#828 – Piracy in Latin America: From Counterfeit Goods to Illegal Streaming

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border, down Mexico way That's where I fell in love when the stars above came out to play and now I wonder Hello there all you ex-pat wannabes I'm Johnny Mueller and you're listening to the expat files living in Latin America the show that tells you just what it's like to live Work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here So let's get started You know one of the first things gringos and expats notice once they come down here to Latin America is there was pirating Everywhere now. I don't mean our shiver me timbers kind of pirates You know 16 men on a dead man's chest and all that

[00:46] Although that kind of pirating does exist in one particular area of Latin America That would be the waters between Venezuela and the island of Aruba and in Cura south Meaning you don't want to be cruising around on a catamaran or luxury yacht in or near Venezuelan waters because there really is a good Chance you'll be boarded by local Venezuelan pirates Then of course expect to be robbed and maybe never heard from again, you know That's one of the consequences of being a failed state They're breeding grounds for pirates of the Caribbean kind and of course consumer product pirating So today we're going to discuss everything and anything you ever wanted to know about Pirated goods in Latin America, and I'll tell you when I first got down here to Latin America almost 30 years ago now

[01:32] There was plenty of pirating everywhere and since then man Not only has it not gone away or diminished you could say the pirating base is on steroids And it's much more sophisticated, too And now of course you've got IT and the Internet and man that's made it even easier to be a pirate now You could be a couch potato pirate from the comfort of your own home Let's take for example Brazil and the city of Sao Paulo It's a huge city and everywhere you see guys Weaving through crowds pushing hand carts stacked with garbage bags filled with knockoff Gucci and Louis Vuitton handbags at 10 to 30 bucks a pop they've got Nike's Reeboks Puma's all for 8 to 10 bucks a pop

[02:17] So you know they're not real. They've got all the name brands to Ray Ban Oakley sunglasses at 3 to 5 bucks a pop and man have they got the lock on those little reading glasses Buy a lot of those myself They're going for like a buck or a buck and a half even the ones that are high quality with springs built into them So you don't break them in the first week You know in the states that target Walmart Costco You'll be paying 10 or 15 bucks apiece for the good ones But get this these days, and I never saw this a year or so ago You could walk down the streets of any big city in Latin America for example Sao Paulo Brazil again And buy personal data and email lists to use for marketing and you know when it comes to internet sales It's all about the quality of your marketing list, right?

[03:05] Man was I shocked when I saw you could buy all kinds of mailing lists right on the street and they're sorted Get this by profession region age demographics etc etc marketers dream And guess what I saw that you could get a package of 50,000 emails and all the debts on people for only three bucks a Marketers dream of course who knows the quality of those lists, and how many times they've been sold you get what you pay for right? including this show Talk about complete loss of privacy You know that has a lot to do with the fact that I told you before many times before that Latin So give up their email credit card numbers What's up numbers address and all the debts on their family members to anytime a pop-up window appears and says put in your debts

[03:52] And you'll get a free slice of pizza though They really don't even have to plug in their debts because Google Yahoo Fake book twaddle and Instagram are collecting all that stuff and selling it to the highest bidder, too But I digress as usual. Where were we? Oh, yeah So as mentioned pirating has gotten real sophisticated here in Latin America now get this during the Christmas rush We just had in 2018 the hottest item for sale on the street down here in Latin America was a little black box No bigger than a couple of packs of cigarettes that allows you to receive nearly every cable or streaming TV series on the planet in any language Now I was skeptical. I've seen these things and they sell anywhere from 100 to 300 bucks aside from the fact They're illegal. The question is how do you know these things will do what they say because you know me

[04:41] I've been down here a long time and I bought lots of pirated CDs And I'd say probably one out of five or six once you'd get it home and in your CD player was a dud Now I know what some of you are thinking Oh Johnny How could you buy pirated stuff and I say how could you not fact is you can't find anyone who sells? Legit CDs down here and if they did you'd probably have to pay five or ten bucks for the real thing Meanwhile, the pirated jobs are going for a buck or less Anyway, we all know CDs are on their way out their old school and everything's on the net these days though with lag time There is still a big pirated CD market here in Latin America But back to the point if you buy one of those pirate boxes, how do you know it'll even work as advertised

