Cisco has warned that supply chain challenges and material shortages were creating a rise in grey-market activity and counterfeit IT products.
Cisco legal director Al Palladin said some customers — and even channel partners — were looking outside of Cisco’s authorised channels to get their hands on new products faster, resulting in a spike of counterfeit activity,
Products sourced outside of Cisco’s authorised channels won’t come with a valid warranty or license from Cisco. This gear also runs the risk of being tampered with in a way to makes it more vulnerable to security breaches. Not only could this cause damage to Cisco’s brand, it also could leave businesses open to attack or early failure of the product, Palladin warned.
Palladin’s Global Brand Protection was established to investigate leads on fake Cisco IT gear or grey-market activity. The group is focused on product diversion crimes and counterfeiting, or illegally using cisco’s trademark on fake or tampered-with products, a growing problem in recent years affecting Cisco’s switches and access points.
Cisco and its colleagues in the Alliance for Gray Market and Counterfeit Abatement (AGMA), which includes the likes of HPE, Juniper Networks, and Microsoft, have estimated the economic loss to channel partners exceeds $100 billion a year. From a Cisco perspective alone, the company estimates $1.2 billion a year in losses to Cisco partners that are displaced by other partners winning deals with counterfeit, or low-quality gray market gear or customers purchasing outside of the Cisco supply chain.
Palladin urges partners to be aware and careful during these challenging times.
“Temptation is out there”, he said. “There are many fraudsters out there that are trying to cheat you out of legitimate business, and if it’s too good to be true, it probably is. Don’t put your reputation at risk.”
