Counterfeit

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For other uses, see Counterfeit (disambiguation).

A counterfeit is an imitation that is made usually with the intent to deceptively represent its content or origins. The word counterfeit most frequently describes forged currency or documents, but can also describe clothing, software, electronic stock shares or certificates, pharmaceuticals, watches, or any other manufactured item, especially when this results in patent infringement or trademark infringement.

This covers a wide range of consumer items, from outright fakes in the sense that they are non-functional lookalikes (e.g. prescription drugs, computer flash drives), functional but inferior items (Memory Sticks, blank videotapes) to fully functional items illegally manufactured without paying copyright fees (CDs, DVDs, computer software). In the latter case, there is often little or no attempt at disguising its origin as the end user will be aware that the counterfeit product will work at least as well (and sometimes better than) the original. The alternative term bootleg is more often used for this type of conterfeiting, where the user is fully aware of its illegal status.

By contrast, a knockoff item may imitate a well-known one, may be sold for a lower price, and may be of inferior quality, but there is usually no attempt to deceive the buyer or infringe upon brand names, patents, trademarks or copyrights. An example of a knockoff item is Dynacell batteries.

Contents

[edit] Counterfeiting of money

[edit] History

Forms to counterfeit coins from the late 2nd and early 3rd century
Forms to counterfeit coins from the late 2nd and early 3rd century

Counterfeiting is probably as old as money itself. Before the introduction of paper money, the two main ways of doing it were to mix base metals in what was supposed to be pure gold or silver, or to "shave" the edges of a coin so that it weighed less than it was supposed to. A fourrée is an ancient type of counterfeit coin, in which a base metal core has been plated with a precious metal to look like its solid metal counter part.

[edit] Overview

Kings often dealt very harshly with the perpetrators of such deeds. In 1162, Emperor Gaozong of Song had promulgated a decree to punish the counterfeiter of Huizi (currency) to death and to reward the informant. [1] The English couple Thomas Rogers and Anne Rogers were convicted on 15 October 1690 for "Clipping 40 pieces of Silver" (in other words, clipping the edges off silver coins). Thomas Rogers was hanged, drawn and quartered and Anne Rogers was burnt alive. The gruesome forms of punishment were due to the two's acts being construed as "treason", rather than simple crime. In America, counterfeiting also used to be punishable by death, for example paper currency printed by Benjamin Franklin often bore the phrase "to counterfeit is death."[2] The theory behind such harsh punishments was that one who had the skills to counterfeit currency was considered a threat to the safety of the state, and had to be eliminated.

Far more fortunate was an earlier practicioner of the same art, active in the time of the Emperor Justinian, who got the nickname Alexander the Barber. Rather than being executed, when he was caught the Emperor decided to employ his financial talents in the government's own service.

Modern counterfeiting begins with Paper money. Nations have used counterfeiting as a means of warfare. The idea is to overflow the enemy's economy with fake bank notes, so that the real value of the money plummets. Great Britain did this during the Revolutionary War to reduce the value of the Continental Dollar. Although this tactic was also employed by the United States during the American Civil War, the fake Confederate currency it produced was of superior quality to the real thing.

This building was used to mint counterfeit American nickels in the late 19th and/or early 20th centuries. The picture was taken in 1911 and featured in a Chicago newspaper.
This building was used to mint counterfeit American nickels in the late 19th and/or early 20th centuries. The picture was taken in 1911 and featured in a Chicago newspaper.

Another form of counterfeiting is the production of documents by legitimate printers in response to fraudulent instructions. An example of this is the Portuguese Bank Note Crisis of 1925, when the British banknote printers Waterlow and Sons produced Banco de Portugal notes equivalent in value to 0.88% of the Portuguese nominal Gross Domestic Product, with identical serial numbers to existing banknotes, in response to a fraud perpetrated by Alves dos Reis. Similarly, in 1929 the issue of postage stamps celebrating the Millennium of Iceland's parliament, the Althing, was compromised by the insertion of "1" on the print order, before the authorised value of stamps to be produced (see Postage stamps and postal history of Iceland.)

In 1926 a high-profile counterfeit scandal came to light in Hungary, when several people were arrested in the Netherlands while attempting to procure 10 million francs worth of fake French 1000-franc bills which had been produced in Hungary; after 3 years, the state-sponsored industrial scale counterfeit operation had finally collapsed. The League of Nations' investigation found Hungary's motives were to avenge its post-WWI territorial losses (blamed on Georges Clemenceau) and to use profits from the counterfeiting business to boost a militarist, border-revisionist ideology. Germany and Austria had an active role in the conspiracy, which required special machinery. The quality of fake bills was still substandard however, due to France's use of exotic raw paper material imported from its colonies.

