RETURN ON TECHNOLOGY: Exploding mobile phone? Maybe you bought a fake

January 21, 2008

Has your cell phone exploded lately? A cell phone battery literally blows up, shattering the phone and spraying hot components like shrapnel. Detonating phones haven't killed anyone that I could determine, but they've caused several trips to the hospital for lacerations, burns and broken eardrums. When it happens, manufacturers understandably scramble to find out why, and the answer today is often that the battery was actually a knockoff, a counterfeit that looks just like the real thing, but might be made with leftover components scrounged out of garbage heaps.

Counterfeit electronic devices are no longer rare. You can find fake routers, cables, computers, monitors, hard drives and even smaller components inside of otherwise legitimate products, like capacitors, resistors and integrated circuit chips. Knockoffs find their way even into the parts bins of major manufacturers, to all appearances stamped with the right logos and accompanied by the right paperwork attesting to their authenticity. The problem is worldwide, and growing. Four of the top 10 confiscated items by U.S. customs in 2004 were counterfeits.

Then there's the "gray market," where legitimate items are sold back into the mainstream. These might be industry rejects that just didn't quite make it all the way to the recycling center, or they could be used products sold as new. Altogether, the electronics industry's Alliance for Gray Market and Counterfeit Abatement says $40 billion of counterfeit or gray-market tech products are circulating each year. They make up about 10 percent of technical goods on the market at any given time, AGMA reports.

Anybody can be fooled, even such demanding customers as the U.S. military. Just last September, a vendor was convicted for selling and installing fake network switches for a Navy subcontractor. And in December, two Texas brothers were indicted for conspiracy and trafficking in counterfeit goods, having imprudently supplied such equipment to various departments of the U.S. government, reportedly including the FBI. Now, while I'm indignant when my government is scammed by one of my fellow citizens, I have to admire the colossal chutzpah it takes to rip off the FBI.

The problem isn't just profit, but safety. A cell phone converting itself into a grenade is a danger, but there are even greater dangers in the counterfeit circuit breakers and ground-fault interrupting receptacles used in bathrooms and kitchens to protect consumers against deadly shocks. Officials in Suffolk County, N.Y., found a stash of such phony devices, which carried similarly bogus Underwriter's Laboratory stickers. There are fake thermostats, fake smoke detectors, and fake carbon dioxide detectors.

The problem is worldwide. Authorities in Manila busted a pirate ring in 2006 that was selling network cards, routers, switches, cables and boxes, complete with packages that proclaimed them to be from Cisco Systems. The European Union says the seizure of all kinds of bogus goods at its members' borders continues to rise each year. Every year, the Union records tens of thousands of seizures, and the member countries acknowledge that seizures are only a tiny fraction of what gets through. In 2004, Lithuania alone caught 400,000 batteries. The vast majority of the fakes originate in China, Hong Kong, the United Arab Emirates, India and Malaysia, but other countries are starting to participate in the fun, too.

If you've bought quite a bit of technology, like computers, phones, network equipment, batteries, and the like, you probably have at least one fake sitting around right now. If you bought the products from eBay or refurbished from someone other than the manufacturer, the chances go up. If you got a great deal on used equipment, the probability increases, too.

The temptation to save money buying from online vendors is enormous, and understandably so, but it makes selling phony goods almost child's play. The hit you take may come soon, or it may come later. If it comes right away, you're likely to be out no more than your purchase cost. But if it comes later, as with a hard drive, you could stand to lose a great deal more after it's been loaded with your valuable data. In between are the annoyances of cable connectors that don't connect, or wireless that's as temperamental as an opera diva.

You can't avoid the risk entirely, but you can cut it down to manageable size by gritting your teeth and paying original-equipment manufacturer prices from the OEM itself or sticking to known retailers. Dell isn't likely to sell you a computer that never saw the inside of a Dell factory, but an online wholesaler might.

You can sometimes spot a fake by checking the paperwork for typos and other clues. If the item is big enough to have a serial number, check with the manufacturer to see if it's legitimate. You can report a fake to, of all places, the U.S. Chamber of Commerce, at www.thetruecosts.org/portal/truecosts/action/reportafake.htm.

Altom is an independent local technology consultant. His column appears every other week. Listen to his column via podcast at www.ibj.com. He can be reached at timaltom@sbcglobal.net.
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