Producing counterfeit products is big business, but it hurts both legitimate businesses and consumers.

Businesses that make a designer product, for example, lose money if a consumer buys a knockoff, thinking it's the real thing. Consumers often end up with shoddy, and even dangerous products.

New Jersey State Police say they have shut down a major counterfeit trademark operation based out of Passaic, N.J. Wan Kim, 52, of Ridgefield, N.J. was arrested by detectives and charged with possession and manufacturing of counterfeit trademark items.

$1.6 million in knockoffs

In a raid on a Passaic, N.J. warehouse, detectives seized over 15,000 pieces of counterfeit trademark clothing valued at approximately $1,600,000.

Some of the brands involved were Polo Ralph Lauren, Northface, Ed Hardy, and the NBA. Police says they also seized 100,000 counterfeit trademark neck labels and price tags for numerous trademark clothing companies including Lecoste, Baby Phat, True Religion, Girbaud, Coogi, Adidas, Sean John, and two Tajima 20 head embroidery machines valued at $120,000.

"This counterfeit operation was not small by any means, it produced millions of dollars worth of clothing that made its way onto the black market in New Jersey causing legitimate companies millions of dollars in the process," said Colonel Rick Fuentes, Superintendent of the New Jersey State Police.

According to a study by the Counterfeiting Intelligence Bureau (CIB) of the International Chamber of Commerce (ICC) counterfeit goods make up five to seven percent of world trade.

Shoes and handbags big sellers

Counterfeiters in the apparel industry turn out clothes, shoes and handbags that bear a fake designer label but are made in varying quality. Sometimes the counterfeiter is trying to fool the consumer into thinking they are buying the real thing. Increasingly, however, consumers are buying the goods because they are cheap, and don't care if they're genuine or not.

Consumers have to be especially careful when it comes to counterfeit drugs and other personal products that might actually be dangerous. In 2007 Colgate warned consumers that counterfeiters were selling knockoff toothpaste. The toothpaste contained DEG, a deadly chemical found in antifreeze. The counterfeit tubes were discovered in discount stores in Maryland, Pennsylvania, New York and New Jersey.

Last year the Food and Drug Administration (FDA) warned consumers about a counterfeit and potentially harmful version of Alli 60 mg capsules. Tests conducted by GlaxoSmithKline (GSK) -- the maker of the FDA approved over-the-counter weight-loss product -- revealed that the counterfeit version did not contain orlistat, the active ingredient in its product.

Instead, it contained the controlled substance sibutramine. Sibutramine is a drug that should not be used in certain patient populations or without physician oversight. It can also interact in a harmful way with other medications the consumer may be taking.