The holiday season is a time of family cheer, goodwill and fake consumer goods. That's right - unsurprisingly, counterfeits and the holidays go hand in hand.
Criminals are becoming more sophisticated in their approaches to getting fake goods in front of customers every day, robbing companies of revenues that are rightfully theirs and potentially damaging brands' reputations. While fraudsters will generally use any channel available to hawk their wares, the use of technology has allowed counterfeit goods to move more easily across the world.
"The use of technology has allowed counterfeit goods to move more easily across the world."
Brick and mortar stores remain an important player
Oftentimes, there is no substitute for foot traffic. This is especially true when it comes to clothing, shoes and other goods that consumers prefer to try on.
CBS Detroit recently reported that charges are pending after Michigan State Police seized counterfeit designer items worth a cool $500,000 at market price. These items were being sold at a dollar store in Eastpointe, which included some of the regular suspects: UGG boots, Nikes, North Face jackets and expensive jeans. As is often the case, the fake items were being sold at prices that were far too good to be true.
Only looking closer does it become obvious that the fake goods are of a lesser quality, MSP Lt. Mike Shaw explained to the news source. The vendor was also selling counterfeit colognes and perfumes, which often contain chemicals that may be putting consumer safety at risk.
In America, we often fall into the trap of thinking that counterfeit goods aren't sold by more established retailers. The retail industry tends to turn a blind eye to brick and mortar sales, assuming that person-to-person sales and illegal street vendors account for most of this category, the profits from which often are too small to move a brand's bottom line needle. However, in places all across America where times are tough, larger scale fraud frequently becomes a bigger issue.
Counterfeit tires discovered by Consumer Reports performed extremely poorly in winter weather
Straight from the manufacturer
Another channel that is often overlooked is manufacturer counterfeiting.
Consumer Reports recently released an article depicting an interesting conundrum: It couldn't locate the origin of three sets of Chinese-branded all-season truck tires. These cheap tires retailed for as little as $89 each and performed abysmally in the organization's ratings. In particular, they did very poorly in winter-condition testing.
After Consumer Reports published its ratings, it was contacted by a representative of the company owning the tires' brands. They explained that Consumer Reports' findings were significantly below their own internal findings and asked for the date codes on the tires. Eventually, representatives claimed that the tested tires were not manufactured by authorized parties. Further, the representatives said that many of their molds went missing at the time, meaning that they had no idea who made the tires or what materials were used.
This so-called "gray market" activity can be difficult to detect and revenue losses can be staggering.
Via various social channels
Most companies are aware that unscrupulous websites sell copies of their products at rock bottom prices, but how they get consumers to these sites is often less clear.
There are only a few digital marketing channels that work consistently for fraudsters. Pay-per-click campaigns tend not to last long, as Google and other search engines are committed to working with authorities and brands to reduce counterfeiting. Likewise, many of these sites aren't online for long enough to generate organic traffic from search engine optimization. That leaves social channels, like Facebook and Twitter.
"Most companies are aware that unscrupulous websites sell copies of their products at rock bottom prices, but how they get consumers to these sites is often less clear."
Sales of counterfeit goods via mobile platforms has increased by 15 percent in the last year, according to Electrical Safety First. About a quarter of consumers report that they have seen attempts to sell such goods on their social media accounts. Further, one-third of respondents said that they would consider buying a counterfeit good to save money if they couldn't tell the difference between it and a genuine version of the product.
"Trading standards officers are on the frontline of consumer protection working hard with other authorities to remove dodgy goods from the market place," Leon Livermore, Chief Executive of the British Trading Standards Institute told the news source. "With 69% now using social media to investigate IP crime, they are hot on the heels of rogue traders' new tactics."
Even so, the number of counterfeit goods being sold online seems unlikely to stop its steady increases.
Counterfeiters are constantly trying to find new ways to duplicate products using materials that make them cheaper to produce and to sell those goods to the broadest market possible. This robs legitimate companies of the money from that sale and may result in an unsatisfied customer causing more lost sales. Staying on top of new developments in this world and finding ways to stop counterfeiting is one of our top priorities at OpSec.
Branddy Spence is OpSec's Senior Marketing Manager. Prior to her current role, she spent several years implementing successful brand protection programs for many well-known licensing and entertainment brands.