Formed in 1977 by Miles Copeland (brother of Stewart Copeland) to release the debut single by his brother's band, Police.

Copeland went on to sign more artists and start several other indie labels, all under the blanket name of Faulty Products. In 1979, Miles decided to launch an American version of his Faulty/Illegal operation and started the I.R.S. Records label. Many I.R.S. releases were issued through Illegal for the UK and European market.