- September 4, 2014
- Posted by: Cheryl Rybka
- Category: Blog
By: Mike White
Penalties for knowingly committing fraud or failing to prevent counterfeit parts and materials can be severe. For example, the US Aircraft Safety Act of 2000, Section 38 includes penalties for individuals that range from a minimum of 10 years and/or $250,000 to life and/or $1 million for each count of violation of the law. Organizations can be exposed to fines up to $20 million dollars. However, counterfeiters operating in some countries outside the United States may face little or no penalties, making prosecution of these crimes difficult if not impossible.
This is a two part blog on counterfeit parts. Part 1 discusses the history of counterfeiting and issues that arise from counterfeit parts. Part 2 reviews some of the penalties that result in selling counterfeit parts, the global impact and how to be proactive when buying from suppliers.
The most recently accepted definitions used in the industry today (especially in the US) come from AS5553 Revision A, Fraudulent/Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition:
Suspect Part – A part in which there is an indication that it may have been misrepresented by the supplier or manufacturer and may meet the definition of fraudulent part or counterfeit part provided below.
Fraudulent Part – Any suspect part misrepresented to the Customer as meeting the Customer’s requirements.
Counterfeit Part – A fraudulent part that has been confirmed to be a copy, imitation, or substitute that has been represented, identified, or marked as genuine, and/or altered by a source without legal right with intent to mislead, deceive, or defraud.
In addition to AS5553A, SAE International also released:
- AS6081: Counterfeit Electronic Parts: Avoidance, Detection, Mitigation, and Disposition – this standard is aimed at distributors selling to aerospace and defense manufacturers.
- AS6174: Counterfeit Materiel; Assuring Acquisition of Authentic and Conforming Materiel.
- ARP6178: Fraudulent/Counterfeit Electronic Parts; Tool for Risk Assessment of Distributors.
- AS6462: Verification Criteria for AS5553 “Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition” – this set of criteria is to be utilized by accredited Certification Bodies (CBs) to establish compliance, and grant certification to AS5553
Counterfeit components have been identified in commercial items, services, aerospace, energy, construction and medical sectors. Disciplinary actions for supplying counterfeit parts include extensive fines and jail time. Avoid liability, rework and corrective actions by educating your business on how to detect and avoid the use or inclusion of suspected counterfeit components. Lower your RISK and develop a mitigation plan now.
Counterfeiting Impact: It costs the global economy over $650 billion per year and accounts for more than 5 percent of global merchandise trade. It has caused the loss of over 750K U.S. jobs. Interpol has linked counterfeiting to organized crime and terrorist financing. It is predicted to grow to well over $1.2 trillion. It jeopardizes our warfighters, the health and safety of consumers, it is national security threat, it also affects brand names and reputations. The problem is not going to go away. Organizations need to create a plan to address this problem now.
Many large Aviation, Space and Defense (ASD) organizations are now requiring suppliers to have a counterfeit and suspected counterfeit parts mitigation plan in place before they will buy from a potential supplier. This should be part of an organizations supply chain risk management process and will no longer be confined to electronic parts but all parts including raw material. If you are an AS 9100, AS 9110 or AS 9120 registered organization you need to develop that plan now!
In the simplest case the mitigation plan may be to only buy from OEM manufacturers or their authorized or franchised distributor, no purchases from broker unless specifically authorized by your customer. So the plan would revolve around how to control this process and flow it down to your suppliers and for them to flow the requirement down to their suppliers, this could be a multi-tier situation.
(Some of this content is provided by SAE International, from the Supply Chain Management Handbook)
For more information about counterfeit parts, please go to: