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The Risks of Running on Counterfeit

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Last month the City of London Police announced the genesis of a new specialist cyber-crime unit - which I welcome with open arms. Piracy is a real and persistent problem, in particular computer software piracy. While the internet has transformed society, it also plays to the criminal under-world's preference for anonymity and has been effectively exploited as a playing field for the unscrupulous. Their victims are mainly every day consumers and businesses.

While many people knowingly use pirate websites; a sizeable proportion are regularly duped into buying illegal goods which exposes them to all manner of risks. According to our research, 52% of small businesses in the UK have either bought or downloaded illegal software. Over two-fifths (41%) believe their details were used in identity theft as a result and over a quarter (28%) had their credit card cloned. A third claimed additional money was debited from their account and unsurprisingly another 41% complained that they had no way of directly contacting the seller.

The lack of contact details on illegal websites links to why it is so difficult to clamp down on this opportunistic crime. Site creators can mobilise themselves quickly to set-up websites, make a profit and then destroy all traces of their activity before moving onto new sites.

Business Secretary Vince Cable is reported as saying that safeguarding the UK's creative industries is vital to the growth agenda. There is ample evidence to back this up. In terms of the software industry, a hugely important money and skills generator for our economy, unlicensed software repetitively robs the UK economy of valuable revenue. A recent BSA commissioned study with INSEAD shows that increasing the use of properly licensed software would have a greater impact on the UK economy than allowing similar growth in the use of pirated software. A one percent increase in the use of licensed software would generate an estimated £2 billion in national production, compared to £470 million from a similar increase in pirated software.

Just as our survey showed that the user experience of buying illegal software can be very testing, the risks to software and hardware are also ominous. IDC and Microsoft recently tested counterfeit software for evidence of additional malicious code. Their findings are quite chilling. Over three-quarters (78%) of software downloaded from websites offering counterfeit software contained tracking cookies/spyware and 36% came with Trojans or malicious adware. All of which expose businesses to identity theft, data loss, PC damage and downtime. This is a dangerous cocktail of risks. A business could be effectively crippled by a destructive virus infection, suffer a devastating blow to its reputation and incur untold financial loss as a result of compromised productivity.

In addition to operational risks, there are legal ramifications of being found with illegal software; whether the software was procured intentionally or not. The BSA has a remit to act on its members' behalf in instances of intellectual property theft. We take enforcement action against companies that infringe Intellectual Property Rights on the grounds of illegal software use. Enforcement activity is generally costly for the organisation involved, stressful and time consuming. It's also entirely avoidable. With the right advice a business shouldn't fall into the trap of using illegal software.

Vigilance is a business' best protection. I would urge all businesses to question websites that offer software at discounted prices, even if it has only been reduced by 10%. Where possible, try to purchase software from certified vendors only. It's also prudent to check the website has an encrypted payment page and its web address starts with 'https://'. Make sure you can contact the seller in case you have any issues with the software. The law requires every commercial website includes specific contact details. Beware of sites that only give a mobile number or generic 'contact us' form. Another tell-tale sign is an activation key that doesn't work. If you're receiving a CD through the post check the hologram is embedded and can't be peeled away.

It's almost inevitable that a company that actively looks for the cheapest deal will fall into the trap of buying illegal software. Ironically it's these businesses which are paying the price further down the line. The new internet piracy unit has a significant job ahead of it.