Counterfeit goods: A $461 billion problem

Most consumers may think of knockoff Louis Vuitton bags when they think of counterfeit goods. But the problem of fakes reaches far beyond counterfeit luxury handbags.

The trade in phony products is a growing problem and now amounts to as much as $461 billion, or more than the combined GDP of the Czech Republic and Ireland, according to a new report from the Organisation for Economic Cooperation and Development. When the OECD last looked at the counterfeit trade industry in 2008, the Paris-based think tank pegged its size at $200 billion.

The industry isn't only growing, but it's striking in a bewildering number of sectors, ranging from the pharmaceutical industry to toy manufacturers. Those fakes are frequently low quality and can lead to health and safety issues for consumers, the OECD warned. Countries and brands are also hurt due to the loss of taxes and sales.

"Today's report is a wake-up call for everyone," said Antonio Campinos, president of the European Union Intellectual Property Office, in a press conference to discuss the findings. "The figures are almost too large to comprehend."

Poor countries aren't the only destinations for counterfeit goods, given that a growing share is sent to developed countries, said OECD Deputy Secretary-General Doug Frantz. The counterfeit industry "is not the stuff of back alley garages," Frantz said. "This is manufactured in factories and shipped all over the world."

The country responsible for the biggest share of counterfeit production is China, the report found. Almost two-thirds of fake good originate there, far more than any other country linked to the practice. The second most common country of origin is Turkey, which the OECD said is responsible for 3.3 percent of counterfeits.

The top industries affected by fake goods are footwear, electrical machinery and equipment, followed by clothing, the report said.

Counterfeit medicine has become a serious problem in the U.S. and other countries. The Food and Drug Administration has warned medical professionals in recent years about a number of fake medications, ranging from Botox to a fraudulent cancer medication.