Bogus Auto Parts Entering Canadian Market

During a fishing trip in the backwoods of Central British Columbia, Cpl. Doug Fisher’s Toyota 4Runner broke down and left the Vancouver policeman stranded for several hours.

By the time his vehicle was pulled out and repaired, Fisher was only too glad to pay $500 for the tow and the new alternator that a garage operator installed.

“At that price, the job was a bargain. But I had no idea I would pay for it somewhere down the line,” Fisher said.

A few weeks later, his 4Runner began suffering intermittent alternator problems. When he finally decided to change the alternator, a friendly mechanic decided to open up the faulty part.

“The mechanic explained to me the alternator frequently shorted because the core elements were not original parts and the wires were not properly graded,” said Fisher, who eventually paid $300 for genuine alternator.

Oil filters without filtering elements, haphazardly wired alternators, inadequately cushioned shock absorbers and brake pads made of sawdust. These are just a few of the thousands of counterfeit auto parts that organized crime rings from around the world are able to slip into Canada.

Canadian police and anti-counterfeiting organizations estimate the traffic in bogus parts amounts to well over $2 billion in trade annually. Sold at anywhere from 50 to 75 per cent below regular street prices, the products might seem like a steal, but they come loaded with some dire consequences.

“The traffic results in billions of dollars in losses for car manufacturers and automotive parts makers, and contributes to layoffs in the industry,” said Lorne Lipkus, partner at the Toronto law firm Kastenberg Siegel Lipkus LLP, and a founding member of the Canadian Anti-Counterfeiting Network (CACN).

“Faulty repairs due to fake parts,” Likus warned, “can destroy a garage’s reputation or worse cause fatal accidents.”

Looks can deceive

When placed right beside original products, some fake parts can even fool experienced mechanics said Lipkus. “The parts don’t have to work well; they just have to look good.”

For instance, phony oil filters recently seized by U.S. police came in boxes that were “very convincing copies of the original” according to Joe Wiegand, global brand protection manager for Ford Motor Co.

The filters themselves were undistinguishable from the original. “But when you sliced these fake filters open, you’ll see they hardly have anything inside to filter the oil,” Wiegand added.

Investigators hired and trained by Ford to seek out counterfeiting factories around the world have also come across thousands of fake parts bearing the company’s familiar logo but spelled as “Foos.”

Among the most frequently copied parts are: spark plugs; shock absorbers; brake pads; oil filter; steering and suspension parts; spark plugs; light bulbs; side mirrors; grills; airbags; and gauges.

“Any part that is frequently replaced is faked because this means profit,” said Wiegand.

High profits, low risks

Cities such as Vancouver, Toronto, Montreal and Halifax are favourite transshipment points of fake products from Eastern European countries and Asian nations. China is said by authorities and investigators to be the source of nearly 80 per cent of counterfeit auto parts. The parts end up in Canadian stores, and in the U.S.

A few weeks ago, Wiegand revealed before the U.S. Congress that Ford losses a staggering US$1 billion annually due to counterfeit parts.

The auto industry estimates counterfeiting as a US$12 billion world wide problem.

About US$3 billion in phony parts are believed to be sold in the U.S. every year.

“These are not mom and pop operations, but full-blown organized criminal networks,” said Sgt. Andris Zarins, national coordinator of the intellectual property crime unit of the Royal Canadian Mounted Police (RCMP).

Zarins said the crime rings employ engineers and technicians who research and reproduce products, operate factories and maintain an extensive international distribution network.

“It’s a high-profit, low-risk business,” lamented Fisher who also works with an anti-counterfeiting task force of the Vancouver police.

The Vancouver police have not been able to carry out any major raid against crime rings controlling the traffic because of resource shortages and legal constraints. The amount of cargo entering Vancouver is so great that Canada Customs is able to inspect only two per cent, Fisher added.

He said Canada Customs officers are not empowered to actively search for or seize counterfeit goods entering the country because under Customs laws faked goods are not illegal. Customs officers can only quarantine suspicious cargo or shipment that has been pointed out to them by the police. Because Canadian law only considers as illegal the marketing of counterfeit goods, police can only pounce on the criminals when they try to sell the products.

To obtain a search and seizure warrant, police also need to place the cargo in question under 24-hour surveillance for a number of days.

“We just don’t have the money and resources for a protracted stakeout so the criminals can out-wait us or simply leave the container. With the profits they make, one less container is a drop in the bucket,” said Fisher.

White boxes and gray markets

When a customer goes out to buy an auto part, the guy across the counter will often offer several options: good, better, best.

“You’d better be careful because you could be sold: good, bad or crap,” says Brian Madeley, owner of Madeley Automotive in Kingston, Ont.

He strictly buys parts from automakers or “white boxed” products that contain OEM parts when a customer wants to cut down on cost. Madeley, whose garage specializes in Japanese vehicles and European cars, said buyers looking for a bargain often risk being handed fake parts. These buyers often skip the more reputable parts dealers and seek out smaller stores or dealers in the “grey market.”

“There are parts stores that knowingly or unknowingly sell substandard products or outright fakes,” Madeley said.

Sometimes auto dealers or suppliers looking for bargains can end up as unwitting distributors of faked parts. A few years ago, American authorities seized thousands of counterfeit parts that were destined for use in taxi fleets and police cars in New York City.

A penny saved, an auto lost

Madeley said savings realized from buying substandard or fake parts can mean trouble later down the road. A cheap but fake water pump might look identical to the original, but its structural composition and components are not built or assembled to the same standards.

“A malfunctioning water pump will eventually lead to a damaged engine belt which can lead to a wrecked engine,” said Madeley.

Fake parts can also stretch the time needed for repairs because of improper fit.

Customers can also come back annoyed because of part failure, according to Dominic Lapointe of Performhaus, a Ste-Foy, Que.-based garage specializing in European sports cars.

“When customers keep coming back because parts keep failing, it doesn’t reflect well on any shop,” said Lapointe. “Our business depends on our reputation and when you lose that you lose your customers.”

Spotting the Fake

Industry insiders and anti-counterfeiting experts agree that most bogus auto parts these days are nearly indistinguishable from the originals.

But in some instances you might be lucky to spot some dead giveaways.

Funky spellings and funny names:

Some fakers might still pack parts in ill-copied boxes that show colour and design inconsistencies. Watch out for misspelled words. Other counterfeiters stamp parts with names or logos that sound or look similar to popular name brand items.

Rough edges:

Look out for dull or overly shiny finishes and shoddy craftsmanship. It might be rare, but some bogus parts might ac
tually look inferior in quality.

Imperfect fit:

Phony products might not fit flush to the part or area they’re supposed to go into.

Check the weight:

Hold the part you’re purchasing. Check it against the part it’s supposed to replace. Do they have the same weight and feel?

Is the price right:

Consider where you are buying the part and how much you are paying for it. If the seller is not reputable, or if the price seems to be too good to be true…it usually is.