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Why E-waste Becoming Counterfeit Components Is Your Problem!

Posted by Colin Page on Aug 20, 2013 10:53:00 AM

After a recent case in which the owner of an electronics recycling company was handed a 30-month prison sentence for exporting over 400 shipments containing over 1 million dollars’ HATworth of electronic waste overseas in direct violation of federal law, the defendant’s attorney made the following statement: “I have represented people accused of, and who have committed, horrific crimes. This isn’t one of them. The impact was that some people — not all of them — didn’t get their electronics disposed of in a way they approved of.”  This attorney went on to justify her client’s behavior by stating that no one lost their jobs as a result of Executive Recycling’s misrepresentation and none of the victims in the case were financially ruined.   This view of the situation not only completely ignores the reality of e-waste export, but is also factually wrong. In fact, it is absurd that such a statement can be made publicly. Unfortunately, this is currently the case, mainly due to a widespread lack of information regarding the subject of e-waste and its relationship to counterfeit components.  This case garnered national attention when it appeared on 60 minutes.

The current public attitude towards counterfeit electronics is seWaste in chinaimilar to the attitude displayed in the 1960s towards drunk driving: While driving drunk is now rightly viewed as extremely dangerous and irresponsible, only a few decades ago it was viewed by many as relatively harmless. This is evidenced by the evolution of legal penalties regarding drunk driving: Decades ago, penalties for drunk driving would include a fine of similar magnitude to a speeding ticket. Whereas nowadays, a DUI can result in thousands of dollars in fines as well as, in some states, mandatory minimum prison sentences. In the same fashion, the counterfeiting of electronics (as well as the exporting of e-waste, which has been demonstrated to directly enable this type of counterfeiting) is currently seen as only a minor crime, even though it has been extensively proven to cause financial loss, injury, and death.    

Negative Effects of E-Waste Exports

Additionally, the defense attorney’s statement completely ignores the numerous negative effects of e-waste export, which holds serious environmental, economic, and health ramifications. In addition to these direct consequences of improper e-waste disposal, there also exists a high probability that items from e-waste shipments are used in counterfeit electronic components, which are in turn sold for use in consumer goods, aerospace systems, military applications, and sometimes in life-critical systems.

The EPA estimates that, in the United States, “as little as 11 to 14%” of e-waste is sent to recyclers and 70 to 80% of that portion that is sent to recycling companies is shipped overseas to less developed nations, which often use extremely basic (and often dangerous) methods of component disassembly and material extraction.[1] When these processes are used to dispose of e-waste improperly, the results are extremely detrimental to the environment. Surveys by the United Nations Environment Programme have found that disassembly practices performed in developing nations such as China and India include open-air burning of wire to retrieve copper and open acid baths, which are used to separate metals. Waste from these processes is, according to the EPA, “simply discarded, allowing pollutants to seep into the ground and water sources.”[2] These processes cause large amounts of air and water pollution – according to the same EPA report, “lead levels among children in Guiyu (a town in China in which e-waste is “processed” in this fashion) were also more than 50% higher than among children in a neighboring village where used electronics were not dismantled.”[3] According to the Tides Center, the parent organization of the Electronics TakeBack Coalition, the types of computer monitors that Executive Recycling disposed of improperly contain between four and eight pounds of lead per monitor[4]. The environmental and health effects of 400 shipments of e-waste are potentially massive, yet the defense in this case continues to believe that the only problem with this firm’s actions is that “some people… didn’t get their electronics disposed of in a way they approved of.”

Electronic Waste Has Negative Economic Effects 

In addition to heavy environmental and health impacts, the improper disposal of e-waste has negative economic effects. It is estimated that 70 to 80% of the e-waste that is sent to U.S. recyclers is exported to developing nations such as China and India to be disposed of.[5] 

According to the office of U.S. Congressman Mike Thompson (D-CA), this creates a situation in which “many responsible recyclers in the U.S. operate under capacity, undercut by brokers exporting e-waste to developing nations.” Unscrupulous firms, such as Executive Recycling, fall into this latter category: In their rush to make a quick buck, they sent jobs that would be performed by honest American firms, which are bound by a code of environmental regulation, and instead sent them overseas to unregulated and unscrupulous companies who are not above sacrificing the health and safety not only of their employees but also any residents of the area in which they dispose of e-waste in order to turn an easy profit. This further diminishes the already minimal credibility of the defense: When stating that no jobs were lost as a result of these practices, the defense obviously did not include the jobs in the American recycling industry that were affected. Of course, the possibility exists that this attorney had not bothered to educate themself on the issues before commenting.  Clearly, the evidence indicates this to be a ridiculous statement.

