I believe that the ultimate danger and damage caused by "knife makers" (using that term loosely) who produce (or peddle) inferior knives with fradulent tales of quality exists solely because of a very large number of customers being uninformed. While some customers may purchase an inferior knife and learn that its quality is lacking and purchase one from a more reputable maker, most will not, especially if that is their first venture into the realm of the custom hand made knife.
For those customers who have no experience with hand crafted knives, going out and purchasing a knife from one of the frauds deals a great deal of damage to those who do things right. If your first and only experience with something is a bad one, what are the chances that you will go back and try the "same thing" again?
While the good quality maker is in reality much different than the fraud, there is already a negative preception in the customer's mind towards "hand made" knives. Only having the bad experience, the uninformed customer will not likely give hand made knives another chance, since there was no positive experience associated with that area of "knives" in their mind. Customers who have some information and experience with quality knives would quickly recognize that not all "hand made" knives are like that, and that particular individual/company/seller is producing/selling inferior products. In that case business is lost to those peddling crap, and gained by those who produce quality blades. So with informed customers, its not really a problem, but it is with those customers who recieve their first experience with "hand made" knives that is so damaging.
As has been mentioned, knife makers constantly need a new customer basis to stay afloat. The average knife buyer won't buy more than a handful of knives from a maker/s in their lifetime and if they are quality blades, its doubtful that they would need replacing anytime soon

. So there is a need for new blood to enter into the customer basis, and this comes in the form of uninformed potential customers. Being uninformed, most new customers wouldn't understand why a quality blade would cost 2, 3, 4, etc. times more than a factory knife and instead probably choose to take the less "risky" route and go with a less expensive "custom" knife for their first step, which is where the frauds usually set up market. Then with the negative word of mouth and "stereotyping" that usually results, many potential customers can be lost.
Its easy to try to relate buying a knife to going to a restraunt, however there is a great deal more complexity to knife buying than attending a restraunt. Restraunts and the idea of restraunts are very common in todays culture, there is lots of "information" and opinions about restraunts for people to base decisions off of. If an otherwise "uninformed" customer goes to a restraunt for the first time and has a bad experience there, it is likely they won't go back to that restraunt, and would probably relate their poor experience to others considering going to that restraunt, however that doesn't mean they wouldn't try another restraunt somewhere else in the future. Restraunts are also less of a financial risk than purchasing a knife. A meal at a restraunt is generally much cheaper and more affordable to most than a quality custom knife, that means with less risk, more people are willing to try other restraunts if they have a bad experience at one, than they would be to go spend another couple hundred dollars + on a different "hand made" knife from a different maker.
With knifemaking, things aren't as main stream, and its extremly difficult for makers to differentiate themselves from other makers. Since the vast majority of people have very little idea what a hand made knife is (there are a lot of people that would be very supprised to learn that there are still people who make knives by hand), and without a lot of other opinions and information available (or cultural commonality), most "new" customers create easier to understand "groups" in their minds, mainly "factory knives" vs. "hand made knives." That immediately takes whatever experience a new customer has regarding a custom knife (be it good or bad) and in the back of their mind applies it to the whole general category. While their experince is probably fairly unique to that particular maker, without additional understanding about how knives are made, information about makers, quality, etc. the customer has no way of actually knowing what is out there. People can only compare things against their own experiences or make pre-concieved opinions based on what they hear from others close to them. Hence, if one new customer has a bad experience with "hand made knives" from one of the junk dealers, there is an extermly good chance that they won't be back for any more of those "hand made knives" and they will probably tell their friends about that, who will tell their friends, etc. and pretty soon a lot of damage is done to those who don't deserve to be grouped with the frauds and inferior knife makers/dealers/sellers. Its extremly difficult to overcome a negative perception like that (its basically stereotyping).
Anyway, thought I'd throw in my long winded opinion on the matter