[05:28] Well, never fear even these pirate guys and sleazy little kiosks have an internet connection to prove it to you right there So you drop let's say 75 or 100 bucks have free and of course illegal access to HBO Fox CSP and practically anything In fact, the guy selling it to you will instantly scroll up a huge list of Alphabetical offerings beginning with a Algeria. Yeah, Algerian TV just what the doctor ordered, huh? so you've got hundreds of stations to choose from ending in Z for Zimbabwe Zambia and Zanzibar three more perennial favorites, huh? Well, at least zombies stations in English In fact, the last pirate TV guy I talked to I told him I was from Chicago and within about three seconds

[06:14] He found the local ABC affiliates and was streaming high-def live images of Super Station WGN Alright ready for some stats as of right now February 2019 One-third of all Latin households get their pay TV illegally pirated and of course It's all about the money because most Latin American consumers probably 80% of the entire population Can't afford to pay the regular legit pay TV prices It makes sense, but that's not the whole story The truth is wealthy upscale Latins the upper-middle class politicians cops, etc Are pirate TVs biggest customers? I mean hell take a walk through a government building or business district and you'll see all kinds of those pirate kiosks

[07:04] Everywhere. Yep right outside and right in front of police buildings municipal buildings Congress even the presidential palace and Notice at lunchtime when everyone's out grabbing a bite You'll see lots of guys in three-piece suits queuing up for their little piece of pirated media without one bit of guilt fear or reservation Of course in Latin America legal subscriptions to things like HBO on demand Netflix Spotify, etc etc will run around 10 to 20 bucks a month and just like in the rest of the world that part of the business is Booming to and you have to wonder who's buying the legal services if the pirated stuff is so cheap in fact Sometimes even free after the initial purchase. I kind of think it's the real legit businesses the franchises like McDonald's Burger King

[07:53] Costco Walmart churches helicopter schools universities only businesses like first world franchises that have to run on the straight and narrow You know, it wouldn't look good if the corner church our lady of perpetual motion Ran pirated cable TV to all the classrooms though. I could be wrong about that So Latin America truly is the land of the digital pirates, too. So how does it work? How do people hook up? Well across Latin America Instagram. What's up fake book are just loaded with Advertisements pop-up windows that offer pirated access to Netflix Spotify and such They'll bundle all that up for you for a total of less than three bucks a month Generally, then you make your payments through Latin PayPal

[08:39] Yep They've got PayPal here and they'll give you security codes to access the contents and they'll update it monthly Via what's up as mentioned in previous shows everyone in Latin America has what's up even the shoeshine boys And if you don't have it, you're nothing anyway by stealing the digital signal They build out their own server farms here. So it's not your normal P2P connection. That's peer to peer It's P2P as in peer to pirate Anyway as of 2019 of all the ways to steal signals and illegally stream stuff to customers Nothing is bigger here in Latin America than those little TV black boxes get this in Brazil alone There are more than two million of those so-called TV boxes in use and since you know

[09:26] Latin males Latinos are nuts about their football. We call it soccer Suppliers can barely keep up with the demand for those things And even though there was somewhat live feeds coming from Europe's soccer games can have a 15 30 or 45 Second delay to the fanatic it's infinitely better than just a year or two ago when games were watched pre-recorded hours earlier or by Pay-per-view. In fact, Spain's Liga the World Cup guys claim a 60% loss in revenue Just from Latin American pirating alone. So what about when the legit companies change their codes? They do that once in a while You know, won't that screw up your pirate box? It needs those codes too, right? Well get this when you buy a pirate box you get a guarantee Chinese companies

[10:12] Manufacture those boxes with built-in pirate friendly configurations Hmm again with the Chinese, huh? That means the Chinese set up and maintain certain standard features so that the software code is automatically Reconfiguring the networks when local or regional law enforcement shuts down access to foreign service Even wilder is the pirates hire their own software experts that steal the HD TV directly from legal TV boxes And it's so common that Latino soccer fanatics don't even flinch when they see Chinese Subtitles sometimes pop up on the screen right in the middle of a soccer match That's what happens when one or more servers get shut down and they have to reconfigure on the fly

