An Ontario hardware reseller has been charged by the RCMP for allegedly selling large quantities of counterfeit Cisco Systems networking equipment.
Last February, the RCMP Greater Toronto Area Federal Enforcement Section searched Network IT offices, seizing approximately 1,600 counterfeit parts, worth an estimated A$2 million. The company faces two counts of fraud over $5000, one count of passing off, and one count possession of property obtained by crime.
According to Network IT's Web site, it has been in operation since 2001 and has been a "leading reseller of refurbished and used Cisco networking hardware." The company sells a wide variety of used Cisco routers, switches, cables, memory boards and security appliances.
RCMP officials said its initial investigations began in 2006 after Cisco tipped off the enforcement agency to Network IT's potential distribution of counterfeit materials. John Noh, a spokesperson for Cisco's brand protection team, said that because counterfeiting affects the entire IT industry, he hopes law enforcement agencies will continue to be proactive in combating counterfeit hardware. ."
"We're very pleased with the support we received from the RCMP in this case," Noh said. "This is a very good example of the success that we can achieve when we cooperate and collaborate with agencies in cracking down on this illegal activity."
According to Noh, the Network IT case demonstrates the prevalence of counterfeit computer hardware in today's reseller market. And because the line between used "grey market" Cisco hardware and counterfeit "black market" equipment has become blurred in recent years, he said, prospective customers would be best served to only purchase from authorized Cisco vendors.
"Most hardware companies have a published list of authorized vendors and they encourage customers to only buy these partners," Ram Manchi, president of the Alliance for Gray Market and Counterfeit Abatement (AGMA), said. "If customers choose to buy outside the channel they run the risk of getting a product that isn't genuine."
But despite warnings from both Cisco and the AGMA, many in the used hardware community stress that not all resellers outside of the channel are bad news. Colin Williams, owner of Montara, Calif.-based Coastside Networking, said companies who want to avoid getting duped by counterfeit resellers should be weary of unrealistically large discounts.
"It's like walking down the street and being offered a Rolex watch for $100. It's very tempting, but it's probably fake," Williams said. "As an end-user, you typically get a 15 to 20 percent off the list price. If you're a big time corporate company, you might get a 30 to 35 per cent discount. But if a dealer is offering a small company a huge discount like that, it's an automatic red flag."
Another warning sign, according to Williams, are resellers that engage in aggressive and unsolicited e-mails and phone calls.
"They're contacting you, you're not contacting them, so that's a huge red flag," Williams said. "Basically these fake dealers are trying to take advantage of your desire to get a bargain. And while every business recognizes the need to try and cut costs, you can't do it by buying counterfeit equipment."