Why consumers buy fakes

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Interview with Alona Borzhemska, Chief Commercial Officer at DomainCrawler. Prepared for the report produced for Scamadviser

Trade in counterfeit and pirated goods has risen steadily in the last few years, even if overall trade volumes have not necessarily increased in parallel. This now accounts for as much as 3.3% of global trade, according to the OECD and the EU’s Intellectual Property Office. 

Although it's hard to estimate accurately, the value of imported fake goods worldwide based on customs seizure data likely exceeds USD 500 billion, or 3% of world trade. For the European Union, counterfeit trade could exceed 7% of imports from non-EU countries. These figures do not include domestically produced and consumed fake goods either, or pirated products distributed online, which likely makes it much higher. 

Which trends do we see in the sale of fake products?  

The most prominent trend is still cross-product fakes, whereby counterfeiters will put a logo anywhere they think it will sell. However, the traditional supply chain and port of entry for goods has changed as many things can be ordered online and drop-shipped. Websites have become sophisticated and harder to track due to use of anonymous networks like dark web and new marketplaces on emerging platforms continue to evolve, alongside proliferation of additional types of social media and other channels.  

Current social media scams, the most common, account for 45 percent of all online shopping scam reports. Instagram, Facebook, WhatsApp, and Telegram are the top platforms. Social media in particular has made it easy for criminals to reach people, because they can acquire sensitive information to personalize their approach. Together, with the emergence of easy site building, hosting & SEO tools, such as Wix and Shopify, websites selling fake goods became much more sophisticated. They can be professional looking and designed to closely resemble the sites they’re mimicking, down to the logo, branding, and content. Cybercriminals also use trusted payment providers, bots and short-lived spoof sites to quickly generate copies of genuine sites, which evade web indexing, and that means the burden for detection often falls to the user. Alongside, the increased use of anonymous payment systems such as digital currency, bitcoins etc all support the counterfeiting enterprise.  

Which type of products are most infringed? 

Footwear made up almost a quarter of seized goods around the world, making it the most popular product copied by counterfeiters. But also apparel & accessories, leather goods, perfumes, electronic devices and watches. 

Which Global brands are the most infringed? 

Luxury clothing brands such as Cartier, Rolex, Chanel, and Gucci tend to be the most infringed ones. Apple and Samsung are the most counterfeited tech brands in the world. Whilst fake fashion might not kill anybody, counterfeit medication such as faux versions of the swine flu drug Tamiflu, are estimated to kill at least one million people a year, according to world police agency Interpol. A staggering 10% of medication in the global supply chain could be counterfeit, and the issue further affected by the COVID-19 pandemic. Trademark research and protection firm CompuMark estimate that almost three quarters of brands experienced trademark infringement in the last year. One-third of companies had to change the name of one of their brands as a result of infringement, while more than half took legal action against third-party infringements.  

How can we identify fake goods and scams? 

There are a number of indicators that can help detect infringed goods. In the case of physical goods, inspect the product, as the quality is often lower than that of the originals. Inspect the packaging and instructions, as it is typically inferior or does not indicate the address of the manufacturer or importer and may not be in local language or contains grammar errors. Many products these days should have holograms, control numbers and/or other security measures. Check logos and trademarks carefully for slight differences and inferior quality. As always suspiciously low prices are still a good indicator, if it seems too good to be true, it probably is. Don't hesitate to ask precise questions to sellers or auctioneers about the supply chain. Purchase medicines from safe, reputable sources, and be wary of websites offering to supply prescription-only medicines without a prescription. 

In many cases, however, fake goods don't even reach the consumer, branded webshops can be fake too. They might be selling non-existent goods at much reduced prices to attract the buyer, but it's just another method of fraud facilitated by cybercriminals that can destroy a brand and pose a significant threat to consumers. These scams happen in a myriad of ways, via phishing emails, social media, SMS messages and more and the main purpose might be credit card or identity theft or another nefarious activity. Phishing is still the top online scam today, whereby Internet thieves prey on unsuspecting users by sending out links to websites via email, posts in social media or SMS links to mobile devices. In these cases, a cybercriminal tries to trick a consumer into believing they are visiting a trusted website or one they would normally like to use. It's not always physical goods either, but any other type of consumer product or service or could be an invitation to install hostile apps or malware, again with the same purpose.  

Fortunately, there are some useful ways to help identify scam sites and emails. Using third party security apps to identify emails originating from suspicious sources, checking carefully an address bar and URL for misspellings or dubious top level domains. Plus, checking for missing contact page information, missing or invalid social media links, poor grammar, spelling, and lack of a privacy policy. Free tools or other services in the public domain, such as those provided by Scamadviser can help to scan for potential infringements. 

Where do fake products originate from? 

According to the OECD, 80% of the world's counterfeits originate in China, but other major points of origin include the United Arab Emirates, Turkey, Singapore, Thailand, and India.  

How should brands protect themselves?  

Traditionally, a copyright, patent, or trademark protects original works of the creator. But in today's online world, brand protection is more about comprehensive intelligence sourcing and mitigation of those external threats targeting a brand. Digital brand abuse can occur anywhere online. Therefore, it is necessary to have proactive and comprehensive detection capabilities across digital channels to prevent revenue loss and reputation damage.  

There are many brand protection agencies that can help to identify infringements such as Red Points, Corsearch, Opsec, etc to name a few. Once specific threat types and sources identified, further actions can be taken, such as ‘Take down orders’ or proceeding with litigation process to pursue and prosecute counterfeiters and enforce counterfeit listings.  

At DomainCrawler we collaborate with such agencies by offering comprehensive domain data for the analysis. look into domain name infringement, detect counterfeits, do scoring of the data and then do the dot connection to identify the network of similar sites.  

How to prevent “Whacking the mole”?  

Whack-a-mole in a business context is when the culture is to attack the symptoms of a problem rather than the cause. The “moles” (crises) continuously reappear because responding to the symptom of a current crisis means they never have time to address the cause. In the world of Anti-Counterfeiting & Brand Protection, it is necessary to allocate time and resources to implement an effective strategy with processes that identify and eliminate moles one at a time. Companies need to ensure their employees fully engaged to support the fight. Ideally, they will include BP and IP Protection considerations at the onset of business planning, versus being reactive after significant issues have already arisen. Global Anti Scam Alliance in cooperation woith DomainCrawle roffer several data services to advertising networks, law enforcement, security firms, and brand protection agencies to help them separate reliable online stores and sites from scams and fraudulent websites. 

What Does the Future of Anti-Counterfeiting & Brand Protection Hold? 

Technology will increasingly play a critical role in making brand protection and supply chain management and security more effective. E-commerce marketplaces will get tougher and tougher for counterfeiters, so the concern will mostly disappear there, but such criminals will respond via more private messaging, apps, and dedicated email marketing. Organisations will need to deploy more dedicated resources to the cause, develop strategies, and collaborate and join coalitions and organisations such as International Trademark Association (INTA) and similar. 

To read the full report visit Why Do Consumers Buy Fakes? 2022 Survey | ScamAdviser

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Volodymyr Holovash
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About DomainCrawler
Founded in 2021, DomainCrawler combines industry expertise, a global approach, and up-to-date innovative solutions. With one of the most comprehensive and frequently updated databases in the world, DomainCrawler is able to provide enterprises with accurate web data, allowing them to fight cyber fraudsters, prevent brand infringements, conduct comprehensive market research, understand the competition, and enable the best data-driven businesses decisions.