Taking Action on Fake COVID-19 Products and Other Counterfeits

The global COVID-19 crisis and the resulting urgent demand for medical supplies has given way to a rise in opportunistic counterfeiting, that put consumers at risk. In an interview with the INTA Bulletin, Marta Castillo González, Head of Sector at the European Anti-Fraud Office (OLAF), offers her perspective from the frontlines in the fight against coronavirus-related fake products and all other counterfeits. She discussed results from a new investigation by her office, and the office’s focus on closing illicit factories outside Europe and identifying fraudsters, as well as broader efforts to address counterfeiting across industries, counterfeit environmental goods, the need for increased educational campaigns, and the involvement of organized crime.

What is OLAF’s role and main challenges, in terms of the fight against counterfeiting specifically?
The European Anti-Fraud Office (or OLAF, as it known by its French acronym) investigates matters relating to fraud, corruption, and other offenses affecting EU financial interests. As for counterfeiting, OLAF’s role is preventing counterfeit products from entering into the EU, dismantling the illegal factories producing counterfeit products, and identifying the fraudsters behind the production and sale of counterfeit goods.

How does OLAF coordinate/work with the rest of the European Commission (EC), Europol, other enforcement bodies, or even rights holders in the fight against counterfeiting?
OLAF is the only EU body with investigative powers. This means that in the course of an investigation, OLAF collects intelligence, carries out inspections at the premises of suspect companies, takes interviews from suspects or witnesses, and acquires forensic data. In doing so, OLAF always works in very close contact with the competent authorities in member states, with non-EU countries, and with rights holders.

Successful investigations into counterfeit goods clearly require close cooperation between rights holders and OLAF. Rights holders provide us with valuable information and their input is essential to help us distinguish between counterfeit and genuine products.

Within the EC, various different services are involved with intellectual property (IP) issues, from IP rights legislation or relationships with e-commerce platforms to IP rights enforcement policy, and so on. We ensure, of course, that our work is coordinated.

It is important to remember, however, that although OLAF is completely independent when it comes to running its investigations, we very frequently collaborate with other EU or international organizations such as Europol or Interpol, as and when it is necessary for the effective running of our investigations.

Among OLAF’s activities, what is the importance of investigations related to counterfeit products? Has this increased or decreased over time?
OLAF has a broad remit when it comes to its activities. These can range from investigations into the spending of EU funds or inquiries about serious misconduct by EU staff or members of the EU institutions to investigations concerning the illicit traffic of goods that may have an impact on the environment or the health of EU citizens.

Over the last five years, we have seen greater importance given in particular to investigations into counterfeit goods that may pose a risk to human health. The number of investigations into counterfeit goods has increased sharply as a result, and OLAF has recruited a team of very competent and specialized investigators to carry out these investigations.

OLAF recently (March 20) launched an investigation into “imports of fake products used in the fight against the COVID-19 infection, such as masks, medical devices, disinfectants, sanitisers and test kits.” Could you tell us more about the exact scope of the inquiry?
The OLAF enquiry targets the the illicit trade of medical supplies used in the fight against the COVID-19 infection, such as masks, medical devices, disinfectants, sanitizers, test kits, and medicines.

OLAF has collected evidence that fraudsters are offering, both to public institutions and to the private sector, large amounts of counterfeit masks, which they claim can be supplied within less than a week. In some cases, fraudsters offer large quantities of goods which are impossible to deliver, asking for upfront payment for goods that never arrive. In other cases, fraudsters typically offer counterfeit FFP3 masks, the EU’s highest standard for masks that are, for example, used for the protection of hospital staff caring for COVID-19 patients.

OLAF’s investigation showed that the frauds most often took the form of counterfeit or substandard products and scams. The data collected so far indicates that around two-thirds of counterfeit medical supplies related to COVID-19 appear to be coming from China. Other seized shipments have been identified as originating from EU neighboring countries and from South Asia.

Most of the goods are transported by air freight, but we have seen evidence of a wide variety of transport types and routes being used: several EU member states have reported seizures of smuggled face masks via land borders. Counterfeit and substandard medical supplies are shipped directly to the buyer in the EU or they are shipped to warehouses in the EU from where they are offered for sale. These counterfeit products often enter the EU through online sales and are brought into our homes via postal or courier services.

