A third have used pirated digital products, survey finds

Illicit trade loses State up to €946m says report urging more intellectual property protection

Cybercrime could be costing the Irish economy as much as €630m per year. Stock photo: Getty images

Cybercrime could be costing the Irish economy as much as €630m per year. Stock photo: Getty images

Thu, Mar 27, 2014, 11:53

A third of consumers have knowingly acquired a pirated product, according to a new survey out today.

The findings are part of a Grant Thornton report which estimates that illicit trade in the Irish retail sector loses the Exchequer up to €946m and loses retailers and rights holders up to €587m.

This ranges from products such as fuel and tobacco to digital goods and pharmaceuticals. The estimated loss is 3 per cent higher than last year because of a “limited government response and continued weak penalties for violation of the law”, the report says.

The loss to the Exchequer from digital piracy is €57m and is €260m to the rights holders and retailers, the report says.

Films were the most commonly acquired digitally pirated product (70 per cent)followed by music (56 per cent) and television series (34 per cent), the report’s survey found.

Cheapness was the most common reason for acquiring these products (70 per cent) with convenience coming second (42 per cent). Most consumers (80 per cent) thought such products were easy to acquire. A fifth of those surveyed did not care about the impact on legitimate business while a third cared “a little”.

The online survey conducted by Amárach included a representative population sample of 1000 people and a sample of 200 shops across the State.

The estimated loss to the Exchequer from illicit trade in tobacco was even higher than digital piracy than at up to €575m , with costs to retailers estimated at up to €122m.

Almost a quarter of consumers surveyed said they knowingly purchased illicit tobacco, the survey found . The greatest reason for the consumers to purchase tobacco was cheapness (83 per cent ) while a quarter of consumers said they knew someone selling it.

Three-quarters of retailers believe their revenues have decreased as a result of illicit tobacco trade and also think the government response in the area is too little. Most retailers surveyed believed that government proposals to introduce plain packaging for cigarettes would increase illicit trade.

T hese proposals could “potentially send a negative signal about Ireland’s commitment to intellectual property rights protection”, the report says.

Ireland has the highest contribution from intellectual property intensive industries in the EU, at 50 per cent of GDP and almost a quarter of total employment coming from such companies, the report finds.

“Digital piracy of movies, production of counterfeit CDs, smuggling of illicit tobacco and alcohol are all examples of IP abuse that hurt the Irish economy,” report author and Grant Thornton partner Brendan Foster said.

Because of this the defence of intellectual property rights should be central to government strategy and a “strong national framework of intellectual property protection is vital “, he said.

Even though just 6 per cent of people surveyed knowingly purchased illegal fuel, the report estimates that the total loss to the economy was up to €466m, over half of that being loss in taxes. A fifth of those surveyed believed illegal fuel was as the same quality as legal but most thought it was difficult to buy.

Most retailers said organised crime was involved in fuel laundering and the report makes a link between illicit trade in fuel and tobacco and money laundering . “Money laundering allows these illegal proceeds to penetrate the legitimate financial system,” Mr Foster said.

Money laundering in Ireland is likely to range from €3.1bn to €7.8bn, the report estimates based on figures from the IMF.

“New threats such as the unregulated nature of payments with virtual currencies such as Bitcoin also pose new challenges to controlling what is a global problem.” Mr Foster said.

Cybercrime could be costing the Irish economy as much as €630m per year, the report, ’Illicit Trade: an Irish and Global Challenge’, finds. Cybercrime costs include online banking fraud , fake escrow scams and online payment fraud as well as costs to protections costs for businesses such as antivirus software.

The report finds that big data technologies are increasing the effectiveness of cybercrime attacks with organised criminals the drivers of cybercrime. Non-reporting of such crimes is a problem both in Ireland and globally, it says.