You may say, "I didn't make it! I didn't know it wasn't safe!" The answer from the courts may well be, "You should have."
One of the most common misconceptions is that a distributor can't be liable for distributing a counterfeit good or a project subject to a lawsuit or recall. Distributors are increasingly being held liable for the distribution of counterfeit or defective products, say attorneys, even if they did not know the products were bad.
If courts decide that distributors "should have known" the products they were selling were inferior, it's called being "willfully blind."
When You Should Know
Some examples, from real court decisions, of situations where the court said the distributor should have been tipped off that parts were counterfeit:
- Purchase are outside the usual distribution network of the manufacturer.
- The goods are sold without authenticating documentation or with altered documentation.
- The quality of the purchased goods differs dramatically from the quality expected.
- The price you paid was dramatically below the reasonable or suggested price
- Billing slips use mysterious or cryptic codes to describe the products purchased.
And it's not just counterfeits. According to a special report by the Automotive Aftermarket Suppliers Association, distributors also can be held responsible for private label or will-fit products.
For example, the report says, the National Highway Traffic Safety Administration took action against the distributor of a tail light that did not meet required federal safety standards. The distributor faced fines of around $650,000.
4 Things to Watch
Here are four things you can do to help know you're selling genuine, reliable parts:
1. Take complaints seriously. If you start getting complaints about the way a product is performing, you should contact the manufacturer and stop selling it until you get things resolved.
2. Pay attention to details. Check packing slips to make sure they don't look tampered or altered. Check the quality of the product. Check the country of origin -- if it normally comes from Europe and this shipment came from India, for instance, that could be a red flag. (However, there are reputable companies that make quality products overseas.)
Look for visual cues that something is amiss. Minor markings on a product can be telltale differentiators between a real and a fake part. Are the part numbers and RMA codes on the part accurate? If you are buying a particular brand name, make sure the name of the company is on the product, not just the box. Take a close look at the packaging. Is the brand name spelled correctly? Are the colors what you expect from the original manufacturer? Is the paint job poor?
If you run into any of these types of things, don't hesitate to call the manufacturer.
3. Buy brands you trust, through the manufacturer's normal channels. You should buy from a trusted source. If you find someone on the Internet offering a pallet load of unnamed product that you can pick up at the dock in California, that's probably not genuine product. Most reputable manufacturers sell through their own reps or a different channel. You're not going to be able to buy them by the boxload from a guy you met in the corner at a trade show.
You need to think about who is distributing the parts, what kind of reputation they have, and if they stand behind what they sell.
4. If a deal sounds too good to be true, it probably is. When you look at the real competition, and they're all within a certain price range, there's a reason behind that pricing. If you find a product being offered at a huge discount, it should set off warning bells.
Even if you never get hauled to court, the fact is, your company's reputation is on the line. Better do your homework.