A recent study conducted by the EU’s Intellectual Property Office (EU IPO), said that 180 million fake mobile phones are sold globally per annum (www.euipo.europa.eu – "The Economic Cost of IPR Infringement in the Smartphones Sector"). Why are counterfeit mobile devices a concern for consumers and businesses?

The problem of counterfeiting is much wider than mobile phones. Counterfeit products raise a number of concerns for companies who believe their products are being copied, such a loss of consumer trust in their brand and loss of revenue. The following article gives an overview of some of the security and health problems caused by fake mobile devices. This is only one small aspect of the problems caused by counterfeiting which the ICC has said drains approximately $4.2 trillion dollars a year from the global economy. We work closely with brands and the authorities to help tackle the problem of counterfeit items and protect the interests of our clients.

Security and Health Risks

While software on authentic devices may be defective from time to time, manufacturers will often pre-install defective software on fake devices. The counterfeit device will generally appear normal for a number of weeks, before it reaches out to a "command-and-control" network to retrieve updated instructions which will cause the device to behave in a manner that is different from the authentic device. Another report for the EU IPO (March 2019) confirms the danger caused by malware to the consumers (www.euipo.europa.eu – "Trends in Trade in Counterfeit and Pirated Goods").

Even authentic devices can malfunction because of defective software. The risks of a malfunctioning device are even more acute in counterfeit devices where defective software and imitation parts may be used to create a cheaper product. On September 15, 2016 a leading mobile phone retailer recalled one of its flagship models after dozens of reports of overheating due to battery management system failures.

Below are some of the key security concerns relating to counterfeit electronic devices:

  • Malware: once activated, phones can download malware that has the potential to spread throughout various networks. This can lead to problems affecting other devices on the same network;
  • Ransomware: ransomware is a type of malicious software or malware, designed to deny access to an electronic system or data until a ransom is paid. This may be included on counterfeit devices and may travel between devices on a network causing broader contamination;
  • Keylogging: some devices log keystrokes to capture user names, passwords and any sensitive information that could be useful to criminals; and
  • Data Theft: personal or business data may be stolen given the low levels of security by design on counterfeit devices.

Conclusion

According to a WCO report, 2 out of the 3 most counterfeited brands worldwide are global technology companies who produce mobile devices as a key part of their product offering. Replica mobile devices pose security and health risks to the consumer as well as economic risks to the brand that is being counterfeited. There are a number of ways to spot a fake device, from assessing the packaging, the device's color, an incorrect hologram sticker or a fake IMEI (International Mobile Equipment Identity) number in the context of mobile devices. If you are unsure about the provenance of a device or are concerned that your brand is being counterfeited, we advise proactively seeking the advice of an expert in the area. We work closely with brands and the authorities to help reduce the damage done by counterfeit products and to reduce the impact they have on the global market. If you are concerned about counterfeit products or would like to know more about how we could help you, please get in touch with us.