WikiLeaks cables show Apple's actual counterfeit
security team internal documents detailing their struggle and battle
with counterfeiting in China!
"Apple was slow to act
against the booming counterfeit industry in China and other Asian
countries, according to cables obtained by WikiLeaks. The
technology giant eventually organized a team in March 2008 to curtail
the explosion of knockoff iPods and iPhones, according to an electronic
memo from the Beijing embassy dated September 2008. Yet, three years
after Apple moved to crack down on widespread counterfeiting and put
pressure on China, progress has been slow. Gadget piracy isn't a high
priority for the Chinese government, the U.S. reports and experts say.
Members of Apple's recently formed global security team were recruited
from Pfizer after they executed a series of crackdowns on counterfeit
Viagra production in Asia, the report says. John Theriault, formerly
Pfizer's security chief and, before that, a special agent for the
Federal Bureau of Investigation, leads Apple's global security unit. Don
Shruhan, who worked for Theriault at Pfizer, is now a director on
Apple's security team in Hong Kong. Shruhan told the Beijing embassy
official that his group at Pfizer spent five years planning raids on
counterfeit drug rings, the cable says. He said he's "afraid" of the
volume of imitation Apple products being produced in China and about the
inexperience of Apple's lawyers in dealing with Chinese authorities, the
An Apple spokeswoman declined to comment. A Pfizer spokeswoman, who
declined to comment on personnel matters, said the company has a strong
global security team to handle the increase in counterfeit medicine
worldwide. WikiLeaks, a group that publishes private government
documents, posted tens of thousands of previously unreleased U.S.
diplomatic cables last week. The reports from the Beijing embassy
detailing Apple's piracy crackdown were unclassified, but many were
described as "sensitive" and "not for Internet distribution."
In December, Apple said it removed an application from its mobile store
that let people browse WikiLeaks documents from their iPhones "because
it violated developer guidelines." The company suggested that the app
broke laws or could be harmful to people, but many free-speech advocates
cried censorship, as they have in the past when Apple has pulled apps.
The fresh WikiLeaks documents shed new light on Apple's struggles with
intellectual-property theft in China, but the subject hasn't completely
flown under the radar.
Last month, international news media were rapt after discovering that
China is home not only to fake Apple gadgets, but also to imitation
Apple stores which had many of Apple's signatures. The Chinese
government ordered two of the five unofficial stores to close because
they had not secured proper business permits, but a spokesman for
China's Kunming government defended the others, saying they sell
authentic Apple merchandise, according to Reuters. Apple owns and
operates four stores in China. The three in Beijing and the one in
Shanghai are Apple's highest trafficked and top grossing stores in the
world, Peter Oppenheimer, Apple's financial chief, said in an earnings
call in January. But the hunger for Apple products is insatiable there.
That's why stores have begun to sell the products without Apple's
permission, while others are hawking cheaper, lower-quality gadgets that
are aesthetically similar and bear the chic Apple logo.
China's Guangdong province, the country's most populous region, has
become a hub for manufacturing and selling of counterfeit Apple
products, two of the newly surfaced cables say. The Foxconn Technology
Group, which assembles products for Apple, operates factories in
Guangdong. Workers typically smuggle parts from the facilities in
order to make replicas, said Lilach Nachum, an international business
professor for Baruch College in New York who travels frequently to Asia.
It's the cost of doing business in China, where many American companies
go for inexpensive labor and efficient industrial plants, she said.
"Not to go to China is not really an option," Nachum said. "Companies
cannot afford to do that. No one can afford to do that."
China's counterfeiting ring is responsible for supplying India with fake
Apple products, the 2008 cable says. In raids, Indian officials
uncovered shipments that had moved from China through Hong Kong, the
Apple's early plans to go after counterfeiters, according to a cable,
involved first targeting offending retailers and street vendors; next,
Apple would work with police to raid manufacturing facilities; and
finally, the company would pursue online resellers. The plans
closely resemble Pfizer's successful strategy, the cable says, citing
Shruhan, the Apple director. "Shruhan said that low-profile retail
raids are a good option for Apple, a company that wants to stay away
from too much publicity surrounding this issue," the cable says.
Theriault, Shruhan's boss, briefed Steve Jobs, then CEO, on the plans in
2008, the cable says.
But Apple is having limited success. In countless stores and at
tables setup on streets, merchants purporting to sell iPods, iPhones and
iPads at deeply discounted prices are prevalent, said Wini Chen, a
student in San Francisco who recently returned from studying abroad in
Beijing. "They'll say, 'Yeah, we have iPad. We'll give you a
really good deal'," Chen recalled from her shopping trips. "If I really
want to buy a knockoff Apple product, I could probably do that in 15
Chinese officials readily cooperated with pharmaceutical companies on
their raids, but that hasn't translated to software, as Microsoft has
discovered, or electronics, as Apple is learning, said Nachum, the
professor. Whereas a defective pill could cause sickness or death, a
shoddy iPod has less dire consequences. Apple had planned to strengthen
its case with the government by arguing that defective batteries could
blow up and injure people, and that lost tax revenue could have a
significant economic impact, the cable says. The arguments weren't very
effective. China's government declined to investigate a facility
in March 2009 that was manufacturing imitation Apple laptops because it
threatened local jobs, says a cable dated April 2009. A different
arm of China's government scrapped plans for a raid on an electronics
mall in the Guangdong province because it could have driven away
shoppers, the cable says.
