ERAI: The Counterfeit Watchdog

Estimated reading time: 2 minutes

Rick Smith is vice president of business development at ERAI, an organization founded in 1995 as a watchdog for the electronic component distribution section, aiming to combat bad business practices and counterfeiting. Rick definitely has some stories to tell about the hows and whys of counterfeiting, and breaks down some compelling numbers when it comes to fake parts being sold into the open market.

Nolan Johnson: Rick, why was ERAI formed?

Rick Smith: ERAI was formed to clean up, police, and promote the electronic component distribution world to the manufacturing community. When we formed, most of the incidents we tracked and reported on were just bad business practices. Shortly after China joined the World Trade Organization in 2000, we received our first report of a counterfeited integrated circuit. Since that time, we have put together the largest known database of counterfeit and non-conforming electronic components, as well as the companies reported for having shipped those components. ERAI also tracks and reports on many other supply chain issues including wire fraud, something that has just exploded in the last couple of years. We provide business, industry, and government intelligence to navigate the supply chain and avoid bad products and bad companies, thereby mitigating risk and preventing loss.

Johnson: Essentially, you're tracking the ethical and non-ethical behavior of suppliers. How did this start?

Smith: Our founder and president, Mark Snider, started a company in the early 1990s as an independent distribution broker. He was appalled by the number of bad actors. It was completely unregulated with quite a bit of financial fraud. For example, you would get an order and ship the parts COD. They would write a check, and the UPS guy would deliver the box. You’d get the check back from UPS in 10 days and 10 days after that, you’d find out the check had bounced.

So, Mark faxed everyone he knew in the industry. He said, “I’m going to stop selling to this guy. I got a stack of bad checks from him.” Lo and behold, he got replies of, “He got us too.” Mark started keeping track of that information and started this organization with the support of companies he had communicated with. He kept track of incidents and trends and sent that out weekly. By 2000, he had a website, and we started getting reports of counterfeit material.

To read the rest of this article, which appeared in the October 2024 issue of SMT007 Magazine, click here.