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Election Vital to Halt Flood of Chinese Counterfeits

Election Vital to Halt Flood of Chinese Counterfeits
(Mnovelo | Dreamstime.com)

By Wednesday, 23 September 2020 10:01 AM Current | Bio | Archive

Counterfeit products from China – including rare and circulating U.S. coins – have been a continuing and growing problem.

On March 2, HR6058 (dubbed the “Shop Safe Act of 2020”) was introduced in the House of Representatives. It would amend the “Trademark Act of 1946” to give certain e-commerce platforms contributory liability when counterfeits are sold that pose a health risk to consumers.

The key phrase is “health risk,” which seems to shut coins out of the equation, even though some fake coins coming from China contain traces of cyanide, which could pose a significant health risk.

Going into March, this bill had bipartisan support in the House, being introduced by:

  • Doug Collins, R-GA, Ranking Member House Judiciary Committee
  • Hank Johnson, D-GA, Chairman Subcommittee on Courts, Intellectual Property and the Internet
  • Jerrold Nadler, D-NY, Chairman House Judiciary Committee
  • Martha Roby, R-AL, Ranking Member of the Subcommittee on Courts, Intellectual Property and the Internet

While the media has been focused on the coronavirus pandemic and urban riots, we have seen an increase in cybercrime and counterfeiting in many brands and products over the last few months.

This may put added pressure on lawmakers to move on a version of this bill when pandemic and election concerns lift, probably in early 2021.

To date, e-commerce platforms would only be liable under this bill if a counterfeit product posed a health risk, which is short-sighted, I’d say.

Counterfeit products can rob Americans of their life savings, which is an indirect health risk, or they can cause machinery to malfunction at high speed, which can cause sudden death.

The FAA estimates 520,000 counterfeit or unapproved parts are installed in aircraft each year, and U.S. military aircraft are reportedly riddled with counterfeit parts, of which nearly 70% come from China.

Interpol states on its website that there is a clear link between the illicit trade of fake or pirated goods and other crimes, including human trafficking, drug trafficking and money laundering.

For our purposes, we leaders in the numismatic community will work hard to see that this bill is modified and reintroduced in 2021 so that it would cover counterfeit coins, most of which are made and delivered from China. Specifically, we would like to see it contain a reference to the Hobby Protection Act, as amended in 2014, to cover counterfeit coins.

Beyond that, however, I believe it should cover all counterfeit products, which are almost unbelievably common. In February, the Canadian Broadcasting Company bought a random sample of dozens of products from common online platforms like Wish, AliExpress, Amazon, eBay and Walmart.

They found counterfeits on all of these platforms, and over half of the products they bought were fake.

Some of the health dangers included alarming amounts of heavy metals in health and beauty products. One lipstick had 751 times the amount of lead that Health Canada considered acceptable for cosmetics. As scientists have shown, lead affects one’s cognitive ability and it is especially dangerous for children.

These Chinese counterfeit problems have been sporadically covered in the national press.

Two examples:

  • According to Forbes in 2018, counterfeiting is the largest criminal enterprise in the world. It is expected to grow to $2.8 trillion by 2022, costing 5.4 million American jobs.
  • In an interview for CBS MoneyWatch titled “China’s Latest Export Boom: Fake Gold Coins,” Kathy Kristoff interviewed experts, including me, on the proliferation of Chinese made counterfeit coins being sold on the internet.

It is well known that the Chinese Internet sales platform “Wish” is rife with counterfeits, yet the Los Angeles Lakers accepted $36 million (less than LeBron James’ annual salary) to adorn the Lakers uniform with a large “Wish” logo for a three-year period. This comes from a league that seemingly discourages players or executives from criticizing Chinese business and labor practices or taking a stand against China’s authoritarian acts to usurp a democratic Hong Kong with its repressive and violent tactics.

It's a concern shared by Lorrie Turner, legal counsel and senior vice president of brand protection for headwear brand New Era Cap Co.

“All of that money is used illegitimately to support other criminal activity,” she said. “While you may think it’s just an individual trying to earn money, ultimately all of that money goes toward nefarious things.”

Are you listening, LeBron James – and Lakers and NBA fans?

