There has been a rash of fake flash drives advertised for sale on eBay, found in the Amazon Marketplace, and in the ads Google carries from many Chinese sites. How do you tell if you are getting what you pay for, or a drive that was hacked to look much larger than its original size? * Updated*
Many sources help you discover you have been swindled

There are cautionary articles, guides on eBay, websites such as SOSFAKEFLASH.com, and Bright Hub posts and articles such as Is
There Really a 128 GB USB Flash Drive Out There? They are all meant to keep consumers from falling prey to the unscrupulous sellers who take USB flash drives with little memory- sometimes as little as 256MB- and hack the controller so it appears they have 16GB, 64GB, or even the until recently mythical 128GB capacity.
picture courtesy of mtlin from photo displayed on Flickr
Whether you are contemplating importing a bulk order of inexpensive drives directly from China, or want to bid on one from eBay, do your research. As of June 20th, 2009, there were a number of sellers on the site madeinchina who were offering obvious fakes 128GB drives. If they are selling obvious counterfeit goods of one sort, be wary of the other products they carry as well.
SOSFAKEFLASH.com puts out regular warning lists of sellers of faked drives, particularly for sellers on eBay.
However, many of these guides, especially the eBay guides, concentrate on identifying the fake after you have purchased it. This article will try to help you identify drives you should not buy, saving you grief, money, and the possibility of lost data.
Now there are real 128GB USB flash drives
*Updated* Until June 15th, 2009, if you saw a drive advertised as having 128GB capacity, it was certain that it was a fake. Until July 15th, when the Kingston drive is supposed to be available, any 128GB drive is still a fake- even with Kingston as the brand name.
Since the 15th, three well known companies, Kingston, Edge Tech and Patriot, have announced they will be releasing 128GB drives. No doubt other well known companies will being announcing their release of drives with 128GB capacity soon. It is therefore urgent that consumers are able to determine whether or not a drive is real or not, before they are burned. After July 15th, Kingston will have 128GB drives on the market. Edge Tech expects to have drives available July 31st. Patriot has not set a release date yet. Both Kingston and Edge Tech have pictures of their drive, and it is possible to see how it is distinct from other drives they sell.
*Updated" Corsair and Super Talent Luxio have also released 128GB drives. Read about the drives and see pictures of the actual drives to make sure what you buy is what you really want.
* Kingston, on July 20, 2009, about a month after announcing it had a 128GB drive, has said they have developed a 256GB USB flash drive. It is currently only available in the UK, according to their announcement, and is retailing for over $900 USD.
Check the manufacturer's site. These are what the only real 128GB drives look like

Go to the website of the brand. Kingston can be checked at www.kingston.com. Different sizes are color coded, and they have different styles which only go up to specified capacities. If the picture does not match any drive shown, then it is not a Kingston drive. The 128GB drive has a black end and these are the only models in the DT 200 series.
Edge Tech has two sizes in the style they are using for the 128GB drive, a 64GB drive, and the 128GB. You can see the Edge Tech drive on their website.

Patriot has said their drive will be in their Extreme Magnum series, and said it will have a read speed of 31MB/s, and a write speed of 20MB/s.
Check too for pictures of the Corsair and Super Talent Luxio drives- the newest legitimate 128GB drives on the market.
For more information about these new drives, see the article: How to Find the Biggest and the Best USB Flash Drive Available: Choices for 128GB drives, and a Single 256GB drive
Check the brand name
First of all, when you see an advertised multi-GB drive, check the brand. Right now a 128GB drive will come from Kingston, Edge
Te
ch, or Patriot. Any other brand in that size is counterfeit. When new companies release a 128GB drive, we will list them in this article.
Transcend has not announced that they make a 128GB USB drive.
Corsair's 128GB drive looks nothing like the drive in this picture.