Yeah, this is a good topic.
As far as legal vs. ethical; I know that at least in my state (and federal law) it IS against the law to knowingly (emphasize knowingly) possess, sell, or distribute counterfeited goods. Why do you think that guy just got arrested? He didn't actually sit there at a factory and carve out pins by hand. He purchased them (like you can on ebay, he was just a little more direct) knowing they were fakes and distributed them (sold them) to other people (like new traders or the ones in question) passing them off as real pins. Therefore, those individuals in question that Dan is curious about are in fact actually breaking the law because they KNOW they are buying and distributing counterfeit goods. It is NOT an ethical issue in any way. It might seem like it because it isn't exactly the easiest thing in the world to enforce; it would be like trying to give everyone a $1000 ticket for littering every time someone spits out gum in the street. But just because it is obscure or impossible to enforce does not make it any more legal than what the people making the fakes are doing. Knowingly buying a counterfeit item and passing it off as real is ILLEGAL whether it is 1 or 100,000. End of story.
There are so many legit cheap ways to purchase real pins that these guys should be driven out of business, and shame on those that knowingly trade fakes to CMs. If I find a new trader in the park that has traded all their new pins for fakes I give them a real pin to compare with cast member pins before making the trade. You can find real pins to trade for four dollars or less. Some of the pins are old piece of history pins, LE's, Villains, canceled projects, mystery pins, pin on pin, hinged and artist easels to name what I have seen in the past. I even have cell numbers and email's of pin traders that I contact when I see some good deals at the store and I purchase pins on their behalf. PM me if you want to be added to my list; I am more than happy to help. Pins are as good as money to me (yes I do accept paypal also). I would trade you several discount rack pins for one pin no problem.
I frequent Disney discount outlets like:
Disney's Character Warehouse
243 Orangefair Mall
Fullerton, CA 92832
(714) 870-9363
Ontario Mills Mall Disney Store
1 Mills Circle, Suite One
Ontario, CA 91764
(909) 484-8300
I also do not believe in punishing kids for having fake pins. If they come to my table with pins in baggies I let them trade off my own personal "kid lanyard" and not out of my collection. If they are interested or just starting out I will educate them about fake pins. Many adults get offended if you tell them their pins are counterfeits and do not want to hear it; no one wants to hear that their metaphorical diamond ring they got on discount is CZ. They tell me how the pin is real becuase they got it off of a cast member and such. My response is usually that I can trade with them for pins they have purchased out of the store and that usually ends the debate.
Bottom line; obviously not ALL the people that trade that live near the parks have bought these, but there are plenty that have. Those that made an honest mistake can be forgiven. We bought several sets of 20 and 50 for like 12 bucks a pop, then got laughed at in the park with a book full of trash. Actually, looking up what a fake is lead me to this website to begin with. Dan's post on fakes is the first DPF thread I ever read. So, live and learn, and you might actually get some damn good friends as well as a little wisdom out of the experience. But, and I mean a big, huge, steaming BUT, there is no excuse for those that do this as a business. I met a family that made a hell of a profit on this; tell innocent naive people they have a fake, trade them 2-3 fakes for their one pin out of "pity" and say they are "doing them a favor", and then go trade those for real pins off of CMs. Now, I know people that do it every once in a while to be nice to the naive, but these people... it was their business. I sat there and watched them one day. It was a mom and like 5 kids. When they got there, I looked through their stuff and they had maybe a hundred pins, mostly rack and not a single one special. I looked again several hours later and they had at least 300; the book that started half full was now full of fakes, and they were just dumping the ones they were getting into a big shopping bag. I heard one of the kids say to the mom "look mom, I got five fakes out of that guy for one pin!" The mom then sent that kid out to scour real pins for them off of CMs. This was going on all day, and who knows how many people they did this to. This whole family was actually running a scam in the park. Real, honest pity is one thing, but not what they were doing. They were doing it knowingly and for profit. Just remember, if you do this, or buy them off the bay knowing what they are and trade them in the park anyway, you ARE breaking the law.
~Geoff
PS Magnet test: I did the same thing; took a powerful magnet into the park and pulled it across several hundred pins. Less than half are magnetic. Magnets prove NOTHING.