Businesses reliant on the global supply chain have to take on more responsibility in the fight against counterfeit merchandise, according to a new report released by the American National Standards Institute (ANSI).

"[P]rivate-sector entities should recognize that relying solely on law enforcement to solve their counterfeiting issues is a very poor strategy," the 29-page report stated (.pdf) [1]. "Organizations need to be proactive in developing an anti-counterfeiting strategy that includes law enforcement and legislation as just one critical component of their overall anti-counterfeiting efforts."

ANSI argues that businesses have to understand the inherent limitations of law enforcement in the battle against a crime with inherent jurisdictional problems. Counterfeiting is an international crime and U.S. businesses have to understand that their government's statutory authority ends at their national borders. Beyond that, ANSI says, government simply doesn't have the resources to handle a problem of such enormity.

"Fighting counterfeit products at ports of entry is—as most will acknowledge—a case of too few resources targeted far too late in the supply chain to make more than a dent in the problem," the report notes.

And the problem is enormous. According to ANSI, counterfeiting costs businesses $250 billion in losses that put 750,000 American jobs at risk each year, on top of the serious health and safety risks associated with counterfeit products like pharmaceuticals and eletronics.

“The rapid growth and sophisticated organization of counterfeiting operations is increasingly threatening legitimate business and the health and safety of millions of people,” said S. Joe Bhatia, ANSI president and CEO.

Rather than rely solely on law enforcement, ANSI recommends a four-pronged strategy that private-sector organizations can take to limit the amount of counterfeit products that end up in the consumer market.

The first prong, according to the voluntary standards body, are public-private partnerships, which are necessary, considering counterfeiting's global reach. In an appeal for collaboration, ANSI stresses that "shared discussions, best practices, standards, conformity assessment efforts, and initiatives among all stakeholders will lead to the best solutions."

Another effective means of fighting counterfeiting is widespread education. According to the report, there's a widespread public belief that counterfeiting is a victimless crime. ANSI recommends that supply chain stakeholders disabuse consumers on that notion, teaching them that the profits raised from counterfeiting have been used to perpetuate serious crimes, such as terrorism.

To help enforce counterfeiting laws, ANSI recommends that companies within the supply chain refuse to use, pay for, or return counterfeit products that arrive at their facilities. More importantly, companies should report any counterfeit part or product to law enforcement and also rely on certified, trusted suppliers for their parts and products.

While admitting standards can't end counterfeiting, ANSI believes they can help bolster company awareness and increase the adoption of check and balances to root out counterfeit parts and products throughout company supply chains. ANSI notes that SAE International has recently published guidelines to help companies and organizations detect counterfeit electronic parts. The standards, according to ANSI, have already been adopted by the U.S. Department of Defense and NASA.

The report and its recommendations were the product of a workshop and a conference held in 2010, which was attended by affected industry groups and policymakers.

♦ Screen shot of ANSI's "Best Practices in the Fight Against Global Counterfeiting"

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