of counterfeit electrical product.

Industry organisations

Industry organisations such as the National Electrical Manufacturer’s Association (NEMA), enable member companies in the electrical industry to focus their collective efforts on identifying ways to stop counterfeiting. Industry representation by NEMA can be used to promote laws, regulations, or government directives. Other industry organisations rely on engagement from the electrical industry supporters to promote consumer awareness of counterfeit electrical products. These collaborative efforts carry a stronger message to the public.

Government

For governments to be effective at blocking the proliferation of counterfeit product at customs and borders, laws must be enforceable while supporting the victims. The engagement of government to create stronger deterrent penalties, especially where safety issues are concerned, is crucial to stopping counterfeiting.

Government also needs industry’s support and collaboration to be effective. A high degree of brand holder engagement with law enforcement is key to enforcing intellectual property rights (IPR) laws successfully and to taking criminal action against illicit manufacturing, importers, and brokers of counterfeit electrical product.

Proactive users

As the last step in the supply chain, customers can help combat counterfeiting by educating themselves on how to identify a counterfeit electrical product and avoiding purchasing them.

The first step in identifying a counterfeit electrical product is to recognise that they are difficult to identify. Many counterfeit products are hard to detect because they contain the trademark or service mark of the genuine brand or use the appearance of a well-recognised article, which may not include the tags or labels.

An example of a counterfeit circuit breaker, together with a genuine circuit breaker, is shown in Fig. 1. While the physical differences between the two circuit breakers are nearly undetectable, Eaton’s Circuit Breaker Authentication Tool (www.eaton.com/counterfeit) can help identify the circuit breaker on the right as the fake.

It is important to know how to spot a counterfeit electrical product upfront at the very beginning of the purchasing process to avoid these safety hazards and unnecessary costs. There are many precautions possible for purchasing decision makers to become more confident that their facility is free of counterfeit product. First and foremost, the best way to avoid counterfeit electrical products is to purchase products from the manufacture’s authorised distributors or resellers. There is a higher risk of counterfeits if one cannot trace the path of commerce to the original manufacturer.

Purchase decision makers can also use tools provided by the original manufacturer or certification organisations to verify that electrical products are authentic. It is also advised to scrutinise labels and packaging for certification marks and suspicious additional labeling not applied by the original manufacturer and to ensure that all parts are present, including the owner’s manual.

If a product is suspected to be counterfeit, it is recommended to contact the brand owner. This will allow authentication of the suspect product and will ensure that the potentially unsafe product is removed from the market place.

Contact Marlene Coetzee, Eaton, Tel 011 824-7400, marlenecoetzee@eaton.com

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