Supply chain issues and inflation fuel billion-dollar black market

Scammers sell everything from fake handbags to fake electronics, but now, they’re getting creative, and it could become deadly, according to Customs and Border Protection. Experts say that people are pawning off fake alcohol to unsuspecting customers because of supply chain delays and inflation. 

"Whenever consumer demand begins to exceed the supply, you tend to have the black markets looking to capitalize on that," Wine and Spirits Wholesalers of America Executive Vice President of Communications and Marketing Michael Bilello said. 

In the last fiscal year, Customs and Border Protection seized over $3.3 billion worth of fake goods, including things like fake pharmaceuticals, shoes and electronics. Fake liquors were among the items seized. A large number of these items come from China. 

Sazerac CEO Mark Brown said his customers are among those who are getting duped into buying fake alcohol. 

"We have seen a dramatic increase in the number of counterfeits, and we’re finding examples of people who have bought bottles that have been refilled," he explained. Brown said because supply has been low, people are seeking out items on auction websites and marketplaces, where they are getting scammed. 

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Bilello explained the importance of staying within the distribution chain to ensure you don’t get scammed or harmed by consuming something potentially deadly. 

"Like any other market in the U.S., where there’s a lot of value placed on items, you always have bad actors," he said.  

"Consumers who go outside the three-tiered system in a strongly regulated marketplace, are going to be subject to counterfeits and perhaps illicit alcohol," Bilello said. 

The three-tiered system prohibits distillers from selling and distributing alcohol, prohibits distributors from distilling and selling alcohol and prohibits retailers from distilling or distributing alcohol. 

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"Inside the three-tiered system, you’re not going to become a victim of a scam of counterfeit products," Bilello said. 

Gabriel Ibanez works as the regional director of operations for Republic National Distributing Company, one of the largest alcohol distribution companies in the nation. They act as the middleman in the system. 

"We’re getting directly from a supplier. We know everything we are carrying is authentic," he said. 

Though there are strict regulations set in place in the wine and spirits industry, scammers still find a way to make profit and take advantage of people. Scammers will purchase high-end empty bottles and fill them with water or a cheaper alcohol before selling them off as something else. 

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"People will buy them for a high price because that’s what they’re selling for, versus here, we’ll buy it from the supplier at its cost, ship to the customer at our cost, and they’ll sell it from the retail value from there," Ibanez explained. 

The Customs and Border Protection website warns:

"Many counterfeit products are low-quality and can cause injuries.  Protect yourself and your family by avoiding potentially risky items."