During World War II, the Nazis attempted to do a similar thing to the Allies with Operation Bernhard. The Nazis took Jewish artists in the Sachsenhausen concentration camp and forced them to forge British pounds and American dollars. The quality of the counterfeiting was very good, and it was almost impossible to distinguish between the real and fake bills. The Germans could not put their plan into action, and were forced to dump the counterfeit bills into a lake. The bills were not recovered until the 1950s.

Today the finest counterfeit banknotes are claimed to be U.S. dollar bills produced in North Korea, which are used to finance the North Korean government, among other uses. The fake North Korean copies are called Superdollars because of their high quality. Bulgaria and Colombia are also significant sources of counterfeit currency.

There has been a rapid growth in the counterfeiting of Euro banknotes and coins since the launch of the currency in 2002. In 2003, 551,287 fake euro notes and 26,191 bogus euro coins were removed from EU circulation. In 2004, French police seized fake 10 euro and 20 euro notes worth a total of around €1.8 million from two laboratories and estimated that 145,000 notes had already entered circulation.

The spread of counterfeit goods has become global in recent years. It is currently estimated that Counterfeit Goods consists of 5 to 7% of World Trade, ranging in losses between 500 Billion and 600 Billion U.S. Dollars.

In the early years of the 21st century, the United States Secret Service has noted a substantial reduction in the quantity of forged U.S. currency, as counterfeiters turn their attention towards the Euro.

In Russia, authorities estimate that 90% of products sold to people are counterfeit[citation needed], while in China there are an estimated 3 to 5 million people working in the counterfeit industry.

In 2006, a Pakistani government printing press in the city of Quetta was accused of churning out large quantities of counterfeit Indian currency, The Times of India reported based on Central Bureau of Intelligence investigation. The rupee notes are then smuggled into India as 'part of Pakistan's agenda of destabilising (the) Indian economy through fake currency,' the daily said. The notes are 'supplied by the Pakistan government press (at Quetta) free of cost to Dubai-based counterfeiters who, in turn, smuggle it into India using various means,' the report said.[1] This money is allegedly used to fund terrorist activities inside India. The recent blasts in Mumbai were funded using fake currency printed in Pakistan.[citation needed]

[edit] Anti-counterfeiting measures

Anti-counterfeiting features on an old U.S. $20 bill
Anti-counterfeiting features on an old U.S. $20 bill
Two forged UK pound coins. The left coin shows poor surface clarity, irregular reeding and no side lettering. The right coin demonstrates poor metal quality.
Two forged UK pound coins. The left coin shows poor surface clarity, irregular reeding and no side lettering. The right coin demonstrates poor metal quality.

Traditionally, anti-counterfeiting measures involved including fine detail with raised intaglio printing on bills which would allow non-experts to easily spot forgeries. On coins, milled or reeded (marked with parallel grooves) edges are used to show that none of the valuable metal has been scraped off. This detects the shaving or clipping (paring off) of the rim of the coin. However, it does not detect sweating, or shaking coins in a bag and collecting the resulting dust. Since this technique removes a smaller amount, it is primarily used on the most valuable coins, such as gold. In early paper money in Colonial North America, one creative means of deterring counterfeiters was to print the impression of a leaf in the bill. Since the patterns found in a leaf were unique and complex, they were nearly impossible to reproduce.[3]

In the late twentieth century advances in computer and photocopy technology made it possible for people without sophisticated training to easily copy currency. In response, national engraving bureaus began to include new more sophisticated anti-counterfeiting systems such as holograms, multi-colored bills, embedded devices such as strips, microprinting and inks whose colors changed depending on the angle of the light, and the use of design features such as the "EURion constellation" which disables modern photocopiers. Software programs such as Adobe Photoshop have been modified by their manufacturers to obstruct manipulation of scanned images of banknotes.[2] There also exist patches to counteract these measures.

For U.S. currency, anti-counterfeiting milestones are as follows:

The Treasury had made no plans to redesign the $5 bill using colors, but recently reversed its decision, after learning some counterfeiters were bleaching the ink off the bills and printing them as $100 bills. It is not known when the $100 bill will be redesigned in this format, but the new $10 bill (the design of which was revealed in late 2005) entered circulation on March 2, 2006. The $1 bill and $2 bill are seen by most counterfeiters as having too low of a value to counterfeit, and so they have not been redesigned as frequently as higher denominations.

