When a Mercedes-Benz sedan went up in flames in 2013, the resulting damage could hardly have been more dramatic. The vehicle had been parked outside the garage of an apartment block in the United States, and the inferno destroyed most of the three-storey building. Investigators quickly established that the fire must have started under the car’s hood.
Closer inspection revealed the cause to be the cooling fan control unit: A short circuit had evidently resulted in a spontaneous blaze. With the car little more than a heap of molten plastic and twisted metal, X-ray analysis was used to uncover the truth: The faulty control unit was not a genuine Mercedes-Benz replacement part, but a forgery.
Thousands of miles from the scene of the accident, Peter Stiefel sits at a computer screen in his Stuttgart office, scrutinizing the investigators’ photos. “Our goal is to prevent such dangers before they arise,” says the Head of Global Brand Protection at Mercedes-Benz.
Stiefel is Daimler’s chief forgery hunter. There is a poster on the wall of his office identifying over 360 different Mercedes-Benz wheel rims. Stiefel knows most of them by heart and can immediately spot a car without the genuine articles should one pull up alongside him at a traffic light.
But light-alloy wheels are just the tip of the iceberg when it comes to product forgeries. Counterfeit articles include everything from Mercedes-Benz key fobs to an entire vintage 300 SLR – not to mention the full range of replacement parts. These are what give Stiefel and his team the greatest cause for concern: Unlike copies of luxury watches or clothing, forged parts not only damage a brand’s sales figures, they can also put the safety of unsuspecting customers in serious danger.
In order to determine exactly how great that risk may be, Daimler has been testing forged products for a number of years. As a result, the company now knows that a forged brake pad is up to 60 percent less efficient than a genuine Mercedes-Benz part – and that means an increase in braking distance of up to 15 metres. There is the additional risk that vehicle safety systems such as ABS and ESP no longer respond properly to counterfeit parts in an emergency situation. The Brand Protection department is currently working on further tests with the aim of putting a figure on the risk factor generated by other forged replacement parts, such as oil filters and airbags.
Peter Stiefel and his team also coordinate the global battle against product forgeries. And since counterfeiting is such a lucrative business, they are increasingly coming face to face with organized crime. Fraudsters are able to achieve profit margins not unlike those in the drug trade, and yet the penalties they face if caught are far less severe – if the authorities take an interest at all.
Given this combination of high profits and low risk, the market for forgeries has grown exponentially in recent years. “Experts estimate that around 10 percent of industrial sales worldwide are lost to brand and product piracy – and the trend is set to continue,” the forgery hunter explains. Each year, forgeries in the automotive industry alone are thought to be increasing by nine to 11 percent.
It is a dangerous development, since the replacement parts copied are increasingly relevant to vehicle safety: Filters, brake pads, windshields and steering columns were among the most frequently confiscated counterfeit products found in Chinese warehouses and production facilities between 2008 and 2012. And China is not alone: Other hot spots in the global forgery business include the United Arab Emirates, Southeast Asia and India.
In addition to the increasing professionalization of the forgers, what makes Stiefel’s work so challenging is the fact that they are dotted around the globe. Although all roads eventually lead to Stuttgart, individual battles are often waged thousands of kilometres apart. The Brand Protection managers are in contact with colleagues in China, Dubai, India, Russia and Turkey, where they liaise with customs and tax authorities to monitor investigations and raids in their region – most of which are the result of months of painstaking detective work.
“An investigation usually starts six to 12 months before an actual raid,” says Stiefel. Typically, the process begins with a member of his team ordering a suspicious-looking wheel rim, brake disk or filter unit from an online dealer. Even before carrying out tests, it is often clear they are dealing with a forgery from the moment they take the part out of its packaging. Sometimes – as in the case of oil filters – closer examination is necessary to identify a fake.
If initial suspicions are confirmed, the online trader will receive a letter from Mercedes-Benz demanding confirmation of a cease-and-desist declaration and naming the supplier of the forged article. Thereafter, the case is usually put in the hands of a specialist law firm, which employs detectives to carry out further investigations on behalf of the Brand Protection team. Often, they will conduct surveillance of a distributor’s premises for days in order to determine when the delivery in question is due. The detectives will then follow the vehicle carrying the forgeries back to the wholesale dealer, and the waiting game begins all over again: surveillance, discussions, more surveillance.
If all goes according to plan, the trail will lead directly to the forger’s workshop, although the term “factory” is often more appropriate given the scale of operations these days.
Forgeries by the truckload
In 2014 alone, 2,000 such actions led to successful investigations: Customs seizures, cease-and-desist declarations or raids resulted in forged Mercedes-Benz products being confiscated. In addition to Stiefel’s 15-strong team, over 100 external lawyers and investigators are employed to combat the fraudsters.
But brand piracy usually involves only medium-size fish. The objective is to make the forgery business less attractive by carrying out carefully targeted raids. Occasionally, though, they also catch a major player. When Arab authorities carried out a large-scale raid on a warehouse in Dubai in the presence of the Brand Protection team in early 2014, for example, they unearthed over a million forged car parts – including 123,000 destined to be sold as Mercedes-Benz accessories. It took over 10 trucks to remove the potentially dangerous goods.