Firstly, you're absolutely correct about you assumption of this product from China being fake.
People do take the risk, no doubt about that. You will find these products scattered throughout markets and other venues. You won't get away with listing them on ebay any more, they will pull your listing.
The answer to how people are getting away with it is that they are living on borrowed time.
I have a good friend that has been selling fake phones for two years now. When he first started I told him he was crazy, that it wasn't worth the risk. Here we are nearly two years later, he is still going strong...and making a killing!
We both know that it's only a matter of time till customs gets him, but he considers the risk well worth it. Unfortunately for him, he has been going fro so long now that when they do catch him, it won't be a slap on the wrist, they will make an example out of him for sure and then he might realize it wasn't worth it.
Plenty do it, but anyone that tells you that it is legal is either ignorant of the law, or just kidding themselves. Piracy in this country is a big trade, just as the US, but every time another load is imported, the person comes one step closer to getting caught.
What is also happening, especially here, is that effected brand owners are also taking their own legal action against those that are caught. I know that some big local surf brand companies, including billabong, have a policy now of legal action against any one caught by customs.
Piracy is hurting their brands so much that they have no other choice, other than to make examples of people who they can catch, and the law gives them plenty of options to do it!
If I were you I would call customs, just ask what the penalties are for importing and selling fakes, not sure myself any more, but I'm willing to bet that it's scary, and that's just what customs can do to you, not considering what the brand owner can do on top : )