The Expenses of Counterfeit Money

Posted December 12 2013

 The ramifications of counterfeiting are enormous. Both economically and sociologically, counterfeiting affects us all. A worldwide phenomenon, this insidious practice results in death, loss of jobs, loss of tax revenue, loss of money, and decrease in social services.

U.S. businesses lose $250 billion a year and 750,000 Americans lose their jobs. This is a result of counterfeiters putting retailers out of business. They cannot compete with the reduced prices of counterfeit goods. The Business Software Alliance, for example, calculates the expense of software piracy alone to be about $12 billion a year. Closely related to software piracy, is CD and DVD piracy in the entertainment industry. CD piracy since the 90s has driven sales down to such a degree that record executives claim the music industry is on “life support.” The closing of major record labels and loss of jobs also attests to this fact.

Perhaps, the most alarming relationship is that between counterfeiting and terrorism. For example, on February 28, 2003, Mohamad Hammoud was sentenced to 155 years in jail for a cigarette smuggling operation that channeled money to the mid-Eastern terrorist organization Hezbollah. In addition, Al Qaeda has been linked to the selling of counterfeit goods. Shipments of counterfeit shampoos, creams and colognes bound to the U.K. from Denmark earmarked the sender as a member of Al Qaeda.

Returning to the economic effects of counterfeiting, consider the following facts:

  • $600 billion sales of counterfeit products worldwide
  • $23 billion of annual sales in counterfeit products in New York City.
  • $1 billion yearly loss in tax revenues in New York City due to counterfeiting.
  • 550,000 counterfeit watches reportedly taken by Cartier in a raid in Chinatown
  • 7% of all world trade consists of counterfeit goods.

It can thus be seen that the political, economic and sociological effects of counterfeiting are mind-boggling. The International Anticounterfeiting Coalition in Washington, D.C. is one organization that has been established to solve the problem. For more information, read their Facts on Fakes, a detailed report documenting specific incidents of international and domestic counterfeiting.(www.iacc.org) Alex Reichmann