[10:57] In fact one European reporter doing a story on the pirate biz in South America said he was walking on Santa If a Hina Street in Sao Paulo Brazil on a single black he counted 40 different little kiosks selling those pirate boxes He said they all seem to be buddies and loosely bound to a kind of a pirate co-op They even had their own clandestine software programmers that would offer to customize your box for another 15 bucks One guy said he sold an average of 20 to 30 boxes a day and often there weren't none on the shelves at all They were selling like hotcakes or rather I should say tortillas from there You walk down the street and you see little guys handing out slick flyers Offering access to a pirate platform called my family cinema which offers more than

[11:44] 60,000 films and TV series including more than 250 channels in Ultra HD And of course all the kid Disney and porn channels, too That's a mention. They've got a religion package allowing you to tune into more than 500 religious channels Hmm. You gotta wonder would Jesus be up for that. Hey, he multiplied the fish when the people were hungry Why not the pirate boxes? Hey, brother. Have you heard the word for 15 bucks extra? You could have it in a hundred languages, but I digress. Where would be oh, yeah Speaking of Chile we're talking about that place in last week's show Turns out last July just six months ago Fox Network News Group and paid TV Led a raid along with Chilean police on seven different pirate locations in Santiago

[12:31] They seized more than 10,000 black boxes including a number of servers packed with the names and viewing habits of the pirate network's 50,000 plus subscribers, so that's one way pirates can avoid being prosecuted in various countries by having subscribers in one country Routed through another country. So if there's a raid the jurisdictions are all muddled and no one gets prosecuted Meanwhile in Paraguay's private pirate paradise, Ciudad del Este Hmm. Try saying that real fast after a couple of tequilas. Let's see Paraguay's private pirate paradise Paraguay's private pirate paradise Whoa anyway, police seized a hundred and fifty thousand illegal black boxes and 90,000 black boxes that had just arrived from Peru

[13:19] the thing is cops are very hesitant to prosecute these kind of crimes because they buy pirated stuff themselves and They're on the take to look the other way In fact, I'll bet you a Bitcoin that there isn't a single cop or fat ass government slug Who doesn't have a dozen or so pirated CDs at the house I'm talking about cops in uniform and fat ass bureaucrats in their three-piece suits walking up to a kiosk Right in front of where they work buying pirated stuff as casually as you'd buy a package of Doritos Oh, and I've also driven on the pan-american highway between Guatemala and Mexico and I've watched cops pull over and buy pirated gasoline, too Yep, there are hundreds of little outlets up and down the pan-american I weigh selling pirated gasoline and diesel in individual gallon and five gallon jugs with the discount price

[14:10] Scribbled on each jug with a magic marker And the funny thing is years ago when I first saw a police cruiser pull up to one of those pirated kiosks I thought aha, they're gonna bust that guy for selling pirated gas Instead they were there to buy a couple gallons. Not kidding So the question is as compared to a few years ago, is there more piracy in Latin America or less? Well, let's dive in by talking about this article that just came out of Brazil Starts out when Brazilian authorities announced to crack down an illegal cable and TV services in 2018 a newspaper poll showed 95% of the public opposed any measure or crackdown In fact, what the poll showed was that Latin society believes illegal markets are legal

[14:59] Especially since they know the cops and the politicians are involved in it, too Then the article says after spending months Investigating and receiving judicial orders to shut down a major pirate broadcasting network in Rio de Janeiro Brazil Regulators and the legit people in the industry cheered when finally after months and thousands of hours of police work The illegal streaming network was halted However, within two hours the software installed in those black boxes had linked automatically to alternative servers And it was up and running again two hours later But they did discover some of the main ways those pirate platforms get back online They discovered the Chinese are hosting those sites

[15:46] Again with the Chinese They use their own server networks and when alerted that legal actions are about to shut down their servers They immediately migrate over to Amazon. In fact, it says according to Antonio Sala's net Oh who works for the anti-fraud intelligence unit of the Brazil Association of pay TV He says the servers will reroute through Amazon calm or Alibaba No wonder how they do that and it's not possible to shut them down once that happens be Johnny again Don't ask me how Amazon gets involved in all that but hey Just reporting the facts ma'am. Oh, and by the way, it's not just IT TV and media that get pirated Turns out that a third of all Latin American medicines are pirated too

