A Summary of Counterfeit Avoidance: Development & Impact

Consumers are accustomed to finding China Compulsory Certification (CCC) or CE (European Conformity) markings on products. These markings provide a level of confidence that products displaying them meet certain industry standards; inspection and tests were performed to determine whether they met prescribed standards. Consumers might be surprised, however, to learn of a gaping hole when it comes to counterfeit components or knock-offs. Regardless of the markings displayed, these items aren’t covered.

For the average person, it’s difficult to determine if a product is authentic or bogus. Price alone isn’t a reliable indicator any longer because counterfeiters of luxury items have discovered that selecting a slightly discounted price, still better than an outlet store, will entice more people to buy their merchandise than a heavily discounted price. The thinking behind this logic may be that such a huge discount only serves to reveal the item as counterfeit.

Recently in the United States, a series of counterfeit avoidance measures to identify counterfeits, mitigate their impact, monitor their presence and design standards to prevent their infiltration were adopted by the Department of Defense (DoD). These standards, AS6081 and AS55553, compliment quality management programs already an essential part of the manufacturing, assembly and distribution processes. Although the implementation of counterfeit avoidance regulations improves efforts made against this rapidly growing epidemic, mitigation of this issue still remains in its infancy.

Roots of a Trillion-Dollar Problem

The International Chamber of Commerce estimates the total global value of counterfeit and pirated products could reach a $1.7 trillion by the year 2015. To help put this figure into perspective, the proposed DoD budget for 2015 is $495.6 billion. A $1.1 trillion spending bill recently passed by Congress further demonstrates the potential impact counterfeits represent.

Money from counterfeit sales fund criminal activities, terrorist organizations and destroys U.S. jobs; these are just a few examples of the impact. As Chairman of the United Sates National Committee/International Electro-technical Commission (USNC/ICEQ) and Secure Components CEO, I’ve worked with groups of individuals and organizations to safeguard not only U.S. consumers, but consumers worldwide. Although these efforts are growing every day, at the core of this community are people who’ve been in this scuffle from the beginning and continue to work diligently toward its eradication. Like so many now common commercial applications, these efforts can be traced back to the military complex. Recognizing the growing presence of counterfeit components in U.S. systems, tracking failures to substandard parts and the opportunity older systems presented, the government examined this silent menace to gauge its depth in the supply chain. The results were staggering. Afterward, discussions with industry leaders sought to develop an outline of how best to prevent the flow of suspect components into the supply chain. One of the items that came to light was the inadvertent impact toward fostering counterfeiting that the Federal Acquisition Streamlining Act (FASA)[3] contributed to fraudulent component growth in avionics defense high-reliability products (ADHP) by permitting the use of commercially available items for designated tasks performed. Another admirable intent of FASA was to reduce program costs inherently imposed as a result of U.S. Military-standard (Mil-Std) requirements.

Under the Mil-Std protocol, additional parts and processes were needed to satisfy inspection, testing and other sampling by third-party organizations creating an additional layer within the supply chain and increasing the cost of required parts. MIL-STDs tended to lag behind continuously evolving technology, preventing their use on government contracts. This was changed to allow comparable, commercial parts to be acquired for military systems. By default, this attribute opened the door to anyone with access to the consumer market or an abundance of discarded parts. Counterfeiters quickly seized upon new market segments.

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Editor's Note: This article originally appeared in the March issue of SMT Magazine.

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2015

A Summary of Counterfeit Avoidance: Development & Impact

04-15-2015

Although counterfeit components and substandard products get plenty of attention in military, aerospace and medical fields due to their costly impact in human life, it’s important to point out the severe impact substandard parts and assemblies play in everyone’s life. Safeguards are in place to filter counterfeit products, but there remains a great deal of work to fully mitigate this threat.

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Kramer on Counterfeits: Bad Customers

01-06-2015

Columnist Todd Kramer writes, "When cost and schedule are allowed to supersede quality and safety like a carrot on a stick, a mentality is nurtured that induces latent defects. Cheap parts are hard to resist, but it's these fakes that risk human life and critical systems."

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2014

Counterfeit Electronic Parts Avoidance - Profitability or Catastrophe

12-23-2014

Sweeping changes in the way your business must handle the counterfeit parts threat are here and will soon affect every sector of the world-wide electronics market: Government, commercial, and consumer. Whether you survive and profit or fail and perish will largely depend on the decisions your business makes today to adapt to these new developments.

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Kramer on Counterfeits: Counterfeit Electronic Parts Avoidance - Profitability or Catastrophe

11-12-2014

Sweeping changes in the way your business must handle the counterfeit parts threat are here and will soon affect every sector of the world-wide electronics market: Government, commercial, and consumer. Whether you survive and profit or fail and perish will largely depend on the decisions your business makes today to adapt to these new developments.

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U.S. Military Tools to Prevent Counterfeit Electronics

10-14-2014

By now, it should come as no surprise to those who are involved in electronics procurement that the industry is facing an epidemic of counterfeit parts. To stem the tide of fake electronics, both private and military supply chains are taking action through the implementation of new authentication and testing programs

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U.S. Military Tools to Prevent Counterfeit Electronics

10-14-2014

By now, it should come as no surprise to those who are involved in electronics procurement that the industry is facing an epidemic of counterfeit parts. To stem the tide of fake electronics, both private and military supply chains are taking action through the implementation of new authentication and testing programs.

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DFARS Flow Downs and Trusted Suppliers

08-26-2014

Ultimately, while the DoD is still noncommittal on what is, clearly, a key tenet of its own requirement that prime defense contractors use "trusted suppliers," it does at least present an update to this definition that requires the implementation of a counterfeit avoidance plan for parts that are not purchased from an OEM or authorized distributor.

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Kramer on Counterfeits: DFARS Flow Downs and Trusted Suppliers

08-12-2014

Ultimately, while the DoD is still noncommittal on what is, clearly, a key tenet of its own requirement that prime defense contractors use "trusted suppliers," it does at least present an update to this definition that requires the implementation of a counterfeit avoidance plan for parts that are not purchased from an OEM or authorized distributor.

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Testing Requirements for Components from Unauthorized Sources

07-21-2014

While no level of testing can guarantee a part is authentic, fully functional, and is not a used or cloned part, showing supplier due diligence is vital when product not procured from an authorized source is used. In some environments it is required. This article demonstrates the importance of proper testing and how to determine the ideal quality and degree of testing that should be performed.

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Kramer on Counterfeits: Testing Requirements for Components from Unauthorized Sources

07-01-2014

While no level of testing can guarantee a part is authentic, fully functional, and is not a used or cloned part, showing supplier due diligence is vital when product not procured from an authorized source is used. In some environments it is required. This article demonstrates the importance of proper testing and how to determine the ideal quality and degree of testing that should be performed.

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Investigations, Evidence, and an Unclear Solution

06-17-2014

In November of 2011, when the United States government publicly got involved in attempting to curb the epidemic of counterfeits in the supply chain, it was a little too late. The Senate Arms Services Committee, led by Senators John McCain and Carl Levin, gave Americans their first glimpse into the catastrophic dangers that our Department of Defense and the aerospace community was facing.

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Independent Distributor - Supply Chain's Best Friend or Worst Enemy?

05-28-2014

Columnist Todd Kramer writes, "As independent electronics distributors come under increased scrutiny, I am often asked about the changes I have seen since my early days in the industry. Generally speaking, the loudest voice against independent distributors comes--as it always has--from the powerful presence of authorized distributors."

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