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Buyers beware! Counterfeiters trying to cash in on Valentine’s Day

Americans are expected to spend $18.2 billion on Valentine's Day, according to the National Retail Federation. Unfortunately, some of that amount may be diverted by counterfeiters attempting to cash in on that with phony goods.

"Valentine's Day is coming up. So you'll see an uptick in counterfeit colognes, perfumes cause those are common gifts," said Jason Molina, an assistant special agent in charge of Homeland Security Investigation's New York field office.

Counterfeit goods are estimated to bring in $600-$700 billion a year worldwide, according to Molina—and that figure is growing. In fiscal year 2016, the Department of Homeland Security counterfeit good seizures were up 9 percent over the comparable year-ago period.

Not only is that money diverted from legitimate business, it can also fund other illicit activities.

"Billions of dollars that are made from these items can go to fund terrorist organizations and go fund other criminal elements throughout the world," said Molina.

Agents and investigators from Customs and Border Protection (CBP) and the Department of Homeland Security are on the front lines of trying to stop the phony goods from entering the country.

It's the proverbial needle in the haystack, as eleven million shipping containers—each with as many as 2,000 boxes—enter the U.S. annually through various ports.

Government agents inspect a shipment from China
CNBC
Government agents inspect a shipment from China

Recently, CNBC was on site when investigators examined a shipment entering a port in the Metropolitan New York-New Jersey. The entire shipment was believed to contain counterfeit perfumes, tucked away in just one of 3,000 containers that arrive at this hub daily.

With so many containers arriving each day, investigators say it's impossible to check each one. If CPB attempted to check every shipment, they say it could potentially grind economic activity to a halt. The Bureau of Transportation Statistics estimates that total North American freight activity is worth billions a year.

"We want to try to facilitate the legitimate cargo from coming into the country, and concentrate on the small percentage of volatile merchandise," said Al D'Onofrio, a CPB inspections chief.

Agents rely on what they call a risk based approach, checking the containers they think could be the most dangerous. One way to filter shipments is by manifests, which are filed before the containers arrive.

A government agent inspecting a shipment finds a bottle of what is believed to be counterfeit Chanel perfume.
CNBC
A government agent inspecting a shipment finds a bottle of what is believed to be counterfeit Chanel perfume.

When the perfume shipment was opened, agents found bottles of Versace, Chanel, and Juicy Couture perfumes.

"The labeling is telling me it's from France, but yet it's coming from China, clear indication that this is going be counterfeit merchandise," said D'Onofrio.

Approximately 88 percent of counterfeit goods come in from China or Hong Kong, according to Homeland Security's Molina. Meanwhile, those phony scents may contain dangerous chemicals.

"You may be getting a $100 bottle of perfume for $20, but what's in that perfume? ... The counterfeiters have no standards," Molina said. "We've seen lead. We've seen arsenic. We've seen rat droppings."

The perfume shipment will be sent for further testing.

"We're going to verify our instinct and that this is counterfeit by sending it to our import specialist, and they're going make the final determination of the product. If it's determined to be counterfeit, we will seize it, and eventually it will be destroyed, if it's not part of any type of criminal investigation," said CPB's D'Onofrio.

If it was not stopped, agents suspect the perfumes would have been sold at small retailers and online.


How to make sure perfume isn't counterfeit

There are a few hints that a perfume may not be legitimate, officials said. If the price seems too cheap, that should be a red flag. Buying perfume from well know retailers and online sellers is the best way to ensure it's real.

"My main tip is to buy it from a legitimate source," D'Onofrio said.

When purchasing perfume from other places, take a look at the package. "Some of the packaging, some of the labeling, the pictures on there could be a flat appearance where it looks like it's faded out, and doesn't have sharpness to it," said D'Onofrio.

If you have the opportunity to open the package, you can check the quality and feel of the bottle.

"Putting it in your hand and feeling it, you know, you're dealing with something more of a toy than a high-end product," D'Onofrio explained.

However, the counterfeiters have gotten so sophisticated, it's often difficult to tell.

"It's very difficult for the average American person to go and look and say that they're not getting what they think they're getting," D'Onofrio said.

If you suspect someone is selling counterfeit goods, you can report it at IPRCenter.gov or by using the Homeland Security Investigations tip line, 1-866-DHS-2-ICE.