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Your Cyber Monday Shopping Could Send Cash to Criminal Cartels

Americans shopping online spent nearly $10 billion on Black Friday and are expected to spend a record $12 billion on Cyber Monday. Unfortunately, law enforcement experts say, too much of that holiday cash will go to criminal cartels — the same ones responsible for drug smuggling and smash-and-grab robberies across the U.S.

How? Thanks to the massive amount of illicit, stolen, and counterfeit consumer goods being sold to Americans, mostly via online shopping.

“The harsh reality is Santa is not the only one handing out toys this season,” said Alysa Erichs with United to Safeguard America from Illegal Trade (USA-IT). “Black market criminals have exploited the boom in online shopping by misleading consumers into buying stolen and counterfeit goods, many of which threaten the economy and our nation.”

Erichs, a former Acting Executive Associate Director of Homeland Security Investigations, made her remarks at a recent press event featuring members of law enforcement and America’s retail sector. They all had the same message: Shopping for deals online could mean sending money to criminal gangs.

Michael Ball with Homeland Security Investigations told reporters the largest counterfeit bust in U.S. history had just happened two weeks earlier. The Department of Justice announced the “seizures of approximately 219,000 counterfeit bags, clothes, shoes, and other luxury products with a total estimated manufacturer’s suggested retail price (‘MSRP’) of approximately $1.03 billion.”

Ball presented a display of seized counterfeit goods ranging from high-end electronics like iPhones to toys and luxury retail items, including Louis Vitton handbags. One popular item is a hoverboard built with batteries that “tended to burst into flame,” Ball said.

Jennifer Hanks, director of brand protection for the American Apparel & Footwear Association (AAFA), also highlighted the dangers consumers face from fake goods.

Authorities recently seized a shipment of children’s sleepwear marked as flame retardant but was not. And she noted a recent study that tested 47 counterfeit products. Of those, 17 were found to have dangerous levels of lead, arsenic, or other substances, she said.

And, Hanks added, counterfeit product and organized retail crime cost real Americans their jobs. The fakers destroyed over 300,000 U.S. jobs in various industries, such as toys, water filters, pharmaceuticals, personal care products, and car parts.

“If it can be made, it can be counterfeited,” she said.

Some of those job losses have been felt here in the Keystone State. The Pennsylvania Manufacturers’ Association is a member of USA-IT, and PMA President and CEO David N. Taylor told DVJournal counterfeits are part of the “ongoing economic warfare” being waged by the Chinese communist government against U.S. businesses and workers.

More than 75 percent of the value of counterfeit and pirated goods seized in the U.S. originate in China and Hong Kong, and online Chinese sellers often rely on Mexican drug cartels to skirt U.S. Customs and import lethal goods like fentanyl and fake pharmaceuticals, according to USA-IT.

“This is something that’s systematically bigger than any one company,” said Taylor. “We need a whole of government response.”

The counterfeiting taking place is “systematic and unrelenting,” Taylor added. “The problem is out of control.”

The impact of organized retail theft is being felt by shoppers in cities like Philadelphia, which has seen stores close across the city over the past two years. In September, The  Wall Street Journal reported retail theft in Philly increased by more than 30 percent compared to a year earlier. Some of the same goods being stolen in smash-and-grab robberies that make the nightly news also make their way to holiday shoppers, often via the internet.

Ball said the organized gangs grabbing armloads are luxury goods and high-end clothes aren’t shopping for their girlfriends. “It’s being resold to criminal organizations to fund organized crime,” he said. “That’s what’s happening.”

“People are being duped to be part of organized crime,” he said. “You’re giving hundreds and thousands of dollars to people who are flooding guns and drugs onto your streets. It’s one of the most foolish things you can possibly think of.”

Ball said counterfeit goods affect the economy and consumers who purchase them.

“It’s crucial that we all remain vigilant about the dangers posed by counterfeit goods,” said Ball. “If it sounds too good to be true, it probably is.”

STEIN: As Holidays Approach, Dangers Lurk For Online Shoppers

“Buyer beware,” the old saying reminds us. It is advice everyone shopping for Christmas gifts on the internet should take to heart.

Including me.

