Counterfeit phones and other electronics are now a $100 billion worldwide problem, second only to counterfeit pharmaceuticals, according to figures from the Alliance for Gray Market and Counterfeit Abatement.
No longer sold only in back alleys and out of car trunks, counterfeit electronics have hit the pages of eBay, Craigslist, Facebook and Twitter.
OpSec Security, a London-based firm that provides brand security to corporations, conducted a study around the launch of smartphones introduced between June 24 and Aug. 24 from major manufacturers such as Nokia, RIM, Apple, HTC, Samsung and Motorola. The firm found suspicious listings of four new smartphones prior to their official launch dates.
One seller offered 1,000 units per week at 65 percent below list price.
Once a manufacturer had announced a phone was out of stock, suspicious listings soared. For instance, 5,000 eBay listings were posted in the first two weeks following one phone's sold-out status, at markups ranging from 30 percent to 100 percent above the list price.
The study found that most questionable listings were from sellers located in China.
Most of China's knockoff electronics industry is based in Shenzhen, just north of Hong Kong.
Legitimate manufacturers making most of Apple's iPods, iPhones and iPads work in close proximity to the knockoff companies, which use look-alike cases with inferior electronics to produce their goods.
Hundreds of Chinese companies, some with no more than 10 employees, produce black market cell phones known as shanzhai for as little as $20 apiece.
While prices may be appealingly low on the Internet outside the manufacturers' and authorized retailers' channels, consumers may be buying an inferior product, one that is not covered when something goes wrong, and one that could pose a physical risk.
Reports of exploding phones due to counterfeit batteries have been confirmed in China, India and the U.S.
Last month, Asurion, a provider of refurbished cell phones through its insurance program, recalled 470,000 counterfeit BlackBerry batteries that it had installed in BlackBerry phones from March 2004 through October 2009 because of fire and burn threats cited by the U.S. Consumer Product Safety Commission.
Before you buy, consider these tips from Theresa Mock, vice president of marketing for OpSec Security, Inc., to help you spot a fake cell phone or other electronic device from the real thing:
Does it look real? Knowing the colors, features, and size of the smartphone can help eliminate the chances of purchasing a fake.
If the smartphone comes in a color that was not produced by the manufacturer or has not yet been released, this is a good indicator of a dubious product.
The weight of a fake smartphone also tends to be lighter than the genuine article.
Take a close look at the smartphone to check its features and dimensions. Counterfeit phones may have missing or additional features, or come bigger or smaller than an authentic device.
Is it a legitimate model? Counterfeiters may attempt to pass off a non-existent model number as an authentic product.
Check if the smartphone model is sold by the official manufacturer. If it does not exist on the manufacturer's catalog or website, it is a sure sign the phone is a fake.
Is the price too good to be true? Counterfeit smartphones may be sold for less -- sometimes for a third or half of the retail price. A smartphone sold at heavy discount is unlikely to be the real deal.
The best approach is to purchase in person when buying a smartphone.
Is there a warranty? All smartphone manufacturers provide a limited warranty that covers the product, accessories, and software.
Typically, a smartphone is covered for one year from date of purchase by the first consumer purchaser of the product.Authorized smartphone dealers may also offer an extended warranty.
When purchasing your smartphone, check that you are covered by warranty service.
How well does it work? You will know in due time whether you have purchased a fake smartphone.
Many knockoffs have slower processing speeds, lack features the authentic models possess, or may simply shut down after a few weeks of use. Knockoffs may be built on cheap chipsets or run on pirated operating systems.
If you've found that your phone is a fake, be sure to have your receipt and all proper documentation so you can offer evidence to the authorities.
This can help prevent the future sale of smartphones from unauthorized brick and mortar shops and online vendors.
Ogden-based TopTenREVIEWS.com guides consumers by comparing products in the world of technology, including electronics, software and Web services. Have a question for TopTenREVIEWS? E-mail Leslie Meredith at leslie@toptenreviews.com.
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