Gray Market Distribution and Counterfeiting

Counterfeit, fake or knockoff products now account for 5% to 7% of world trade, according to the International Chamber of Commerce.

Today, counterfeiters can reach out to customers anyplace and anytime. Particularly at risk are goods in high demand, such as luxury items, pharmaceutical products, computers, and other high-ticket items.

The Gray Market’s Uncharted Territory

Illegitimate online product sales may take the form of a “gray market”. Through multiple schemes, products are sold by unauthorized partners, in non-standard or counterfeit form. Fake products with suspicious indicators, such as incorrect pricing and packaging, are increasingly available.

This gray market infringes on sales territories and can undermine licensed distribution channels. For example, products intended for institutional consumption can be broken up into individual packaging, and sold directly to consumers.

These unauthorized sales violate the terms of distribution agreements, cannibalize dealer sales, and expose the manufacturer to liability issues.

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