I’m a shoe aficionado. A few months ago, I bought an adorable pair from a Facebook ad that advertised them as a name brand. When delivered, the shoes were too small and not well-made. With no return address and Chinese characters on the invoice, one did not have to be a detective to realize this footwear was a Chinese knockoff. An email to the website that sold it bounced back.

Jennifer Hanks tells Delaware Valley Journal my experience was hardly unique.

Hanks, director of brand protection with the American Apparel and Footwear Association (AAFA), said thousands of consumers are falling for these counterfeit product pitches. She spoke to us during a national conference on counterfeiting and the sale of illicit goods in Washington, D.C., hosted by United to Safeguard America from Illegal Trade (USA-IT), a private-public partnership to fight the problem.

There is a “destructive value chain across commerce,” she said. “It’s the fraudulent advertising that is posted on social media. The dupe social influencers are adding hidden links that take consumers offline to fake websites.”

And many times, money from counterfeit goods is not just going to a bogus manufacturer. According to USA-IT spokesperson Alysa Erichs, formerly acting assistant director with Homeland Security, money from fake goods may be funding human traffickers, drug smugglers, and even terrorists.

Years ago, people bought counterfeit items from a physical location. And that pathway to dupe unwary consumers continues. Recently, an Upper Dublin man was convicted in federal court of selling fake Rolex watches from the Philadelphia jewelry store he owned.

But now, the internet brings them into your home while you peruse them in your pajamas, adding more opportunities for crooks to fleece buyers.

“The internet is obviously the vehicle to shop for legitimate products, and it’s being flooded with illegitimate products,” she said.  “While people may think, ‘What’s the harm?’ that they’re getting a bargain, they don’t understand what is happening down the road.”

“So, if you multiply that one click by how many people are purchasing and the money made from the product and where that money is going, it’s not your onesie, twosies. It’s going to an organization, an organization that is, in some cases, sophisticated enough to manufacture a product and have it shipped into this country. This is not your next-door neighbor who is putting a bag together in his basement. This is full production.”

“It’s a $2.2 trillion problem,” she added. The money in counterfeit goods trumps the illegal narcotics trade. “And there’s less risk” for the bad guys.

While getting ripped off is frustrating, even more worrisome is the items could very well be manufactured with poisons like arsenic and lead.

Hanks says an AAFA study released in March found 17 out of 47 products tested contained dangerous components.

“I put the shoes on my kindergartener. My kid goes to school,” she said. “The Halloween costumes that we just packed away in October. It’s these things that everyday items that we, as consumers, buy constantly. And busy families are turning to e-commerce because it’s reliable, it’s easy.”

“Arsenic is one of 10 chemicals that are a major health concern, according to the World Health Organization,” said Hanks. “Lead can cause serious harm to a child’s health, with well-documented adverse effects.”

And there is another unpleasant surprise that could wind up in your Christmas stocking: Stolen goods. Some of what is being sold online is not counterfeit but stolen from stores and resold. In fact, the demand is so high, it is driving part of the surge in the high-profile “smash-and-grab” robberies of major retail outlets you have seen on TV.

“These folks that are being smuggled across the southwest border are agreeing to be boosters (thieves) because they make their money (to pay back coyotes) so much quicker,” said Erichs.  “Maybe they have a list of things to steal. Maybe they have a booster bag. Or a booster skirt.”

Or some gangs use juveniles, literally giving them a list of items to shoplift to meet online sales demand.

Why should we bargain-hunting Christmas shoppers care?

“It matters in several different ways,” she said. “It impacts businesses and communities. There’s health and safety.”  And criminal websites can steal your identity or reuse your credit card number.

What can a consumer do to be sure they are not buying stolen or counterfeit items?

If an item is more than 20 percent less than the retail price, it’s probably bogus.

Look at the website’s ratings and its appearance. Are there misspellings? Logos that don’t quite match the company’s?

Know who the seller is and check their reviews. If there is a street address, you can go to Google maps and see a street view of the business. Pay with your credit card, not a debit card linked to your bank account. Make sure you are paying on a secure site. It should read “https” with the “s” for secure, Erichs said.

And make sure your device is updated, so it has the latest software safety patches.

One way to shop safely, says Hanks, is to go to the retailer’s own website and buy direct.

Erichs, knowing what she does about online theft, said she is going old-school. “I stick with the brick and mortar.”

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