Hey NY Times: Can You Back Up The Claim Of $200 Billion Lost To Counterfeiting?

from the and-you-want-people-to-pay-you? dept

It's getting really frustrating watching the supposedly professional press repeat stats that have been thoroughly debunked as if they're factual, so I think it's about time that people started calling out the publications and reporters who make these mistakes directly. So, Stephanie Clifford, reporter for the NY Times, can you give any evidence whatsoever to support the claim that you made in your article this past weekend that counterfeiting "costs American businesses an estimated $200 billion a year?" I don't think that Clifford can, because that number has been thoroughly debunked time and time again.

Back in 2007 we wrote about a study by the well-respected GAO which noted that industry claims on counterfeiting were massively overblown. The GAO looked at the actual data and found that, contrary to claims from the industry that 5 to 7% of world trade involves counterfeit materials, the research they've seen shows it happening in less than 1% of trade and the value of those goods was significantly lower. Of course, obviously, those trying to pass counterfeit goods across the border will do their best to hide it, the evidence of the supposed 5 to 7% is totally lacking.

Soon after that, we wrote about a similar OECD report that tried to look at how big an issue counterfeiting really was. After it was announced (before the actual report came out) that the OECD numbers were going to show that the $200 billion number was totally bogus, there was lots of talk of "pressure" being put on the OECD to still support the $200 billion number. Eventually, the actual report (pdf) came out, and the OECD hedged its bets by claiming that, even though the data didn't support it, counterfeiting could be a problem that cost up to $200 billion. Lots of weasel words. But since the data was actually there, some enterprising reporters, like Felix Salmon, actually looked at the details and found the real number appeared to be more like $5 billion. Still an issue, but hardly $200 billion. That link amusingly goes through the report to figure out how it came up with the "up to $200 billion" claim, and finds that the OECD, repeatedly basically says "well, this part seemed low, so we doubled it." And then they get to the next number and say "well, this seemed low, so we doubled it again." They end up doing that a bunch of times -- compounding the wild ass guess even further just to make the industry happy.

But where did that actual $200 billion number come from? Well, back in 2008, Julian Sanchez famously went to hunt down the origins of the claim, and found that it was always totally made up. Sanchez tries to track down where the number first came from, and finds it all dates back to a claim made in a 1993 Forbes article. That article claims counterfeiting is a $200 billion problem, but gives no citation or explanation, but that's the original citation if you trace back everyone else who's claiming $200 billion. It's just made up. From 20 years ago. And the NY Times is still relying on it despite all of the research debunking it?

And, of course, all of these numbers tend to come from the industry itself, who has every reason to make the numbers sound bigger than they really are. In fact, all of this ignores more recent studies that have shown the claim of "losses" from counterfeits almost certainly massively overstates the problem, because a significant number of the people who are buying counterfeit goods (1) know they're buying counterfeit goods and (2) at a later date, when they can afford it, often upgrade to the real version. In other words, the counterfeit isn't a "loss" at all, but a market entry point for those who never would have bought otherwise.

So, considering that we have two respected organizations (the GAO and the OECD) showing that the $200 billion number is massively exaggerated, followed by good reporters like Felix Salmon and Julian Sanchez pointing out the real number is much lower, and the basis for the $200 billion number is more or less made up... why is a respected publication like the NY Times still citing it as if it were factual? Of course, I don't mean to just pick on Stephanie Clifford or the NY Times, because plenty of reporters seem to repeat this number without thinking, but it's about time that people started calling them on it, and asking them to back it up with evidence or stop using it.

Filed Under: $200 billion, bogus numbers, counterfeiting, stephanie clifford

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  1. identicon
    Rick, 2 Aug 2010 @ 9:01pm

    Re: Re: Re: Re: Re: I'll call you out little mikee

    In the past you might have been right, Rolex quality was unsurpassed, but in modern times with modern equipment anyone with a reasonable background in engineering and a desire to take the time for quality a Rolex copy could be easily made that matched or exceeded their quality levels.
    If they are better, and aren't breaking anything other than trademark law, I don't see it as that big of a problem. While it sucks for Rolex, the justification of trademark for the government to concern itself with is consumer protection, and while there would be some issues, if consumers are better off with fake Rolexes, then the harm is pretty limited. It seems similar to how De Beers whines about synthetic diamonds that are actually better quality than real diamonds.

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