19% of mobile phones are fake, says OECD

Alan Burkitt-Gray
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OECD report says that trade in fakes across the ICT industry is worth $143bn a year, with China and Hong Kong being the main sources

Nearly a fifth of the world’s trade in mobile phones and accessories consists of fakes – and total annual fraud in information and communications technology is worth $143 billion.

China and Hong Kong are the biggest producers of fake goods, according to the Organization for Economic Cooperation and Development (OECD), but Germany, Sweden, Korea, Turkey and Canada are listed as the top five transit points, says the same OECD survey.

US companies “are hit the hardest by this trade in counterfeits, but those in other OECD countries are also strongly affected”, says the report, listing Finland, Japan, Korea and Germany. Almost 43% of all seized fake ICT goods infringe the intellectual property rights of US firms.

“Trade in fake ICT goods gives rise to significant challenges to effective governance, efficient business and the well-being of consumers,” says Rolf Alter, head of the OECD’s public governance and territorial development directorate, writing in the report.

The report, Trade in Counterfeit ICT Goods, is based on a global database of customs seizures provided by the World Customs Organization, using regional data from the US, the European Union and elsewhere.

It says almost one-quarter of video games trade was in counterfeit goods in 2013. This was followed by audio apparatus, such as headphones (19.4% of world trade were fake); mobile phones and their parts (18.8%); and memory cards and sticks, cards with magnetic stripe, and solid state drives (14.6%).

The OECD cites reports on the dangers of fake goods. One says that fake phones contain more lead and cadmium in both external and internal components than the genuine ones. Another warns of dangers to health and safety from fake iPhone adapters.

The power safety compliance firm, UL, tested 400 adapters with an overall failure rate of over 99%. “Only three adapters (1.3%) passed the basic safety tests, and were free from fire and shock hazards,” says the report. “Twelve adapters were so poorly designed and constructed that they posed a risk of lethal electrocution to the user.”