Rise in counterfeiters that are selling phony ink packaged as the real thing.

Fake Ink Cartridges Ooze Into the Market

Inkjet and printer toner cartridges have joined the ranks of counterfeit Rolex wristwatches and fake Nike sneakers. Canon, Epson, Lexmark, and other leading ink makers are battling a rise in counterfeiters that are selling phony ink packaged as the real thing.

One out of 20 brand-name ink cartridges sold in the United States is counterfeit, according to the Imaging Supplies Coalition, a trade organization of leading printer and ink manufacturers. Fake cartridges--not to be confused with quality off-brand compatible inkjet and toner cartridges--are showing up on retail shelves and are sometimes sold by reputable online merchants. Often, the seller does not realize the cartridge labeled with the name of a major vendor is not, in fact, from that vendor.

Beyond U.S. borders, the counterfeit ink problem has reached epidemic proportions. In parts of Mexico and the Middle East, at least half of the ink cartridges labeled with brand names are bogus, the ISC reports. Costs of Counterfeits

The trend is taking a toll on consumers and ink makers. Makers of brand-name ink, from Canon to Xerox, lost close to $2 billion last year globally to counterfeit ink and toner cartridges, ISC reports. What's more, some of the shady operators behind these counterfeiting ventures include organized crime and groups that funnel proceeds to terrorist organizations, say those who hunt the perpetrators.

For consumers, the price of fake ink is often leaky cartridges, poor quality printouts, and potential damage to printers, say printer manufacturers.

"We find it everywhere," says William Duffy, ISC president. Counterfeit ink is showing up in retail stores, on the Internet, and in just about every other distribution channel you can imagine, he says.

Taking Aim

In the past six months, U.S. Customs has seized 17 shipments of counterfeit inkjet and toner cartridges in the ports of Miami and Los Angeles. Most loads were destined for Latin America, according to the Bureau of Customs and Border Protection. However, three seized shipments were believed to be headed for U.S. retail shelves and online storefronts.

Investigators trace some of the biggest counterfeit ink suppliers to China, Malaysia, and Latin America. Raids there have turned up ink cartridge manufacturing plants with fake labels and packages bearing the logos of big-name vendors, as well as cartridges. Raids in the United States have revealed counterfeit versions of products marketed by Brother, Hewlett-Packard, Epson, and Canon, say ink manufacturers.

Most retailers that stock counterfeit cartridges are unwitting participants in the bogus-ink sales chain. The counterfeit products make their way into the distribution chain long before retailers stock their shelves, says Tim Trainer, president of the International Anticounterfeiting Coalition.

"The biggest challenge right now is documenting the size of the counterfeit ink industry," says John Shane, a director with tech consulting firm CAP Ventures. Shane says the printer-supplies industry is a $46 billion business and growing 8 percent annually. He considers the opportunity irresistible to counterfeiters.

Terror Ties to Bogus Ink

Profiteers of fake ink include organized crime and sometimes terrorists, says Robert A. Levinson, managing director with the Latin American office of SafirRosetti. The consulting firm is one of the many hired guns that ink manufacturers employ. SafirRosetti and others help law enforcement agencies identify and crack down on counterfeit ink rings. Levinson says fake ink is a gold mine for terrorist organizations, because it can be as profitable as drugs and is more easily sold--since it's marketed inside retail stores instead of on street corners.

Those links to terrorism have also caught the attention of the Department of Homeland Security. The newest federal agency is working with ink manufacturers to quell the problem and cut off any revenues to terrorist organizations and organized crime. One of the participating divisions is the National Intellectual Property Rights Coordination Center, which is responsible for intercepting counterfeit products that cross the U.S. border.

"There are strong indicators that proceeds of counterfeit products are going to fund terrorist organizations," says Nancy Kratzer, NIPRCC director. "No matter what it is, if it's popular, then counterfeiters will copy it."

Common Sense Defense

The bad news for consumers is you can do little to avoid phony ink except use common sense.

"If the prices seem suspiciously low, then you should be suspicious," Duffy says. A layperson is unlikely to spot a fake ink cartridge, especially if it bears a brand name, unless it's too late and your printer isn't operating properly.

That's what recently happened to some Brother ink customers, who thought their multifunction fax/printer machines were faulty. Brother says a regional office supply chain unintentionally stocked fake Brother cartridges. Customers started bringing in their printers, complaining that the hardware was malfunctioning, says Matt Hahn, Brother's director of marketing, supplies, and accessories.

"We figured out the problem wasn't with the machine, it was the counterfeit ink cartridges," Hahn says. The vendor yanked the cartridges from the shelves. The company won't say how many customers were affected, or where.

Telltale signs of phony cartidges can be ink clogs and leaks, inferior prints with distorted text and dull colors, printouts with poor resistance to light and water exposure, and a reduced number of printed copies per cartridge.

Consumers, retailers, and distributors can send questionable cartridges to the ISC to verify authenticity. About half of all suspect ink submitted to ISC is verified as fake, up from 18 percent a year ago, Duffy says.

Invisible Ink Problem

Ink makers like Epson, Canon, and HP don't publicize their problems battling counterfeit ink. From their perspective, if customers are wary of brand-name ink cartridges, they're less likely to buy one. Vendors worry that consumers will turn instead to less expensive off-brand ink cartridges.

The damage to reputations can be just as serious as the impact on sales figures, says a manufacturer who didn't want to be identified. Since the cartridge bears a brand name, the customer makes an assumption about its quality. But when that counterfeit cartridge leaks and damages a customer's printer, the manufacturer's reputation takes the hit.

To reduce your odds of getting stuck with a bogus cartridge, buy only from authorized resellers, advise major printer manufacturers. As the counterfeiting problem grows, many vendors are keeping close tabs on what stock is being sold, and where. The printer manufacturers frequently list authorized resellers on their Web sites, providing contact information for online sales and storefront resellers.