Tuesday, 17 May 2016 13:24

Homeland Security Warns Body Shops to Look out for Counterfeit Parts

 Bruce Foucart

Bruce Foucart, director of the National Intellectual Property Rights Coordination Center for Homeland Security Investigations

With the number of OEM counterfeit parts cases on the rise, Autobody News talked to Bruce Foucart to learn more about where these parts are coming from and what collision repair shops should be aware of. Foucart is the director of the National Intellectual Property Rights Coordination Center for Homeland Security Investigations in Arlington, VA.

He has 30 years of experience as a leader and manager at both the headquarters and field activities of U.S. Immigration and Customs Enforcement and its predecessor agency, U.S. Customs Service.

Q: What types of counterfeit parts have you seen during your investigations?

A: What we have found is that every part that goes into a car, whether it is interior or exterior, it’s all being counterfeited now—smart keys, air bags, fuel filters, window shields and tires for example. Anything that they can counterfeit for profit, they will.

Q: Are you finding this is a growing trend and what is being done to combat these crimes?
A: The breadth of the problem was brought to our attention by the automobile industry. Individual auto makers came to us and said, “It’s a problem, they are counterfeiting our products.” They asked if we would shepherd them along to develop a coalition.

I’m happy to say that since then we assisted with organizing a coalition. They call themselves the Automobile Anti-Counterfeiting Coalition—the A2C2. It’s made up of almost every automobile manufacturer and they meet four times a year. We generally attend those meetings as well. They regularly provide intelligence and lead information to us. They’ve been very good partners. Last year alone based on our work with that coalition we opened up 35 cases. We had 12 criminal arrests, 16 indictments and 15 convictions. The 130 seizure incidents were worth an estimated $5.59 million MSRP.

Q: Where are the counterfeiters based?
A: What we have found is that 85-95 percent of all counterfeit goods are coming from China. They are either coming from China or transshiped to Hong Kong or to other countries. Just under 50 percent of counterfeit goods seized last year came directly from China. Just under 35 percent came from Hong Kong and five percent came from Singapore. We believe that all those goods are originating from China because Hong Kong and Singapore don’t have the manufacturing capabilities that China does, but the goods are transshipped through Hong Kong and Singapore where the manifest is being changed in order to trick U.S. customs.

I happened to be in China last September visiting with the Chamber of Commerce, various companies, embassies and Chinese law enforcement. There was a case where the Chinese Ministry of Public Security took down an operation involving counterfeiters in China who were selling counterfeit Ford brake pads and air bags.

Counterfeiting is a global issue. It’s very easy for the counterfeiters to start up websites and sell things online. The operators of some of these websites are to deceive the public. Sometimes the intent is to just sell to people who know they are going to get a counterfeit part, hoping that they believe the consumer feels the counterfeit part is doing their job. It varies who they target.

Potentially, criminals could be doing this until the automobile manufacturer serves a cease and desist order or civilly take these websites down. It’s a trademark violation to represent a counterfeit good as authentic on copyright-infringing websites. It’s so easy these days to start websites. They have very good webmasters who put these things together; they are very advanced. Sometimes a site is up for a month, and then it gets shut down and they are ready to go with another illicit website.

Q: What should collision repair shops be aware of in regards to counterfeit parts?
A: What we try to tell the consumer is to make sure they are buying OEM parts. If not, it should be from a reputable distributor that can be confirmed with the manufacturer. If there is a doubt, there should be a legitimate phone number to call. Go that extra mile when purchasing these parts for customers to ensure these are legitimate parts. A lot of it comes down to buyer beware. If it’s too good to be true, it usually is.

Q: What is the biggest concern in regards to counterfeit parts?
A: Certainly the consumers’ health and safety is at risk anytime they get into a car with a counterfeit part. We’ve seen counterfeit safety belts that weren’t secure and air bags that have exploded so dramatically they probably would have done harm had they gone off. Some of them even failed to deploy.

We actually investigated someone who was illegally smuggling counterfeit airbags into the United States. Along with the National Highway Transportation Safety board, we seized 10 of them. Eight failed to deploy and two would have deployed in a manner that would have harmed the consumer. Those are the kinds of things that keep me up at night. It’s the consumer’s health and safety, especially when you have family members and kids and everyone else getting into a vehicle with counterfeit brake pads. It’s maddening.

Q: Do any specific cases come to mind that you can share?
A: Two summers ago a couple of Canadian citizens were purchasing air bags from China and smuggling them into the United States. They thought they were being cute by driving them down from Canada into Northern WA; then they would mail them via US mail to repair shops. They did that because they thought they could disguise that they were coming from the United States versus coming from overseas. We arrested one as he was smuggling a batch coming in. It led to his brother being indicted. We shared the information with the Chinese Ministry of Public Security in Beijing and they shut down a manufacturing facility and made four or five arrests. They also seized the counterfeit air bags, and US and Chinese currency. It was an extremely successful operation.

Q: How should shops get in touch with you if they suspect they have accidentally purchased any counterfeit goods and want to report it?

A: They are absolutely welcome to contact us. We’ve heard from them in the past. We’re always open to sharing information with anyone about counterfeiting. We can certainly help them with supply chain issues when they are procuring items. We have a general procurement product that we can share as well as awareness training. It is called Acquisition Professional Training: Counterfeit Awareness, Mitigation, Identification and Reporting from the National Intellectual Property Rights Coordination Center.

For more information, visit www.iprcenter.gov or email iprcenter@dhs.gov

Awareness training document: https://www.iprcenter.gov/reports/training/Acquisition%20Professional%20Training%20revised%20for%20public%20use.pdf/view