A major secondary effect of unethical e-waste disposal practices that was obviously not soldier hoomecomingconsidered by those who attempt to marginalize the serious nature of Executive Recycling’s actions is the use of e-waste in the production of counterfeit electronic components. This practice is a threat to U.S. national security: A 2011 report by the Senate Armed Services Committee determined, after a months-long investigation of the U.S. military supply chain, that the supply chain is suspected to contain over 1 million counterfeit parts, including life-critical avionics components.  A recent example of this is the discovery of counterfeit Chinese parts in the instrumentation of C-130J Hercules transport aircraft which would, if they were to fail, leave pilots with blank instrument panels in mid-flight.[6] According to the same Senate report, the production of these counterfeit parts “often begins as electronic waste, shipped from the United States and the rest of the world to Hong Kong. From there, the raw material makes its way to China, where it is broken down, ‘burned off of old circuit boards, washed in the river, and dried on city sidewalks.’”[7]

When it is considered that the majority of counterfeit electronics start out as irresponsibly exported waste material, the true impact of Executive Recycling’s actions can be seen. According to a report by the International Chamber of Commerce, “80% of consumers in the developed and developing world regularly purchase counterfeit products,”[8] even though they are unaware of the dangers that these products can pose to their health and livelihood. These dangers are substantial: According to the International Electrotechnical Commission, “costs related to loss of life and health services to treat injuries caused by dangerous fake products reach over US$ 20 billion.” In fact, recently a woman in China was fatally electrocuted by a faulty counterfeit iPhone charger. In addition to the danger inherent in the production of counterfeit parts constructed from e-waste, enabling counterfeiters has serious economic repercussions. 

2.5 Million Jobs Have Been Destroyed by Counterfeiting 

Analysis by the International Chamber of Commerce indicates that “without counting the secondary impact on suppliers and retailers, approximately 2.5 million jobs have been destroyed by counterfeiting and piracy in G20 countries.” To put this in perspective, employment figures from the beginning of the recent economic recession indicate that 2.6 MAFIAmillion jobs were lost during the period from September through December 2008, a span which included some of the worst months of the entire economic downturn.

Who profits from this? The majority of the profits generated by worldwide product piracy are reaped by organized criminal organizations. Additionally, some of these profits are realized by international governments. For example, allegations of profiting from counterfeiting are commonly leveled at the government of China.[9]

The defendant’s attorney said that the actions of Executive Recycling had no effect beyond that of a few individuals not having “their electronics disposed of in a way they approved of.” To make this statement is, at best, to show complete ignorance of the facts surrounding the issue. Directly enabling counterfeiters is a crime that has widespread effects, and needs to be recognized as such.

Secure Components

Secure Components hopes that, unlike drunk driving, it does not take decades of death and injury to realize that illegally disposing of e-waste is a crime with serious effects.  As an Independent Distributor of obsolete electronic components, we work to protect the Department of Defense, the Defense Logistics Agency, NASA, and many other Aerospace & Defense clients who end up spending billions of dollars combating the end result of illegal waste —Counterfeit Components!  We have seen the impacts that the illegal export of e-waste has created throughout the entire supply chain.   In 2010, the U.S. Senate Armed Services Committee completed an investigation on counterfeit components that found the U.S. Military supply chain containes more than 1 million counterfeit parts.  E-waste is the essential ingredient that counterfeiters use to make their products that ultimately end up in our military supply chain, putting the lives of our warriors on the battlefield at risk.  Secure Components considers organizations like the Basel Action Network (BAN) an ally on the front lines of this epidemic. In 2009, BAN launched the E-Stewards Certification. This PROGRAM is accredited by ANAB, the nation’s leading accreditation authority, and is the certification is awarded to organizations that are doing the right thing.   “The e-Stewards Standard provides true accountability for responsible disposal of electronic waste and with ANAB’s oversight of the certification program, we intend to provide the consumer confidence and value,” said Randy Dougherty, ANAB Vice President.[10]

Like BAN, Secure Components is at the forefront of its industry in the fight against DNV AS9120 & AS6081counterfeits.  In July 2013, Secure Components became the first company in the world to achieve certification to the new internationally recognized AS6081 Counterfeit Avoidance Standard, which is an SAE standard designed to address counterfeit component mitigation for distributors.  In June of this year, the Department of Defense officially adopted the AS6081 standard.  There are currently negotiations between our AS6081 certification body, the International Electro-technical Commission Quality Assessment (IECQ) and ANAB that is likely to result in ANAB accrediting this program. 

The purpose of this article is both to create awareness and spark action on this issue.  Illegally exported e-waste is the cornerstone that moves billions of dollars of revenue to counterfeiters. This, in turn, profits criminals, mafias, and countries hostile to the United States. Illegal e-waste exports also expose our planet, our children, our economy, and our warriors on the battlefield to unacceptable risks, both directly and through the negative effects of counterfeits. To be a part of the solution to this very real problem, take action byE STEWARDS reporting any suspected illegal activities involving e-waste and/or counterfeiting to the proper authorities, or look for recyclers that are participating in the e-Stewards Certification program.  This problem is a global problem, and we as a country must work together in all aspects to come together to promote awareness of and action on illegal e-waste and counterfeiting, as it endangers every one of us.  If you know of a suspect and/or counterfeit item report it to GIDEP and the appropriate authorities. If you have concerns about where your e-waste is ending up, contact BAN for more information on responsible recycling companies and practices.

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