South Africa: Counterfeiting – The Perceived Victimless Crime.

Last Updated: 7 June 2012
Article by Paul Ramara and Michael Lamont

In South Africa counterfeiting is perceived to be a victimless crime, one that is viewed as an open opportunity for the public to get a hold of a brand, be it adidas, PUMA, D&G or any other name brand or product at a cheap price.

The reality however is completely the opposite, counterfeiting is a crime, the Counterfeit Goods Act 37 of 1997, specifically defines the dealing in counterfeit goods as a criminal offence. The crime itself is in fact far from victimless, the TAX revenue that is lost due to counterfeits being imported, incorrectly declared and sold is estimated to be in excess of R2.5 billion in excise and VAT annually for counterfeit cigarettes alone. The loss of jobs due to counterfeiting is astounding. During 2010 it was estimated by the South African Clothing and Textile Workers Union that 14,400 jobs were lost in the textile industry alone due to counterfeit garments being imported and sold. This does not even take into consideration the potential jobs lost as a result of this crime in all the other industries.

Counterfeiting is not only limited to DVD's, clothing and cigarettes, but in fact affects every industry and every type of product. A few examples are circuit breakers, brake pads, sweets, shoe polish and even lifesaving medicines, which all are regularly counterfeited by these unscrupulous individuals. The victims of this crime are everyday people who are ignorant or unaware of the potential harm that they are exposing themselves to. Some of these "cheap" sweets contain substances that are far in excess of the government agreed levels which could result in physical harm to unknowing children. When one contemplates the potential disasters that could occur when an unsuspecting "victim" falls foul to a deceitful supplier of a counterfeit circuit breaker one has to ask if this victimless crime is in fact victimless at all.

Possibly the saddest part of all of this is that most people are not aware of these consequences. The allure of a cheap brand name is too much for some. The behind the scene occurrences are easily forgotten and justified. Everyone has seen, read or heard of a story where the international corporation is bullying the little guy, however what about the international corporations, they have invested copious amounts of time and money into developing their brands and products. The brand itself is a promise to the consumer; a promise of quality and an assurance of peace of mind. The counterfeiters do not have the same regard for the quality or the assurance that a certain brand provides and as a result the product that is produced is done at the cheapest cost possible. Often this is done through the use of inferior quality materials, lack of proper testing and in most cases a disregard for the consumer after the sale. Yet the general public is still inclined to take the side of the "little guy".

In most cases the trading in counterfeit goods is in fact done by or at least controlled by foreigners, who are in South Africa on asylum or student visas and in a number of cases without any official capacity. The "little guy" is not really that little. The consignments of counterfeit goods that enter South Africa on a daily basis are worth millions of Rands, yet the little guy is victimised by the international corporation protecting their brand.

Entertain the scenario of a taxi driver that in order to cut costs buys a set of brake pads from a back street mechanic for a much cheaper price than at a reputable mechanic or trader. This taxi driver now continues to convey passengers from point to point however the brake pads that he has fitted are counterfeit; they do not meet the required standard set by the automotive industry and fail as he is transporting a capacity fare. What are the potential dangers of these counterfeit goods now? Who are the victims in this scenario?

Through the cooperative efforts of the South African Police Service, The Department of Trade and Industry, The South African Revenue Service and the relevant brand holders and their attorneys, numerous search and seizure operations and border stops take place on a daily basis in an attempt to minimise the impact and the number of victims of this illicit activity. However due to the sheer volumes of counterfeit goods being imported and traded in on a daily basis the only way to truly address this issue is to alert the general public to the dangers and the true costs associated with this crime. The public in general need to acknowledge the risks associated with this crime and stop supporting these criminals.

The possible reasons that counterfeiting is perceived to be victimless is in part due to the misperception of the general public and the lack of awareness of this crime. People in general perceive counterfeiting only to affect the clothing and entertainment industries; however the scourge of counterfeiting is far further reaching and has the potential to put people's lives at risk.

The financial harm alone that is done to the South African economy by this "victimless crime" is in fact almost impossible to quantify. It can however easily be pictured. Consider for a moment the number of low cost homes that could be built, the number of additional Police officials that could be employed, and the amount of additional services that could be provided such as health care or even the contribution that could be made to fund the new roads in Gauteng, if indeed these counterfeits were stopped and the actual finances declared and paid to the state.

Is it really a victimless crime or are the consequences of counterfeiting far more?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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