[16:32] In fact, you can visit any crazy chaotic street market and you'll see medicines and pharmaceuticals being sold everywhere You'll see familiar names and brands of psychotropics Antibiotics blood pressure meds even three or four different kinds of Viagra and you'll see it's not just poor Latin consumers buying this stuff It's the middle-class wealthy and upscale professional classes, too Which brings us to this crazy ass story of a guy in Guatemala whose nickname is El Rey the tennis In English the tennis you King this guy whose real name is Roberto Lopez Is the tennis you King he started his career in the early 90s selling shoes out of the trunk of his car while he was in Law school people bought his knockoff brand names and that's no questions. He was buying directly from China

[17:23] Again with the Chinese through Panama at five bucks a pair for knockoff named brands like Reebok Nike, etc By 1999 he was selling 10 million pairs a year Then being a lawyer. He was able to register his own brand name called Payless Exactly like the US retailer though Latinos don't pronounce it right They say Baylex with a non-existent X at the end of it paylex And he was selling Nikes and Gucci loafers for seven bucks apiece then in 2001 the real Baylex sued him as did sneaker brands fans and Pila But nothing happened and the charges were stalled in Latin court And how about this even the Guatemalan Nicaraguan Honduran and El Salvadorian

[18:13] Governments were his customers in the last decade He sold boots to their armies sports apparel and uniforms to their ministers of education and uniforms and boots to their police departments So all you expat gonna be some wannabes if you think piracy is gonna go away here in Latin America. It's Institutionalized so forget about it Alright, so we talked about counterfeiting media TV sports programs, etc and shoes. So what else is pirated? well, it's estimated that roughly one third of all the booze and alcohol is pirated or illicit and Mexico is a major market for counterfeit toys Who'd have thunk it's found that one in every six toys for sale in Latin America is pirated

[19:02] So is your kids toy Mattel Hasbro or a real Barbie? Maybe not and this is hard to believe but it's true Some Mexican made toy bootlegs have become so popular and sought-after by collectors They fetch much higher prices than the real thing Not only that there's a huge market and pirated printing material fiction nonfiction But the big printed market by far knock off copies of academic texts Let's talk about Chile again, and it's Chile not Chile It's ground zero for Latin America's biggest illegal printing and ebook operation through pirated download sites and databases Like sigh hub which provides pirated papers to university students in the name of open access

[19:49] In fact, it's been estimated that 40 to 50 percent of all copyrighted educational books and articles are pirated and or Violate intellectual property laws and so as a secondary effect How can you expect? University students when they get out and graduate to view pirating and violation of intellectual property rights as a serious offense or any Kind of offense at all. Oh and take a guess which Latin country counterfeits the most drugs and pharmaceuticals by far All right times up. Did you guess Columbia? You'll be surprised when you hear that legit Colombian drug manufacturing outfits also produce counterfeit Pharmaceuticals to like discounted treatments for cancer HIV erectile dysfunction meds

[20:34] The works with knockoff labels and often falsified expiration dates And I'll bet you never thought in a million years that Peru is the counterfeit US doe capital of the world Although it's said that North Korea produces the best fakes it turns out in 2003 the US Secret Service first discovered nearly perfect hundred dollar bills coming out of Lima, Peru And they've only gotten better at it turns out these days on the outskirts of Lima for 180 bucks You can buy two thousand dollars in almost perfect fake greenbacks So then how many of these funny money copies of funny money are actually getting out there in the public? Well in 2016 the last year we have data on this US agents in Peru sees 30 million bucks in counterfeit funny money funny money

[21:23] But that's not all Latin America even has counterfeit food. Who'd have thunk, huh? Well, guess who's the biggest producer of counterfeit food in all Latin America? That would be Nicolas Maduro scumbag socialist dictator president of Venezuela Who else whose government was recently caught graciously handing out powdered milk that had no milk or dairy products in it at all? Oh, and they tried to pin it on Mexico because they'd stamped the boxes made in Mexico Yep, Bernie and that snaggle-tooth looking woman Ocasio repeat after me socialism works socialism works my advice Take a handful of soul offs wash them down with a bottle of tequila and book a flight to Caracas Oh and Ocasio, how about free dentistry for everyone starting with you, but I digress as usual but not much

