Panel: Holiday discount-seekers inadvertently supporting counterfeiting

Chris Tortorice with Software

Microsoft Canada's Chris Tortorice with two copies of Office: one legitimate and one counterfeit

According to a recent Ipsos-Reid survey commissioned by Microsoft Canada, the continuing economic doldrums are making Canadians more conscious of holiday bargains than ever before, with two thirds of survey respondents saying they intended to only buy discounted goods or deals for gifts this year.

But at the 16th Annual Anti-Counterfeiting Conference in Toronto this week, Microsoft Canada and a variety of other manufacturers, retailers, industry organizations, and law enforcement are sounding the tried and true alarm that when consumers look for bargains, they run the risk of ending up with less than what they think they’re getting.

“Canadians are looking for ways to stretch those holiday dollars by buying more online, but they’re unknowingly placing themselves at risk by dong so,” said Lorne Lipkus of the Canadian Intellectual Property Council at a press conference at the event.

Surrounded by stacks of counterfeit goods, from work boots to software to pharmaceuticals, Lipkus and a panel addressed what he characterized as “global networks of criminals peddling their wares to unaware consumers.”

The panel presented the argument that counterfeit goods run a serious health and safety risk, with dangers ranging from overheating electronics to contaminated toothpaste. Chris Tortorice, corporate counsel for anti-piracy at Microsoft Canada, said that at first blush, counterfeit software might seem a lower health and safety risk than some of these items. But it’s not necessarily the case. In fact, almost one quarter of all counterfeit operating systems Microsoft comes across either comes with malware on-board, or is set up to download unwanted hangers-on like spyware when that software first connects to the Internet.

Although counterfeiters are getting better at making fake software look more like its legitimate counterpart, Tortorice noted that Canadian consumers do generally show some decent common sense when it comes to the most obvious indicator of sham software: 80 per cent said that if they see a deal that falls under the “too good to be true” category, they’re aware that it’s probably not legitimate.

Inspector Todd Gilmore of the RCMP offered details of an ongoing operation – dubbed Project Scorpion – being run by the force to catch counterfeit goods of all variety as they arrive in the country, an effort to “choke off the supply of counterfeit goods” on Canadian shelves. Forty-five days into the effort, the police have seized $35 million in counterfeit goods entering the country. The operation has been so successful, Gilmore reports, that it’s been made into an ongoing operation. And he describes the success as “a small fraction” of what comes into Canada.

Travis Johnson, vice president of the International Anti-Counterfeiting Coalition, supported those numbers, estimating that all efforts to catch counterfeit goods before they reach consumers, by private sector, industry organizations and law enforcements, catches about one thousandth of the $250 billion of fake goods marketed each year.

Among the findings of the Microsoft Canada/Ipsos-Reid study, 80 per cent of Canadians say they’re concerned that counterfeit goods may be backed by organized crime. And Gilmore strongly agreed with that assertion.

“Counterfeiting is a highly-organized criminal activity,” Gilmore said. “If you choose to buy counterfeit, you are supporting organized crime.”

Among the latest efforts from his organization, a partnership to be unveiled over the next few weeks with major payment processors, seeking to identify sites that are selling counterfeit goods and cutting off their flow of money.

Meanwhile, in the channel…

Last year at this same event, Tortorice noted that for the first time in the recent past, counterfeit software was showing up in the channel, predominantly at smaller retailer who got burned looking for lower prices online than they may be able to find through authorized distribution.

A year later, that’s still a concern – in fact, Tortorice said Microsoft is seeing it happen more often, including finding counterfeit software on the shelves of major Canadian big box retailers. The more sophisticated buying departments of these larger retailers serve as a good first line of defense, but there are a variety of ways counterfeit goods may find their way onto retail shelves, ranging from consumers buying legitimate software and then returning counterfeit for a refund, to unscrupulous action by individuals at a single store. It can also be harder for even experienced buyers to spot the fakes every time – especially as Tortorice reports more counterfeiters moving towards shipping “mixed packages” with legitimate and counterfeit versions of the same software in the same box.

Check back on for a QuickVid with Tortorice explaining the Microsoft/Ipsos-Reid survey, and showing one example of a counterfeited copy of Microsoft Office.

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