COVID-19 and counterfeiting go hand-in-hand

Amid the COVID-19 pandemic, Americans are facing another dangerous and elusive foe: counterfeits. Counterfeiters have been leeching off American families for decades, and they do more than hurt the manufacturers whose products they copy—they endanger lives and threaten public health. Fake COVID-19 tests or faulty facial coverings could cost American lives.

Counterfeiters are exploiting legal and regulatory loopholes to build their businesses and flood American consumers with fake and dangerous goods, and the problem is only getting worse as Americans buy more products online during the pandemic. This must stop, and e-commerce platforms, the federal government, Congress and the courts must do more to halt the flow of these dangerous products.

In addition to putting lives at risk, counterfeiting harms the American economy and millions of consumers. The vast majority of counterfeit goods come from abroad, particularly China, and they are so common that fake goods made up more than half a trillion dollars of world trade last year. Other estimates show that counterfeiting siphoned $131 billion from the U.S. economy as of 2019, including $22.3 billion in lost labor income and 325,500 fewer American jobs.

But the COVID-19 pandemic has created even more opportunities for counterfeiters to make a quick buck—and put lives at risk in the process. Customs agents have seized thousands of unauthorized and unapproved testing kits since the onset of the pandemic, as well as fake and untested coronavirus “treatments.” The same goes for personal protective equipment, with border agents intercepting countless numbers of counterfeit respirator masks from China and elsewhere.

The National Association of Manufacturers, which represents small and large manufacturers across the country, is calling for action. We have released a new action plan with detailed recommendations on how the government can protect Americans from faulty and dangerous products.

With Americans shopping online more than ever, major e-commerce platforms must take steps to guarantee that their platforms are not being used by shady vendors to sell illegitimate, dangerous products to consumers. A recent study showed that 39 percent of all unexpected counterfeits were purchased from online third-party marketplaces. These e-commerce merchants often escape liability for selling unauthorized goods, including dangerous or malfunctioning products, because the law has yet to catch up to the realities of online retail. Congress should take additional steps to hold e-commerce marketplaces responsible for the quality and safety of the goods available online, including enhanced screening of their vendors and proactive actions to remove counterfeit listings.

Although U.S. government agencies play an important role in fighting counterfeits, their response to counterfeiting is insufficient and fragmented. Congress should establish an agency specifically responsible for U.S. anticounterfeiting efforts, working with other relevant agencies for an effective, coordinated response. COVID-19 provides a good test case: the U.S. needs to have a centrally coordinated response, equipping agencies like the Food and Drug Administration and the Department of Health and Human Services to play a highly visible role given the danger of fake medical supplies and testing during the pandemic and giving them full and clear statutory authority to destroy counterfeit medical products.

Congress must also update U.S. law to strengthen the courts’ ability to punish unscrupulous counterfeiters. U.S. civil and criminal law has very narrow rules on definitions for counterfeits, allowing many counterfeiters to escape penalties and limiting the ability of legitimate manufacturers to fight back. Patent laws are structured in such a way that someone selling fake but generically labeled pharmaceuticals could avoid jail time, and someone selling shoes that are almost—but not quite—identical to existing trademarks could avoid penalties. Courts must adjust penalties to better reflect the many dangers these counterfeiters pose.

U.S. Customs and Border Protection noted in 2016 that 16 percent of the counterfeits they seized posed threats to consumer health and safety. The current national emergency has made counterfeiting more dangerous than ever. Protecting American lives requires our leaders to ensure that we can trust the tests, masks, medicines and countless other products we need.

Aric Newhouse is senior vice president of policy and government relations at the National Association of Manufacturers.