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Reporter's Notebook: On the Hunt for Counterfeiters

Genuine and counterfeit Viagra displayed at The Counterfeit Museum in Paris, France.
Yves Forestier | Getty Images
Genuine and counterfeit Viagra displayed at The Counterfeit Museum in Paris, France.

Exploring the world of counterfeiting was an eye-opener in ways I never expected.

When our producers and I started investigating the longtime threat of counterfeits, I expected the problem, while growing, was probably confined to the world of fake purses and watches—goods that are cheap and easy to reproduce and sell on a retail level.

Boy, was I wrong.

The trend of counterfeitinggoes far beyond that, from consumer products like baby formula and prescription medicine to industrial products like military components.

The sophistication of the crime is almost mind-boggling. Where would one even begin to go about copying a complex chemical compound like, say, cough syrup? It seems beyond the reach of the common criminal.

And yet, counterfeiters have figured out not only how to make a product that looks like cough syrup; they're sophisticated enough to make cough syrup that actually delivers some relief— just enough so customers keep coming back for more.

Of course, these products are made without any of the safeguards that protect consumers in regulated markets around the world.

Counterfeit cigarettes have been known to contain insect eggs. Fake prescription medicines can be made in environments that are unclean or germ-ridden.

That's where the real risks to consumers come in: Counterfeiters have no regard for the well-being of their customers. Experts will tell you they are simply in it for the profit.

X-Ray Eyes on Imports

What I found encouraging, in the course of reporting this story, is the degree to which law enforcement is taking it seriously. U.S. Customs and Border Protection watch our nation's ports like a hawk, screening virtually every shipping container that comes into the country with x-rays.

The goods they seize are a testament to the work they do. Stacks and stacks of counterfeit products are catalogued and piled in warehouses around the country. If all of these shelves—two and a half stories high—are packed with fakes, what does that say about how much product is still out there?

That's the challenge for policymakers and the nation's police—making sure the committment to track down conterfeiters doesn't fall short, because the criminals aren't slowing down on their own. If anything, they've been emboldened by the new frontier of product lines that they believe they can exploit.

One Company's Fight Against Fakes

Finally, I was impressed with the way corporate America is tackling the problem on their own.

As part of our reporting, we went to shoemaker New Balance, based outside Boston, and talked to them about their efforts to stem the tide of counterfeit products. New Balance spends $2 million a year on detecting, chasing and prosecuting counterfeit operations.

The company likes to say they have a "zero-tolerance policy" on the issue—and it comes after years of fighting counterfeiters so determined that they copied New Balance's shoes, logos, marketing materials, catalogs, even their company name.

Tackling the issue on their own is the way this problem may have to be fought in the years to come. No one knows their markets the way companies do, and no one has a greater interest in seeing counterfeiters stopped dead in their tracks.

Watch the premiere of "Crime, Inc: Counterfeit Goods," a CNBC special presentation hosted by Carl Quintanilla, Wednesday July 14 at 9pm ET.

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  • Carl Quintanilla is an Emmy-winning reporter and co-anchor of CNBC's "Squawk on the Street," broadcast live from the NYSE.