Counterfeit IT products are a $1 billion-plus business. Initially counterfeit products were low cost, easily duplicated items, but the counterfeit producers have moved up the food chain. The sale of counterfeit products can go on for years, and most counterfeiters are not discovered until enough problems surface. Even the federal government has been duped.
Counterfeit products have experienced failures early in their lifespans. Some have caused fires and damaged other equipment. Some, as soon as they are installed, take themselves off the network. In one case, duplicate MAC addresses took down a user network.
Cisco, one of the vendors most frequently-targeted by counterfeiters, cannot warrant these devices. The counterfeit devices will probably not be serviceable nor will Cisco take back the counterfeit devices and provide a credit to the enterprise. The counterfeit distributor wins, and the enterprise and Cisco lose.
The Latest Cisco Case
The latest situation took place in Washington state. Connectzone.com, LLC, an electronics company, and its owner, Daniel Oberholtzer, were sentenced in July in U.S. District Court in Seattle for conspiracy to traffic in counterfeit goods. Daniel Oberholtzer was sentenced to 37 months in prison, and three years of supervised release. The company was sentenced to five years organizational probation and also ordered to forfeit $716,778.55 in proceeds from the crime.
The Cisco position on counterfeit goods was issued by Bruce Klein, VP of Federal Sales, and Phil Wright, Director, Brand Protection:
"As you may have read, the FBI has identified a number of unauthorized companies that have sold products with the Cisco trademark to various government agencies and other organizations. This is of major concern to us, and we wanted to take a moment to share the efforts we are taking to ensure only legitimate Cisco products end up in the hands of our loyal customers. Unfortunately, counterfeiting is not a new issue in the IT industry or indeed in any successful global enterprise.
"Because counterfeiting is a criminal activity, we work closely with law enforcement agencies worldwide whenever those agencies decide to take action against those who would profit by this illegal conduct," the statement continued. "Cisco has collaborated with the FBI and other Federal law enforcement, and we appreciate their hard work in this important area.
As for what customers can do, Cisco concluded, "We can't stress enough the importance to Cisco customers and channel partners of procuring equipment only from Cisco authorized channels."
However, working with an authorized dealer as recommended in the Cisco statement does NOT always assure the enterprise that there won't be any issues, as even authorized dealers have been accused in counterfeiting cases. Back in the summer of 2013, the owner of a Cisco reseller, Network Genesis, was charged with buying counterfeit or stolen products and passing them on to customers. Federal officials charged that the reseller altered the serial numbers to make them harder to trace.
Who to Deal with
There is no foolproof method to guarantee that you purchase quality equipment. One solution is to work with companies that are part of organizations like the United Network Equipment Dealer Association (UNEDA). UNEDA is an association of more than 300 marketers of pre-owned networking equipment. The members range from large to small companies with hundreds of employees, to local and regional entrepreneurial organizations. UNEDA members choose to adhere to a strict code of ethics that includes a policy against selling any equipment that is not legitimate.
Here are some other recommendations to follow:
• Don't be attracted by deeply discounted eBay equipment.
• Stay with your trusted reseller to buy critical network components.
• The safest bet for refurbished equipment is to purchase certified products through the manufacturer.
• Check the vendor serial numbers against the vendor's database.
• Inspect the packaging carefully. Look for anything out of the ordinary like the logo, size, and type of packaging materials by comparing them with others in the same shipment or that you already own.
• Examine the equipment and compare holograms and chip sets.
Previous blogs on counterfeiting include, Getting Tough on Counterfeit Parts, Clever Counterfeiting Continues, and ICT Knockoffs.