WikiLeaks and Anonymous are out there watching and waiting
and who they target next is anyone's guess. Leave it to say that as
Loss Prevention executives, we have a responsibility to make sure our
organizations and our information is protected. From making political
donations taking stands on certain issues profiling facial
recognition any sensitive information has the risk of being WikiLeaked,
especially from disgruntled former or current employees. Have you
tightened up your information channels and controls on departing
employees recently? And are you monitoring your corporate employee
population for signs of possible leaks?
Who'll be the next WikiLeaked?
According to a new survey,
the debit card is now the preferred payment method,
beating cash, credit cards and checks. However, the suggestion now is not
to use them in restaurants as they are the biggest risk in the market place.
And given the daily news of skimming activity, they rank first with gas stations
being in second place. The point is that the consumer debit cards are
harder to recoup losses from then credit cards. Interestingly, what's
become the number one payment method has also become the #1 risk.
Avenue is opening 5 more Off 5TH's outlet stores
and expanding that business channel.
Opening in Merrimack, NH, Syracuse, NY, Livermore, Calif., Grand Prairie,
Texas, and Nashville, Tenn. outlet centers. Couple this with Bloomingdales
push into the outlet business and you've got some high-enders growing. The
outlets did well during the recession and continue to show small growth
The first of its kind in the U.S.
Mississippi's Intellectual Property Crime Center website to help recognize and
report counterfeit goods
for the consumers with a secure section for law enforcement. The National White
Collar Crime Center, a training project funded by the U.S. Justice Department,
helped develop the website and law enforcement database. (Source
Smartphone virus that records and
saves a user's private conversation
has recently emerged and can be uploaded to a remote server where it becomes
available to thieves and hackers. As mini-computers, they lack the essential
security components that protect users from malware attacks. Tips Lock your
phone Use only secure networks Only install trusted apps Log out Get
mobile security software Keep the default factory settings Beware of unknown
DSW 2Q reports same store sales up 12.3% with revenue up 15%
Dollar General 2Q reports same store sales up 5.9% with revenue up 11%
Winn-Dixie 4Q reports same store sales up 3.2%
Tops 2Q reports same store sales down 1%
Barnes & Noble 1Q reports same store sales down 1.8% with revenue up 2%
The Main Street Fairness Act,
web-based sales tax law, will be a hot subject when Congress returns from recess
on Sept. 6th. Losses
from not collecting state and local sales taxes from Internet purchases will
expand from $8.6 billion in 2010 to $11.4 billion in 2012, according to a
University of Tennessee study.
Three weeks after
Facebook launched a bug bounty
program that pays Web hackers cash for finding flaws
with its website, Facebook said it has paid out more than US$40,000 in rewards.
Flash Mob News
The Flash Mob response of
shutting down cell service by San Francisco's Bay Area Transit
(BART) a few weeks ago to stop protesters from organizing and creating a
"civil disturbance" and to "ensure safety"
result in an FCC ruling that could have long-term impact on this
An emergency petition filed by a number of digital rights groups
asks the FCC to rule immediately so that other government agencies don't
try to copy BART's tactics. BART appears ready to shut down mobile
phone service again for similar reasons, the groups said. "The petition
isn't really about punishing BART so much as making sure that this sort
of problem won't arise in the future," Siy said. "We hope that the FCC
will clarify for other local authorities around the country that
shutting off cell service isn't just a bad idea, it's also against the
law. BART's actions are a violation of established U.S. law, "plain and
simple," Siy said. The Communications Act says telephone carriers and
their agents cannot "discontinue, reduce, or impair service to a
community, or part of a community" without FCC approval. (Source
As a result of the
recent 7-11, well publicized, Mob theft incident in Montgomery County,
Md., lawmakers are considering introducing legislation that specifically
addresses crimes committed as part of a mob. Officials declined to
label the Germantown incident, which lasted just about a minute and was
captured on surveillance video, a "flash mob" because it was not
organized online or via social networking. "This was not organized by a
tweet [or on] Facebook," Montgomery County State's Attorney John
McCarthy said. "It was something more dynamic and occurred on the walk
from the bus station to the 7-Eleven." In addition to the possibility
of a new mob law, police say a youth curfew, which is already under
discussion by the County Council, may have prevented the incident.
The Consumer Confidence Index drops 15 points in August
the lowest since April 2009.
Reading the Daily
pays off One U.S. retailer was
reading the Daily's reports during the UK riots and learned about the old law in
the UK that allows retailers to file for their losses due to looting with the
local police and recoup their losses. They alerted corporate counsel and
started the process. We at the Daily appreciate hearing this story and stay
committed to our mission of Educating
Informing & Instilling a Sense of Community for the Loss Prevention & Safety
executives of North America.
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Join forces with the
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