What type of results and next steps are you pursuing with this investigation?
The principal aim of OLAF’s investigations is to dismantle the illegal factories located outside the EU that are manufacturing the counterfeit products. To help us achieve this goal, we have more than 80 separate agreements on customs matters with non-EU countries requesting their assistance in this matter. The aim of this investigation into illicit medical products, as with all other investigations carried out by OLAF, is to send the investigative report and evidence collected to the competent national judicial authorities in the countries concerned in order to help prosecute the offenders.

Could you tell us more about what the EC, aside from OLAF’s investigation, is doing to raise awareness on this issue to prevent the import of such fake products harmful for the health and safety of citizens?
There are various parts of the EC involved in tackling counterfeiting. The EC’s internal market department is responsible for the overarching policy, assessing the market’s needs, and monitoring and developing the right policies to ensure the protection of industrial property and the fight against counterfeiting. It also runs regular campaigns against counterfeiting and piracy.

At the same time, the European Union Intellectual Property Office, through its European Observatory on Infringements of Intellectual Property Rights, is responsible for supporting the protection and enforcement of IP rights.

We often see that counterfeit products do not respect standards (safety, product standards, etc., but also environmental standards) when manufactured or sold. With the environment being a top priority for the current EC, have you gathered evidence about the absence of environmental standards for counterfeits?
This is indeed an issue that is all too frequently forgotten or misunderstood. Counterfeiting goods goes far beyond the theft of IP or industrial property, it is also about ignoring the rules and standards behind the production. Very frequently when OLAF has worked with national authorities to shut down illegal manufacturing plants, we can see clearly that issues such as waste recycling or environmental protection are simply ignored. In addition, OLAF currently has several ongoing investigations concerning products that by themselves can damage the environment, such as counterfeit pesticides or counterfeit refrigerant gases.

Several studies (notably from the Observatory) have highlighted the link between the sale or trade of counterfeits and organized crime, with criminal networks using the profits of counterfeits. Has OLAF gathered evidence about such links with organized crime?
Fraudsters are clearly attracted by the potential huge profits that counterfeiting can bring, and OLAF has uncovered criminal organizations behind the production, distribution, and sale of counterfeit products in several investigations. We tend to find this in cases where counterfeit products are sold in huge volumes in a country because this really only works if criminal organizations can control every step of the supply chain. On several occasions, our investigations have showed that counterfeiters are also involved in fiscal frauds, money laundering, and illegal migration, among other crimes.

We realize that oftentimes for the general public, counterfeiting is merely linked to fake luxury and high-end products, thereby decreasing the public awareness or interest in the negative impact of the phenomenon. Consumers are generally less aware or unaware of the dangers counterfeiting poses for the health and safety (fake toys for children, fake spare parts, etc.) of the general public. OLAF’s investigation into fake COVID-19 products highlights this aspect. INTA has been trying to raise awareness of this issue for quite some time. Do you agree that more needs to be done to address the health and safety concerns related to counterfeits, and if so, what?
People should indeed be more aware of the potential health and safety risks that counterfeit goods entail. The current investigation into the fake COVID-19 products is a very good example of how people need to change the way they think about counterfeiting: preventing counterfeit products entering Europe is not only about protecting trademarks, it is also crucial in helping to protect the health of EU citizens and to fight effectively against the virus. The products being sold are not only ineffective against the virus, they also fail to meet EU standards, making them potentially additional risks to people’s health in their own right.

Public and private institutions have to do more to change this outdated mindset about counterfeited goods and increase awareness among citizens of the real risks they involve. We need more public awareness campaigns, more information shared in schools, more dedicated programs for law enforcement, administrative and judicial authorities, to help us tackle this issue. Media campaigns showing the broad range of products that are frequently counterfeited, including many everyday items, such as shampoo, toothpaste, food, alcoholic beverages, airbags, and brakes, would surely help to inform citizens more effectively about both the scale and the risks.

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