What We Know – And What We Don’t – About Counterfeit Goods And Small Parcels

Reprinted from the original post on the US Chamber of Commerce blog, Above the Fold, with permission.

By Kasie Brill, Senior Director of Brand Protection, Global Innovation Policy Center (GIPC); Executive Director, Global Brand Council

Cross-border e-commerce is growing exponentially. Consumers can purchase products from all over the world and have them delivered straight to their doors with just the click of a button.

In fact, the U.S. Postal Service’s (USPS) international small parcel business increased 232% from 2013 to 2017, when it received nearly half a billion packages.

Out of those half a billion packages, USPS only had critical safety information on 36% of them. In other words, millions of packages reached American consumers with little or no security screening at all. Though most of these packages contained exactly what the customer ordered, counterfeiters have discovered that small parcels are an easy means to distribute fake and often dangerous goods.

A mail crate sits in a package bin at the United States Postal Service in Washington, DC.

While private commercial carriers are required under the Trade Act of 2002 to provide Customs and Border Protection (CBP) with data on all packages before they are sent – including information on the sender, recipient, and contents – international mailers are exempt from the rule and can send packages through USPS without any accompanying data.

USPS, with the help of CBP, reviews all incoming parcels to the best of their ability, but without the relevant accompanying data, pinpointing suspicious packages is like finding a needle in a haystack. And because USPS is required to deliver each and every package it receives on a strict timetable, the risk of missing a suspicious package is compounded even further.

To international criminal counterfeiters, this is a ripe business opportunity. Rather than transporting counterfeits through large cargo shipments, criminals can look to small parcel mail.

In September 2017, the Food and Drug Administration partnered with Interpol in an effort to seize counterfeit narcotics and shut down websites that illegally sell controlled substances and deliver them to Americans though USPS. Five months later, the Senate Homeland Security Committee’s Permanent Subcommittee on Investigations released a bipartisan report that revealed how counterfeit traffickers in China use USPS to ship the illicit fentanyl fueling the current opioid epidemic. When Senate staffers posed as prospective customers, each of the six Chinese counterfeit traffickers who were contacted sought to ship their products as small parcels through USPS.

The problem isn’t limited to medicines. Each year, international counterfeiters ship more than $400 million worth of counterfeit goods to unsuspecting American consumers. Counterfeit brake pads for cars and airbags that fail; counterfeit batteries and chargers that melt and catch fire; and counterfeit clothing and toys that contain harmful chemicals are just a few examples of the dangerous counterfeit goods streaming into the U.S largely as direct-to-consumer small parcels.

The U.S. government has attempted to alleviate the problem. In a pilot program between USPS and CBP, USPS was able to intercept and provide to CBP 80% of packages law enforcement officials had targeted as suspicious. The CBP-USPS pilot program has been extended to all international shipping centers, and although expanding the somewhat successful program is a positive step, Congress must force a more fundamental restructuring of the treatment of small parcels delivered from abroad.

First, Congress must require nations shipping to the United States to collect and report electronic data. International post offices have a responsibility to alert USPS of illegal and dangerous goods.

Congress must also provide USPS and CBP with more resources to identify and intercept illegal and dangerous packages entering this country. Increased funding will allow USPS to capitalize on 21^st century technology, specifically more efficient, effective electronic small parcel screening.

As more and more Americans open their doors to receive small parcels, their doors also open to an increasing number of dangerous counterfeit goods. The business community, USPS, and CBP should work to find solutions together, because when it comes to counterfeits, what we don’t know can certainly hurt us.

Kasie Brill

Senior Director of Brand Protection, Global Innovation Policy Center (GIPC)
Executive Director, Global Brand Council

Brill is the senior director of brand protection for the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) and the Executive Director of the Global Brand Council.

Image Credits: Andrew Harrer/Bloomberg