Consumers spend about half a trillion dollars annually on counterfeit products. And with the current digital revolution, most of the shopping for these counterfeit products are done online. The ease, speed, available unlimited options and eager customers that online shopping offers, has made it a preferred incubator for fraudsters peddling fake products. Gone are the days when fakes were easily spotted, either through misspelled words or incorrect information. Now, these bad guys are getting smarter at their game.
Counterfeiting in Online Marketplaces
As mentioned above more than 70% of counterfeit products are purchased from online marketplaces. E-commerce is a booming industry that has gone from the era of Amazon’s monopoly to a new era of online shops/e-commerce stores popping up each day.
Worthy of note is the interesting story of Xu Ting, whose husband and other family members were busted for dealing in fake luxury products worth millions of dollars. These products were sold to the public via about 10 online shops which the 45-year old lady runs with her family. Kering Group, owners of the Balenciaga, Bottega Veneta, Gucci and Yves Saint Laurent brands which Xu had been counterfeiting, brought the suit against her.
While some of the online marketplaces mentioned below take efforts to weed out counterfeit, somehow, they still end up in the hands of unsuspecting consumers. In fact, counterfeiters use such marketplaces as a smokescreen to perpetuate their nefarious activities.
Counterfeiting is not only morally wrong, it has dangerous consequences to health and life, considering electronics, sporting gears, makeup and pharmaceuticals are the usual products counterfeited. Imagine purchasing a fake baby carrier whose wheels suddenly pull out while at the mall with your toddler? Or buying a perfume which contains urine and cyanide as ingredients?
Cases of counterfeiting are damaging to the original brand’s reputation, which also affects sales. This is especially a big issue for companies dealing in luxury or personal branded goods, collectibles and art products. They could lose their claim to exclusivity to counterfeiters, which is much more important to them than losing sales.
The queen of e-commerce has found it difficult to have a strong grasp on counterfeit products making its way to their site. Even with the supposedly more secure Amazon Prime, fake products have found a way to get the ‘authentic’ mark on them.
In April 2017, Chanel sued 24 Amazon sellers for selling replica items as the brand’s products. The judge awarded Chanel $100,000 in damages for each of the replica counterfeits.
AliExpress by AliBaba
Is considered as the source of the majority of counterfeit products. Advancement in technology has made it easier to generate fake receipts, tags and authenticity cards used to sell counterfeit products on AliExpress.
About two years ago, AliBaba was slammed with a suit by Gucci and Yves Saint Laurent which claims that the company is doing nothing to curb the display of counterfeit products on its website. Some fake Gucci bags were advertised on AliExpress for between $2-$5, when the original retails from $795 and above.
Popular online auction site, is well known as a place to purchase fairly used original products. While EBay has published on its site that counterfeit products are not welcome, that hasn’t stopped an influx of knock-offs on the site.
Dedicated online stores as we’ve discussed above are not the only places were counterfeit products are sold online. Platforms like Instagram and Facebook with billions of monthly users, which by virtue of their features allow for advertisement also have issues of counterfeit ads being allowed on the platforms. Customers on these platforms have been complaining about the high number of fake products passing supposed vetting process and reaching consumers.
What Can Be Done?
Trying to distinguish between counterfeit and authentic products from an online ad can be pretty difficult. After all, counterfeiters go the extra mile to ensure they look legit, complete with the original brand’s logo. Unless one is familiar with the legit brand, chances of spotting fakes from ads is slim. Nevertheless, taking strong definite steps to protect a brand’s products when advertised online is extremely important.
On the consumer’s side: One can watch out for things like ridiculously discounted price, inaccurate information, unfamiliar designs, unknown factory as place of manufacture, carry out due diligence research and of course, report busted fakes.
On the merchant’s side: The brand can decide to directly retail their products or use an authorized retailer and announce that other than the authorized retailer, they have no dealings with any other purporting to sell their products. Yet, there are times when even authorized retailers with good reputations have been shown to have counterfeit products. That’s why it is really important to have a secure and transparent distribution system.
On both sides: Make use of the blockchain-powered Seal app to verify the authenticity of seal chip integrated products. Here’s how it works: brands record the details of their products on the Seal Network; a dynamic NFC chip with these records is inserted into the product; consumers can then, by using the Seal app via their smartphones, verify the authenticity of the Seal embedded product and access product information. This provides a watertight system that enables both brands and consumers to warrant secure and safe buying and selling. Gualdo Del Re is already piloting our dynamic Seal chip to eliminate cases of counterfeiting of its products.
Staying safe and ensuring the products we purchase are authentic is very crucial, not only for us, but also for the young, the old, and the unborn. It’s reassuring to know that blockchain has a major role to play in achieving this.