Another example is Disney, which says they may pull out of making films in Georgia if that state passes an anti-abortion bill, the Heartbeat Bill, which would forbid terminating a pregnancy when a heartbeat is detected in the new life, yet Disney recently released their new live-action blockbuster film, “Mulan,” filmed in the far-Western Xinjiang region of China, where the government is accused of human rights violations against Muslim minorities, including the Uighurs, who have been locked up and subjected to forced sterilization and abortions, yet Disney’s closing credits thanked the Xinjiang propaganda arm.

Are you listening, Disney film fans?

My associate Jerry Jordan ordered numerous coins and bars from the WISH platform over the past year. Thankfully, they were very cheap, but they were all obvious fakes from Chinese vendors, and all were delivered by the U.S. Postal Service.

Out of many test orders, here are several examples.

  • There was a “Credit Suisse 1-ounce Gold Bar” costing $2 plus $3 shipping. It would have been worth $1,500 when he ordered it and nearly $2,000 today, but it is essentially worthless because it was fake.
  • He also ordered an 1899 “Queen Morgan Silver Dolar” (sic) – that would have graded XF (Extra Fine) and been worth $140 – for just $3.89 shipping. The counterfeit coin was listed at no charge.
  • One of the other coins he ordered was a 1935 Connecticut Commemorative silver half-dollar, which would have probably graded XF and been valued at $170 – if it were real – but not only was it a fake, it wasn’t even made of silver, so it’s worthless.
  • Then, he ordered a gold coin that would have been worth $5 million if it were genuine – a 1933 St. Gaudens Double Eagle – but it sold for $1.83 plus $2.00 shipping, so you can’t fault them for greed.

They chose some extremely valuable coins and then sold the knockoffs for a ridiculously low price. But none of these fake coins had the word “COPY” stamped on them, as is required by the updated 2014 United States Hobby Protection Law for counterfeits. I helped pass this law with the support and assistance from former Louisiana Congressman Jimmy Hayes.

In 2021, we in the numismatic community will support an extension of anti-counterfeiting laws to include rare and circulating coins, and I hope to, once again, be a voice, along with other industry leaders, in its drafting.

So which president would be more likely to better represent our country’s interests when dealing with China and protecting us from China’s proliferation and distribution of counterfeit goods, including coins and paper money, and on important human rights issues.

Texas Senator Ted Cruz weighed in recently on Fox saying, “Trump significantly stood vigorously up to China … Joe Biden spent 47 years kissing up to China.” Cruz also said: “Nancy Pelosi said China wants Joe Biden to win.”

But, the Wall Street Journal noted in a front-page headline on September 11, 2020, “Biden’s Pledge on China Looks a Lot Like Trump's” and “Democrat Nominee is Set to Continue U.S.’s Hard Line If Elected.”

Kurt Campbell, the top Asia official in the Obama-Biden State Department and now a senior adviser to the Biden campaign, was quoted in the same Journal article: “I think there is a broad recognition in the Democratic Party that Trump was largely accurate in diagnosing China’s predatory practices.” So, it seems Biden is finally now following Trump’s lead in his position on China’s predatory practices.

But on one human-rights issue, Joe Biden said in 2011 that he “fully understands” China’s one-child policy and “I’m not going to second-guess.”

Mitt Romney responded: “China’s one-child policy is gruesome and barbaric. Vice President Biden’s acquiescence to such a policy should shock the conscience of every American. There can be no defense of a government that engages in compulsory sterilization and forced abortions in the name of population control!”

I hope someone in the media asks the presidential candidates about these important human-rights and counterfeiting issues.

Maybe LeBron James, the NBA and others could also take note of these important issues we face when dealing with China.

Mike Fuljenz taught classes on grading and counterfeit coin detection for over 20 years. He has also assisted the Texas Attorney General with drafting consumer alerts on coins and on counterfeits. He has lectured and conducted training for law enforcement with the Numismatic Crime Information Center. He has been a member of the National Anti-Counterfeiting Task Force, as well as assisting the Federal Trade Commission with their consumer alerts on coins.

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Counterfeit products from China – including rare and circulating U.S. coins – have been a continuing and growing problem.
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Wednesday, 23 September 2020 10:01 AM
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