Growing fake smartphone market raises eyebrows in Brussels

Experts warn that fake phones can pose a health risk and can come loaded with malware than can steal personal information. [Salim Fadhley/ Flickr]

The rise of counterfeit smartphone devices in the EU in 2015 is dealing a severe blow to industry sales and consumer safety, a new report has warned.

The study published yesterday (28 February) was carried out in collaboration with the International Telecommunication Union, the United Nations specialised agency for Information and Communication Technologies (ICTs).

According to the findings, the increase of counterfeit devices in the global market resulted in 184 million fewer smartphones sales (12.9% of legitimate sales) by the legitimate industry in 2015. The financial impact is equivalent to €45.3 billion.

“In 2015, 1.3 billion smartphones were sold worldwide, meaning that approximately one out of every six people on the planet purchased a smartphone that year, at an average cost of €275,” the report noted.

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Italy tops the list

At EU level, approximately 150 million smartphone devices were sold in 2015, meaning one for every three EU citizens.

The effect of counterfeiting in the EU is estimated at 14 million units in 2015, corresponding to 8.3% of the sector’s sales, or €4.2 billion.

Italy was mostly affected as lost smartphone sales due to counterfeiting were estimated at €885 million for 2015 (15.4% of revenue lost for the legitimate industry) followed by the UK (€660 million) and Germany (€564 million).

Spain and France are also in the top five countries severely affected, with €386 and €380 million respectively.

EUIPO Executive Director António Campinos commented that it was the first report, which analyses a sector both inside and outside the EU.

“Its estimate that 12.9% of legitimate sales of smartphones were lost globally in 2015 can act as a powerful message for policymakers, and all who work to combat counterfeiting worldwide,” he warned.

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Consumer concerns

The growing fake smartphones market does not only have a financial impact but also raises concerns for consumer protection and safety.

ITU’s Telecommunication Development Bureau’s Director Brahima Sanou stressed that counterfeiting affects security, consumer health, privacy and economic growth and emphasised that measures need to be taken to protect consumers.

Michael Milligan, Secretary General of the Mobile & Wireless Forum (MWF), an international association representing mobile and wireless device manufacturers, warned that the report not only highlighted the enormous economic cost to the legitimate industry but should also serve as a reminder to consumers to be constantly vigilant against counterfeits.

“Counterfeit smartphones are a danger to consumers. These devices are made with cheap sub-standard materials and have been shown to contain dangerous levels of metals and chemicals like lead. The devices and their chargers often fail to meet even basic electrical safety standards”, he noted, adding that fake smartphones put a strain on the mobile network by degrading coverage, call quality and mobile internet speeds.

“Consumers should also be aware that recent cases have shown that counterfeit devices can also come preloaded with malware that seeks to steal personal and financial information from the user”, Milligan said.

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