[22:13] Right. Here's another did you know did you know that half of all the software in Latin America has been password cracked and unlicensed making the illegal software market equal in value to the legal market Oh in Brazil has the most flagrant software pirating in all Latin America. Why? Yeah, they actually know why well Analysts say the practice had its roots in the previous Military dictatorship with some of the world's heaviest taxes and restrictions on imports which kick Brazil's software and video game pirates in high gear Oh, and this is interesting. Let's talk about counterfeit seeds and plants Did you know that Argentina is the world's third biggest exporter of soy and corn and right now? There's a controversial kind of piracy which occurs when farmers knowingly or unknowingly

[23:02] plant genetically modified seeds Turns out a previous law allows Argentine farmers to replant genetically modified seeds Again, rather than buying new seeds from companies like Monsanto However, Monsanto recently threatened to leave the Argentine market because of this law So as a result Argentine farmers just struck a deal to pay royalties as part of a proposed reform to that seed law It's in the end will transfer some six hundred million dollars in royalties to buyer slash Monsanto You know, they're one company now over the next five years Now with all due respect to Doug Casey for me, that's just reason 1246 why I'd never want to live in Argentina. All right, but let's not forget the pirated cosmetics industry

[23:53] And for that we're back in Chile again. They're big on pirated beauty and personal care products Maybe number one in all of Latin America turns out in late 2018. Just a few months ago Chilean custom seized 144,000 boxes of undeclared unmarked that means without a country of origin beauty products valued in the millions and Industry tests on some of those counterfeit products revealed that some had high levels of mercury and even human waste Nice what price beauty, huh? Now if you look at simple logistics Brazil has the most problem with counterfeiting because it borders ten different countries and has about 5,000 miles of coastline that means there are thousands of unmonitored exit and entry points now

[24:44] If you talk to anyone from South America They'll tell you the best place with the most variety of counterfeit products the one place you can get everything and anything counterfeit, of course, that would be the wild and crazy chaotic Notorious area known as the triple frontier where Paraguay Argentina and Brazil meet at one point So keep that in mind if you want to see a market that's really like the wild wild west So then what our governments and international property law experts doing about it Well last year around 800 tons of counterfeit goods were almost a hundred million bucks were seized near that triple frontier And guess what within two months they were selling balls to the wall again bigger and better than ever That's even though selling pirated software pharmaceuticals alcoholic beverages, etc

[25:31] Can carry huge fines and 15 years in jail? However, if you ask around you'll find that no one seems to know a single person who's ever been fined or jailed for it And here's something I'm sure you haven't considered since dealing in pirated and counterfeit goods is almost always in cash That's one way the narcos in Colombia Peru and Mexico can launder their dough Because cash can finance huge buys even ship loads of counterfeit goods from China It's the old suitcase full of dead presidents method. It's a great way to bypass banks altogether So then you might ask what about Mexico the closest Latin country to you? Well, as far as the government dealing with counterfeit and pirated goods They're doing just about nothing because you see there's a law on the books in Mexico that says the Mexican Attorney General's

[26:23] Office is not authorized to seize Suspect counterfeit goods in transit or through borders unless first it's done a study of the impact of those goods on the Mexican economy Good luck with that. Sounds to me like the counterfeiters wrote that law They probably did Which brings us to Panama where all those counterfeit goods end up making a stop So Panama's the number one pirate distribution site in all of Latin America Well, according to intellectual property attorneys in Panama raids on containers are being affected all the time They say China has its own intellectual property laws But they don't want to implement them in Panama which leaves Panama officials the job of opening containers and checking out counterfeit goods

[27:11] Meanwhile if you walk down any of Panama City's busiest streets or the free port of Cologne in Panama You'll see all kinds of people queuing up at stores and little kiosks for what else to buy counterfeit products The public's buying the cops are too self-important bureaucrats are buying and lard ass government slugs. Are there any other kind? You've been listening to the expat files living in Latin America If you need some help with your own plan B, you can schedule a one-on-one phone call with me But first download my free plan B questionnaire at www.thenewexpat.com Better yet, if you want to get your plan B going from right up there in the states Just sign up for my 9-hour expat essentials course Get the perfect plan B blueprint by going to the expat files dot com slash academy

[27:58] Los bemos