Upset Over Selling Counterfeits: What to Do?

Dear Rich: I have been so depressed for so many days. The issue is basically, I have sold some counterfeit goods saying they were real. I sold counterfeit goods 8 times via Paypal. Furthermore I also sold a lot of my products face to face. Ever since I found out that my goods were fake, and that my supplier who said they were real had lied to me, I stopped. The last time I sold something was 2 months ago. I have never received a complaint or have been contacted by any agencies. I am so scared. Will Trading Standards come after me? I have completely stopped what i am doing. If Trading Standards comes after me, what will they do to me and how should I retaliate? We're guessing that you're located in the U.K. where the Trading Standards Institute oversees enforcement of anti-piracy laws. Because we're only familiar with U.S. law, we'll answer from that perspective, hoping that the universality of your dilemma crosses national borders.
Have you committed a crime? Generally, in criminal law, the perpetrator must have an intent to commit wrongdoing. In cases of fraud, for example, that usually means that the perpetrator intends to cause actual harm or injury. In counterfeiting cases in the U.S., this intent can be inferred from "willful blindess" -- when the perpetrator suspects wrongdoing but deliberately fails to investigate. If you honestly had no idea you were dealing in counterfeit goods and had made some reasonable attempt to authenticate the goods, then you would lack intent under U.S. law and you would not be guilty of trading in counterfeit goods.
Are you personally liable to the victims? Yes, even if fraud or counterfeiting can't be proven, your customers would be entitled to full refunds because they did not receive what they contracted for ... authentic goods.
What do you do? Assuming you're not going to report your sources to the authorities, you basically have two choices. You can: (1) notify your customers and offer compensation; or (2) do nothing and wait to see if anyone notices that the goods are counterfeit (and then deal with the issue). Complicating your ethical dilemma is your relationship with your customers -- you may feel especially pained to have defrauded friends or relatives. We're also mindful of your mental state. Depression is a powerful oppressor. Make the ethical decision that works for you and then close the door on the matter.
P.S. Dept. You might be suprised to learn that some people knowingly buy counterfeit products; in fact they seek them out.