Consumers are accustomed to finding China Compulsory Certification (CCC) or CE (European Conformity) markings on products. These markings provide a level of confidence that products displaying them meet certain industry standards; inspection and tests were performed to determine whether they met prescribed standards. Consumers might be surprised, however, to learn of a gaping hole when it comes to counterfeit components or knock-offs. Regardless of the markings displayed, these items aren’t covered.
For the average person, it’s difficult to determine if a product is authentic or bogus. Price alone isn’t a reliable indicator any longer because counterfeiters of luxury items have discovered that selecting a slightly discounted price, still better than an outlet store, will entice more people to buy their merchandise than a heavily discounted price. The thinking behind this logic may be that such a huge discount only serves to reveal the item as counterfeit.
Recently in the United States, a series of counterfeit avoidance measures to identify counterfeits, mitigate their impact, monitor their presence and design standards to prevent their infiltration were adopted by the Department of Defense (DoD). These standards, AS6081 and AS55553, compliment quality management programs already an essential part of the manufacturing, assembly and distribution processes. Although the implementation of counterfeit avoidance regulations improves efforts made against this rapidly growing epidemic, mitigation of this issue still remains in its infancy.
Roots of a Trillion-Dollar Problem
The International Chamber of Commerce estimates the total global value of counterfeit and pirated products could reach a $1.7 trillion by the year 2015. To help put this figure into perspective, the proposed DoD budget for 2015 is $495.6 billion. A $1.1 trillion spending bill recently passed by Congress further demonstrates the potential impact counterfeits represent.
Money from counterfeit sales fund criminal activities, terrorist organizations and destroys U.S. jobs; these are just a few examples of the impact. As Chairman of the United Sates National Committee/International Electro-technical Commission (USNC/ICEQ) and Secure Components CEO, I’ve worked with groups of individuals and organizations to safeguard not only U.S. consumers, but consumers worldwide. Although these efforts are growing every day, at the core of this community are people who’ve been in this scuffle from the beginning and continue to work diligently toward its eradication. Like so many now common commercial applications, these efforts can be traced back to the military complex. Recognizing the growing presence of counterfeit components in U.S. systems, tracking failures to substandard parts and the opportunity older systems presented, the government examined this silent menace to gauge its depth in the supply chain. The results were staggering. Afterward, discussions with industry leaders sought to develop an outline of how best to prevent the flow of suspect components into the supply chain. One of the items that came to light was the inadvertent impact toward fostering counterfeiting that the Federal Acquisition Streamlining Act (FASA) contributed to fraudulent component growth in avionics defense high-reliability products (ADHP) by permitting the use of commercially available items for designated tasks performed. Another admirable intent of FASA was to reduce program costs inherently imposed as a result of U.S. Military-standard (Mil-Std) requirements.
Under the Mil-Std protocol, additional parts and processes were needed to satisfy inspection, testing and other sampling by third-party organizations creating an additional layer within the supply chain and increasing the cost of required parts. MIL-STDs tended to lag behind continuously evolving technology, preventing their use on government contracts. This was changed to allow comparable, commercial parts to be acquired for military systems. By default, this attribute opened the door to anyone with access to the consumer market or an abundance of discarded parts. Counterfeiters quickly seized upon new market segments.
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Editor's Note: This article originally appeared in the March issue of SMT Magazine.