Nearly 20 per cent of all shipped mobile phones fake, says OECD

A new report out this week from the OECD has found that around one in five mobile phones and a quarter of computer game consoles shipped internationally are counterfeit, and warns that faked IT goods are on the rise given their lucrative returns for criminal networks.

The report, coming out ahead of the 2017 OECD Global Anti-Corruption and Integrity Forum, says there is a growing trade in counterfeit IT and comms hardware that "weighs on consumers, manufacturers and public finances."

The report also found that smartphone batteries, chargers, memory cards, magnetic stripe cards, solid state drives and music players are also "increasingly falling prey to counterfeiters," in the context of infringing on original trademarks.

The report notes that these can all be dangerous, using incorrect chemicals and processes that increase the safety risk of using any of the fake devices. It also says that: "Almost two-thirds of counterfeit ICT goods are shipped by express and postal services," which significantly complicated the screening and detection process.

The biggest culprit of information and communication technology (ICT) fraud? Not surprisingly, China, the OECD says, adding that US manufacturers are the biggest hit when it comes to lost revenue and an erosion of brand value, as almost 43 per cent of seized fake ICT goods infringe the IP rights of US firms. This was followed by 25 per cent for Finnish firms and 12 per cent for Japanese firms.

The report estimates the value of global trade in counterfeit ICT goods at $143bn as of 2013, based on data from nearly half a million customs seizures around the world over 2011-13.

In February, the US-led IP commission report, said that the stealing of intellectual property in the US is "one of the most pressing issues of economic and national security facing our country," and found that China (including Hong Kong) accounted for a staggering 87 per cent of counterfeit goods seized coming into the US.

While mobile phones and consoles were the highest in terms of shipped fakes, in the ICT category on average, 6.5 per cent of global trade in these goods are in counterfeit products, according to analysis of 2013 customs data. That is well above the 2.5 per cent of overall traded goods found to be fake in a 2016 report, the OECD said.

"The high value of smartphones and ICT accessories and insatiable demand makes them a lucrative target for counterfeiters," the authors warn, and further caution that the number and range of affected products is growing.

Last month, a new analysis from the EU Intellectual Property Office (EUIPO) Observatory suggested that 184 million fewer smartphones were sold by legitimate companies as a result of the illicit trade in knock-off phones during that year.

Its figures show that smartphone producers lost €45.3bn in sales due to counterfeiting in 2015, while also warning that they posed an increased safety risk.