With the number of counterfeit goods on the rise, brands face a tough challenge when it comes to protecting their product and their brand integrity. In fiscal year 2013, the United States Department of Homeland Security seized counterfeit goods valued at over $1.7 billion. That same year in the EU, nearly 36 million counterfeit products were seized, valued at more than € 760 million. Counterfeit apparel accounted for most of the goods seized. The sheer number of counterfeit goods, however, is not necessarily the main concern – it’s the increased sophistication of the counterfeiters themselves. In this blog piece, we explore the five ways in which counterfeiters are growing smarter, and how brand protection programs stay two steps ahead.
- Exploit Consumer Demand
In the anti-counterfeiting business, it’s a widely-known fact that if a product is being sold – whether stocked on shelves or living on the World Wide Web – it’s bound to be counterfeited. This rule applies to small businesses and large corporations alike, spanning across all industries, locations, and channels. It is also true that counterfeiters are most successful when they produce items with widespread popularity. Consumer electronics are a great example of this. When the latest phones and tablets hit the market, supply is often lower than the demand. Counterfeiters leap into action to take advantage of this and sell to consumers at much lower prices, and in markets where the authentic product may be scarce. During the 2011 holiday season, many popular electronic brands announced new tablets to be showcased at the 2012 Consumer Electronics Show in Las Vegas. B2B tradeboards were immediately flooded with fakes, proving that counterfeiters stayed on top of the trend.
- Employ Child Labor and Participate in Organized Crime
Counterfeit products are often produced in poor conditions, at sweatshops in violation of child labor laws. In her 2007 book Deluxe: How Luxury Lost Its Luster, Dana Thomas describes her experience at a sweatshop in Thailand:
“I remember walking into an assembly plant in Thailand a couple of years ago and seeing six or seven little children, all under 10 years old, sitting on the floor assembling counterfeit leather handbags. The owners had broken the children’s legs and tied the lower leg to the thigh so the bones wouldn’t mend. [They] did it because the children said they wanted to go outside and play.”
If that is not horrifying enough, many buildings also violate fire code. Exit signs are either not working or have been destroyed, and entryways are often blocked by boxes of material.
Many counterfeit activities can also be linked to drug and human trafficking, and other organized crime. Consumers who purchase these counterfeit goods may unwillingly support these practices.
- Attempt to Replicate Brand Style Guidelines
Counterfeit goods, although usually inferior in quality to authentic product, can often closely resemble the real thing. With advances in technology and access to a wider range of materials, counterfeiters are now able to create products that can rival the real deal.
In the online sphere, counterfeiters naturally want to draw traffic to their illicit items. They will oftentimes create listings with slight brand misspellings as to avoid being caught by site regulators. Counterfeiters also tend to use stock images from the brand’s website to trick consumers into thinking the product is real. When it arrives in the mail, however, it is evident that it is a counterfeit.
- Rely on the Anonymity of the Internet to Conduct their Business
The Internet provides counterfeiters with attractive platforms on which to sell their illicit goods. Often, these platforms are highly unregulated, making it relatively easy for the seller to fly under the radar. Consumers looking for bargains often hunt the web in search of great buys, and counterfeiters are far from oblivious to this. Buyers will often find a surge in counterfeit goods online around the holidays, so it is important to be extra vigilant during that time of year. Implementing an online brand protection program can help monitor the web for fakes and keep counterfeits at a minimum.
- Experiment with New Tactics to Circumvent the Law
Investigators have noticed an increase in the number of counterfeiters practicing what is known as “finishing”. This occurs when counterfeiters legally ship in generic items, and then have factory workers embroider or attach logos to the item.
Another tactic counterfeiters employ is keeping their goods in vans instead of in factory stockrooms. They convince buyers to come to the van to shop so they have a quick escape plan in place, just in case there are law enforcement officials nearby.
The increased sophistication and investment that counterfeiters apply in their attempts to defeat authentication programs poses a serious threat to brands. Because of this, brand owners and their brand protection partner must take a much more holistic and comprehensive approach to fighting counterfeiting. It is much more common today for brands to adopt a complete solution – one that combines very visible authentication features with online monitoring and enforcement – to help ensure that their products are safe.
Eduard Kraemer is OpSec's Senior Sales Manager. Ede has over 15 years of experience working with international brands in marketing/communications, licensing, and brand protection. He has developed solutions for global enterprises and local champions across many industries.