Don’t let your supplement brand get knocked out by knockoffsDon’t let your supplement brand get knocked out by knockoffs
Counterfeiting, fraud and other risks associated with the manufacture, sale and transport of dietary supplements give rise to a variety of legal, regulatory and practical considerations.
June 24, 2021
A “knockoff” is defined as a cheaper copy of an expensive and/or popular product—in other words, a fake or counterfeit.
Buyers, looking for a good deal, can’t believe their luck finding what they want at a price that’s almost too good to be true. Thinking they are saving money, they take the bait and contemplate what else they might buy with their savings.
Sounds relatable—everyone likes saving money. But too often, the too-good-to-be-true item is not what it seems. Counterfeiting is an insidious problem. And when it comes to dietary supplements and nutritional products, the perceived savings at the expense of quality (and maybe safety) not only has financial implications, but can also adversely affect health and wellness when buyers miss out on the genuine ingredient, sometimes replaced with an inactive placebo—or worse, with harmful or deadly “knockoffs.”
The best estimates based on data provided by customs authorities indicate that counterfeit and pirated products accounted for as much as half a trillion U.S. dollars in world trade in 2016, with approximately 3.3% of total global trade in counterfeit and pirated products. These figures are shared in “Trends in Trade in Counterfeit and Pirated Goods” from the Organization for Economic Co-operation and Development (OECD) and the EU’s Intellectual Property Office. The report noted the U.S., Italy and France are among the hardest hit, as their economies thrive on producing high-value, highly desired products, protected by intellectual property (IP) rights and trademarks.
By 2017, the U.S. alone estimated annual losses approaching $600 billion due to counterfeit goods, software piracy and the theft of copyrights and trade secrets. Fake products are found in every trade sector, from perfumes and olive oil, to industrial chemicals and machine parts, to apparel and music, to fish and, yes, even dietary supplements.
Not just big companies and luxury goods
OECD’s deputy-secretary general said the findings of the report “contradict the image that counterfeiters only hurt big companies and luxury goods manufacturers. They take advantage of our trust in trademarks and brand names to undermine economies and endanger lives. Endangering lives with auto parts that fail, pharmaceuticals that make people sick, toys that harm children, baby formula that provides no nourishment, etc.”
FDA acknowledged the "sheer magnitude of the potential crime" makes prevention difficult. The agency noted that with more than 300 ports of entry through which 13% of America's food supply passes, FDA is only able to inspect about 2% of food. Couple this with the fact that tracking down perpetrators would be difficult, if not impossible.
Counterfeiting has tremendous impacts on brand owners—even beyond the lost sales of the genuine goods. When counterfeiters infringe on the trademark, patent or copyright of brand owners by passing off the counterfeit goods, they leave that brand owner potentially liable if the buyer is harmed by the product. Reputation is also at stake when it comes to knockoffs. When buyers don’t experience the desired effects of the product they take, it reflects poorly on the brand, and they do not become repeat customers, or they vent their “complaints” on highly visible social network platforms impacting goodwill and corporate image.
Fighting back against counterfeiters
Fortunately, brand owners can take steps to fight back. A promising three-part strategy focuses on reducing the opportunities to become a target of counterfeiting, monitoring the marketplace for potential attacks, and fighting back when a company discovers it’s been targeted.
Pending legislation in Congress would also make it easier for consumers to identify fake goods and to prosecute the criminals. The Council for Responsible Nutrition (CRN) is bringing together experts to explore the full range of the counterfeit goods issue in the dietary supplement space, offering multiple perspectives on this global problem during an industrywide webinar July 15 from 1-3 p.m. EDT.
Participants will learn from legal, trade, e-commerce and regulatory presenters and hear about industry experiences with knockoffs. Participants will gain a better understanding of how widespread the problem of counterfeiting is; how to monitor the market for counterfeit goods; strategies to limit opportunities for fraud; unique challenges for e-commerce; risks from importation; and legal, regulatory and practical considerations. In addition, participants will gain insights into the likelihood their company’s products will be targeted and what to do if counterfeit versions of their products are discovered in the market. Speakers will also discuss potential legislative efforts to help consumers identify unscrupulous vendors and counterfeit goods, and to help companies prosecute criminal counterfeiters and trademark/copyright infringement.
Armed with increased awareness and expert insights on the dangers counterfeiting poses, supplement and ingredient brands can fight back and activate smart strategies to protect their good name—as well as consumers.
Click the following link to register for “Counterfeit Dietary Supplements: Reducing Your Risk and Fighting Back.”
James Griffiths, Ph.D., is the senior vice president, international and scientific affairs, at the Council for Responsible Nutrition (CRN), a leading trade association for the dietary supplement and functional food industry.
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