Reasons for Proliferation of Counterfeiting

The motivation behind counterfeiting electronic components is the same as any other counterfeiting operation--profitability. There are millions of dollars to be made with, currently, little risk to the criminal.

The origins of these counterfeit parts are now well known and they truly represent a situation in which we are reaping what we have sown. The U.S. was aware that electronic waste contained a multitude of hazardous substances, but remained unwilling to restrict the use of these substances, deciding instead that it would be advantageous to sell and export our waste for disposal in poorer countries, who were more concerned with money than pollution.

However, before this waste made it to the landfill, it passed through the hands of entrepreneurs who removed anything they could potentially use. The used and potentially inoperable electronic components that these individuals removed were refurbished and/or relabeled and resold back to the U.S. as new parts. Today’s counterfeiting operations have grown from a simple cottage industry to complex operations run by organized crime that produce highly realistic-looking parts.

Findings Based Upon U.S. Department of Commerce Report

In a report issued in January of 2010, the Office of Technology Evaluation (OTE) summarizes the state of U.S. counterfeit electronics concerns:

• “All elements of the supply chain have been directly impacted by counterfeit electronics;
• There is a lack of dialogue between all organizations in the U.S. supply chain;
• Companies and organizations assume that others in the supply chain are testing parts;
• Lack of traceability in the supply chain is commonplace;
• There is an insufficient chain of accountability within organizations;
• Recordkeeping on counterfeit incidents by organizations is very limited;
• Most organizations do not know who to contact in the U.S. Government regarding
•  Counterfeit parts
•  Stricter testing protocols and quality control practices for inventories are required; and
•  Most Department of Defense (DoD) organizations do not have policies in place to prevent counterfeit parts from infiltrating their supply chain [3]."

So Why is so Little Done to Deter Counterfeiting?

Well, a variety of reasons act together in preventing an organized attack against counterfeiting. First, many counterfeits, particularly those that operate like the original, though typically not of the same quality, often go undetected and are installed into the finished product. When a counterfeit is suspected, it is frequently difficult to confirm as the inspectors typically do not know all the subtleties of the authentic part. Compounding the problem, Original component manufacturers (OCMs) are often unwilling to aid in the identification of suspect parts purchased outside of their approved distributors. They, rightfully, want to sell current products or products through approved sources and do not want to encourage the use of unauthorized vendors.