In the 1980s counterfeiting in the Republic of Ireland twice resulted in sudden changes in official documents: in November 1984 the £1 postage stamp, also used on savings cards for paying television licences and telephone bills, was invalidated and replaced by another design at a few days' notice, because of widespread counterfeiting. Later, the £20 Central Bank of Ireland Series B banknote was rapidly replaced because of what the Finance Minister described as "the involuntary privatisation of banknote printing".

In the 1990s, the portrait of Chairman Mao Zedong was placed on the banknotes of the People's Republic of China to combat counterfeiting, as he was recognised better than the generic designs on the renminbi notes.

In Australia, the original paper decimal currency banknotes introduced in 1966 were eventually replaced with new designs printed on clear polyester film which allowed them to have "see through" sections that are almost impossible to duplicate with a photocopier.

[edit] Money art

A subject related to that of counterfeiting is that of money art, which is art that incorporates currency designs or themes. Some of these works of art are similar enough to actual bills that their legality is in question. While a counterfeit is made with deceptive intent, money art is not - however, the law may or may not differentiate between the two. See JSG Boggs, the American artist best known for his hand-drawn, one-sided copies of US banknotes which he spends for the face value of the note.

[edit] Famous counterfeiters

"Look 'ere—this arf-crown won't do. It ain't got no milling on its hedge." "Blimy! Nor it 'as! I knew I'd forgotten somefink." Cartoon in Punch magazine 25 August 1920. A half crown was a coin worth one-eighth of a pound
"Look 'ere—this arf-crown won't do. It ain't got no milling on its hedge." "Blimy! Nor it 'as! I knew I'd forgotten somefink."
Cartoon in Punch magazine 25 August 1920. A half crown was a coin worth one-eighth of a pound

[edit] Counterfeiting of documents

Main article: Forgery

Forgery is the process of making or adapting documents with the intention to deceive. It is a form of fraud, and is often a key technique in the execution of identity theft. Uttering and publishing is a term in United States law for the forgery of non-official documents, such as a trucking company's time and weight logs.

Questioned document examination is a scientific process for investigating many aspects of various documents, and is often used to examine the provenance and verity of a suspected forgery. Security printing is a printing industry specialty, focused on creating documents which are difficult or impossible to forge.

[edit] Counterfeiting of consumer goods

In the United States, the FBI estimates that American companies lose up to $250 billion annually due to counterfeit goods. According to the Organisation for Economic Co-operation and Development as well as the European Commission, counterfeit goods are responsible for the loss of 100,000 jobs in Europe each year. First Global Congress on Combating Counterfeiting

Certain consumer goods, especially very expensive or desirable brands, or those which are easy to reproduce cheaply, have become popular among counterfeiters, who attempt to deceive the consumer into thinking they are purchasing a legitimate item, or convince the consumer that they could deceive others with the imitation. An item which doesn't attempt to deceive, such as copy of movie with missing or different cover art, is often called a "bootleg" or a "pirated copy" instead.

[edit] Apparel, accessories, watches, and other goods

Counterfeit clothes, shoes and handbags from designer brands such as Chanel and Gucci are made in varying quality; sometimes the intent is only to fool the gullible who only look at the label and don't know what the real thing looks like, while others put some serious effort into mimicking fashion details. The popularity of designer jeans, starting with Jordache in 1978, also spurred a flood of knockoffs. Factories that manufacture counterfeit designer brand garments and watches usually originate from developing countries such as China. Many international tourists visiting Beijing will find a wide selection of counterfeit designer brand garments at the infamous Silk Street. Expensive watches such as Rolex are also subject to counterfeiting; it is a common cliché that any visitor to New York City will be approached on a street corner by a vendor with a dozen such fancy watches inside his coat, offered at amazing bargain prices.

[edit] Media products

Compact Discs, videotapes and DVDs, computer software and other media which are easily copied can be counterfeited or "pirated", and sold through vendors at street markets, night markets, mail order, and numerous Internet sources, including open auction sites like eBay.

Music enthusiasts may use the term "bootleg recording" to differentiate otherwise unavailable recordings from pirated copies of commercially released material.

[edit] Drugs

Main article: Counterfeit drug

A counterfeit drug or medicine is one which is produced and sold with the intent to deceptively represent its origin, authenticity or effectiveness. It may be one which does not contain active ingredients, contains an insufficient quantity of active ingredients, or contains entirely incorrect active ingredients (which may or may not be harmful), and which is typically sold with inaccurate, incorrect, or fake packaging.

Illegal street drugs may also be counterfeited, either for profit or for the deception of rival drug distributors or narcotics officers.

[edit] References

  1. ^ Pakistan printing fake Indian currency - Times of India at Forbes
  2. ^ Photoshop and CDS

[edit] External links

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