The Cost of Counterfeits? GAO Doesn't Know

It took an act of Congress, a year and a half, who knows how many taxpayer dollars, and a 41-page report, but the results are finally in:  The U.S. government is clueless.

About the cost of counterfeits, that is.  

(Of course, Counterfeit Chic could have told you that years ago -- and come to think of it, actually did.) 

shrug.jpgAmong those who concern themselves with all things counterfeit, it's been an open secret for some time:  Despite the massive numbers thrown around, nobody really knows how large the counterfeit trade is in monetary terms, or the extent to which it affects the targeted industries or the national economy as a whole.  The number most frequently thrown around is $200 billion, the amount of money that U.S. businesses allegedly lose to counterfeiting each year.  But when the the U.S. Government Accountability Office tried to trace this number back to its source, it turns out that there is no source.

Perhaps the most remarkable thing about the GAO's report is that the agency doesn't have any plans to actually try and come up with a number.  A big part of the problem is that the whole point of illicit trade is NOT to be detected and counted.  The other major part of the problem is that experts can't agree on a methodology for evaluating the various harms -- and even potential offsetting benefits -- attributable to counterfeit goods.  There's even a certain amount of disagreement as to what those harms and/or benefits are.  

Of course, there are a few statistics thrown in as consolation prizes for disappointed numerophiles.  There are a lot of fakes out there; over the past 6 years, U.S. law enforcement has seized $1.1 billion worth of counterfeit goods.  57% of the goods seized over that period have been apparel, footwear, and handbags.  China and Hong Kong combined have accounted for about 84% of the value of these items.

At the end of the day, however, the GAO not only couldn't put a real number on the fakes' effect, but also concluded that it had been asked to perform an impossible task.  Maybe the agency will have better luck with next season's snipe hunt.

Related post:  One, Two, Three, Many