Avoiding Counterfeit Trafficking Charges When Reselling Items

Avoiding Counterfeit Trafficking Charges When Reselling Items

Selling counterfeit goods can lead to serious legal trouble, but many resellers may not realize they’ve stumbled into illegal territory. This article aims to help resellers understand the laws around counterfeits, spot fakes, and stay on the right side of the law.

What Makes an Item Counterfeit

An item is considered counterfeit if it uses a trademark or logo without the trademark holder’s permission. This includes fake versions of brand name items as well as unauthorized reproductions of art, music, movies, software, and other copyrighted works. Even if an item is sold as “inspired by” or “looks like” a brand, it can still be illegal.

Some examples of common counterfeit goods:

• Fake designer handbags or clothing
• Replica sports jerseys
• Knockoff watches or jewelry
• Bootleg music or movie downloads
• Pirated video games or software

While it may be tempting to find cheap deals on fakes, trafficking in counterfeit goods is illegal with potentially severe penalties.

Reselling Counterfeits Can Lead to Trafficking Charges

Under federal law, trafficking applies to anyone involved in dealing counterfeit goods, including:

• Manufacturing or producing fakes
• Importing or exporting counterfeits
• Distributing or transporting counterfeits
• Selling or reselling counterfeits
• Possessing counterfeits for sale

Penalties can include up to 10 years in prison and a $2 million fine for individuals, and up to $5 million for companies¹. State laws may also apply additional penalties.

Some key factors determine potential penalties²:

• Retail value of the counterfeit goods
• Number of counterfeit products
• Whether the offender has a prior record
• State laws and sentencing guidelines

While buying a few fake items for personal use is unlikely to trigger trafficking charges, reselling counterfeits – even without knowing they are fake – can cross the line. Online platforms like eBay or Amazon Marketplace make it easy to become an accidental counterfeit trafficker.

How to Spot Fakes

The best way to avoid legal issues is to prevent counterfeits from entering your inventory in the first place. Here are some tips for spotting fakes³:

• Inspect packaging – Look for spelling errors, blurry logos, or packaging that looks “off”.
• Examine stitching and materials – Fakes often use cheaper materials and inferior construction.
• Compare to authentic versions – Study details like logos, tags, and serial numbers.
• Test functionality – Make sure electronics, software, and mechanical items work as expected.
• Research sellers and supply chains – Buying directly from brand authorized sellers is safest.
• Trust your instincts – If something seems questionable, it probably is.

Bottom line: When in doubt, leave it out of your inventory. Your freedom and livelihood aren’t worth the risk.

What to Do If You Have Counterfeits

If you discover or suspect counterfeit inventory:

1. Stop selling the items immediately.
2. Remove listings from online platforms.
3. Quarantine any remaining physical inventory.
4. Contact the brand owner or rights holder, they may advise you or request the items be surrendered⁴.
5. Consult an attorney regarding your options and obligations.
6. Consider filing a police report if you were defrauded by a supplier⁵.

While this process can be costly, it’s far less damaging than a criminal investigation or lawsuit from trafficking counterfeits. The sooner you take action, the better.

Avoiding Counterfeits and Staying Legal

Here are some best practices for resellers to avoid legal issues⁶:

• Vet suppliers thoroughly and buy only from authorized distributors.
• Inspect all inventory when it arrives.
• Research brands to spot telltale signs of counterfeits.
• Avoid deals that seem “too good to be true”.
• Turn down requests to sell anything that could be counterfeit.
• Consult an intellectual property attorney if unsure about items.
• Consider insurance to cover liability and losses from counterfeits.

While the lure of scoring cheap fakes is tempting, trademark infringement is no trivial matter. For resellers, a counterfeit mistake can sink an entire business. Protect yourself by staying vigilant, knowing the law, and refusing to source or sell any potential counterfeits.