Counterfeiting a moral hazard

1. COUNTERFEITING A MORAL HAZARD.

2. INTRODUCTION The good, the bad and the ugly : There are three main channels to market 1) The
good - authentic goods travel through authentic channels. 2) The bad - The grey market , authentic
products find their way into non- authorized retail distribution outlets which are beyond the control of
the brand owner. 3) The ugly - The black market, where unauthentic goods are sold through
unauthorized channels. This can have disastrous consequences with products that are imbibed.
These ,are the counterfeits and we will study their moral hazards.

3. What is counterfeiting ? A counterfeit is an imitation, usually one that is made with the intent of
fraudulently passing it off as genuine. The activity is called counterfeiting. Counterfeit products are
often produced with the intent to take advantage of the established worth of the imitated product.

4. DIFFERENT TYPES OF COUNTERFEITING 1. Counterfeiting Money is probably as old as money itself. -

Means copying currency notes to pass them off as genuine. - how do counterfeiters pull it off? - they
usually go in for small denominations to counterfeit because they are normally checked. - next they go
in market to purchase the smallest product ,useless it may be and are tendered real cash money in
return. 2. Counterfeiting Documents with the intention to deceive. - birth certificates and driving
licenses are easiest and cheapest to counterfeit. - for a sum very petty.

5. 3. FBI estimates that American companies lose up to $250 billion annually due to counterfeit Goods. -
goods like clothes ,toys ,cosmetics, utensils are easiest to counterfeit. 4. Music , Movies , and Computer
software may be easily copied. -it is easiest to copy and counterfeit music, movies and software for it
just takes a few mouse clicks. 5. A counterfeit Drug or a counterfeit medicine is a medication produced
and sold to deceptively represent the original's -origin, -authenticity or -effectiveness

6. 6. Forgery of Identity . - Starts from forgery of documents. - This is the counterfeiting type that has
been and still is a rage given the improvement in technology. - A person X when forges documents , that
actually belong to some person Y (dead or alive) , to pose as Y then X is said to have forged
/counterfeited identity. - It makes ,existence of two people with everything exactly same
(documentation) , possible.

7. BE CAREFUL !

8. RELATION BETWEEN MORALS AND LAW  Morals = Law (a social instrument) + Standards of
acceptance. We infer that it is possible for something to be morally acceptable but being prohibited by
law and vice – versa. Q. Why is it possible? A. Morals descriptively refer to a code of conduct put
forward by a society , group , religion, or accepted by an individual for his/her own behavior .

9. EXAMPLE In tort , the moral obligation of doctors to treat their patients comes from the Hippocratic
oath , although doctors have been able to justify withdrawing feeding to patients as in the case of bland
(food). Tort – Mock Court.

10. WHY IS COUNTERFEITING IMMORAL ? We know :- Morals = Law (a social instrument) + Standards of
acceptance. Statement :-- Counterfeiting is immoral. Proof- (PART 1) In most countries, counterfeiting is
punishable by criminal and civil laws, with penalties ranging from injunctions , damages , imprisonment.
11. (PART2) Parties involved :- 1. Counterfeit producer -(acceptance , fear of getting caught) 2. Workers
under (1.) - (unskilled and under paid, unhappy lot) 3. Buyers of counterfeit products – 1.who
deliberately buy ( a probable target of police) 2.Victims ( unacceptance , drained financially , do not
satisfy marginal utility , unhappy lot) 4. Legitimate producers – (are taken advantage of on their
established worth , G/W might also be tarnished). We see almost negligible buyers for the 1.Acceptance
part and 2.Happiness part.

12. Famous Case Of Identity Theft 3.Frank Abagnale jr. There is no doubt that everyone has talents,
whether hidden or exposed. Frank W. Abagnale was no exception to the rule. He was a genius in the
truest sense of the word, however misdirected he may have been. The truth is, among some of Franks
best known and least appreciated talents was his remarkable ability to create and utilize false identities
as well as bogus checks. He was a con artist extraordinaire and probably one of the century’s most
cunning . His talent for deceiving the authorities and cheating banks, airlines and hotels out of millions
of dollars was unprecedented. Even more extraordinary was that he was between the ages of sixteen
and twenty-one- years old when he committed the majority of his crimes.

13. “Two little mice fell into a bucket of cream. The first mouse quickly gave up and drowned, but the
second mouse, he struggled so hard that he eventually churned that cream into butter and he walked
out.” – Frank Abagnale Jr. Currently : CEO Abagnale & Associates , security consultants . Helps FBI in
solving ‘counterfeit’ cases , fabricates - instrument security nets for companies and makes millions of
dollars every year.

14. DRAWBACKS AND NEGATIVES . Who takes the HIT? ! (LEGITIMATE PRODUCERS THEIR WORKERS
AND CONSUMERS) . SOURCE : oecd.org

15. JOB LOSSES Source: European Commission, US International Trade Commission, 1996. Direct losses
in sales are sometimes referred to in terms of job losses, The numbers are derived by taking the 1.Loss
of sales of a sector due to counterfeiting . 2.Calculating the number of additional people that could have
been employed with that revenue. 200 000 jobs are lost due to counterfeiting in these two regions
alone.

16. EXPORT LOSSES Source: La Tribune des Fossés, 16 February 1995.

17. SOCIAL COSTS  Ultimately, it is the Consumer who pays the cost of unfair competition , they end up
paying an excessive price for an inferior product.  The Inferior quality of many counterfeits, particularly
those relating to health and safety, have had disastrous effects.  It is No longer rare to find counterfeit
parts in aircraft and other vehicles and even fake pharmaceuticals .  Causing Death and Injuries to
workers and consumers alike .  Workers (making counterfeits) are generally Poorly paid.

18. Negative Impact Of Counterfeiting On 1) Legitimate producers – - counterfeiting tarnishes the

already established brand name. - lose a clientele . - They have to spend another fortune to track fakes
than to advertise. - This sends a bad word of mouth (about the brand) into the market. 2) Legitimate
buyers – -Fake drugs or other goods having lead content etc. , can actually cause even death. -Financially
hit for they end up paying a price equal to the original . -Their marginal utility is not satisfied. -No or
poor after - sale support services , is frustrating and eventually forces them to give up the brand.

19. 3) Workers of legitimate producers – - Mentally and physically hit for they do not reap rewards for
their input . - They fight a low morale . 4) Workers of counterfeit producers – - They work in inhumane
environment - Are grossly underpaid. - Causes energy drain and frustration. 5) Government – - Fact is
counterfeiters are small manufacturers who have no idea of taxes which costs government a fortune. -
Counterfeiters being a 7% part of world trade can actually lead to an economic slowdown at their will or
due to sheer negligence . - Has to handle all consumer complaints and pressure from all over the world
urging it to check counterfeiting.

20. ACKNOWLEDGEMENTS. GOOGLE.COM ASK.COM WIKIPEDIA.ORG YOUTUBE.COM CATCH ME IF YOU

CAN (MOVIE) Created and presented by : Raaghav Bhatia SBSC B.com(H) , 2nd year

About Support Terms Privacy Copyright Cookie Preferences Do not sell or share my personal information

English

© 2023 SlideShare from Scribd