Recently we shared Part One of our Will a MAP Help You Find Your Way series where I discussed what a typical MAP (Minimum Advertised Price) problem looks like and what other types of “unauthorized sales” problems OpSec often finds when monitoring for MAP compliance. In Part Two of this series, let’s take a look at some real world situations and how OpSec dealt with them.
Our findings across various types of online platforms have uncovered the following variations:
Those low prices on consumer sites?
Black market products. Some cases were straight up counterfeits, offered by sellers who have no connection to the brand owner whatsoever. Well, except for having decided to use the brand owner’s good name, designs, intellectual property and reputation for their own gain without an iota of consideration to the blood sweat and tears the brand has put into its products. Solving these problems usually involves conducting some focused research on the sellers. Often, we will conduct test buys to facilitate close examination of the products. In some cases we do test buys in-house; in others we rely on trusted third parties to conduct buys anonymously and in accordance with accepted practices to ensure chain of custody and to abide other evidentiary requirements. Depending on the brand owner’s preference, we might end up helping them with the legwork to prepare for legal action. Over the years we’ve supported prep for both civil actions and criminal enforcement. We understand what’s required. We’re good at it. And, we’re happy to help.
Gray market – diverted products. From time to time we’ve found some authorized sellers to have “sister companies” and various other “cozy relationships” with other entities. They will quietly transfer slow or excess inventory to those entities to speed the process of turning the products into cash. Or, they order larger quantities from the manufacturer than needed to hit a certain discount level and divert the surplus to unauthorized sellers. So, these real products went from legitimate factories, through authorized channels to authorized sellers and still ended up as gray market when they hit the sites of unauthorized third parties. Not exactly a MAP problem, but another type of contractual issue with the authorized sellers involved. A set of tools we find especially useful in situations like these falls within our Link Analysis services. You see, public records contain a world of useful information, much of it is right there online – you just have to know how to access it and understand it. We’ve built a business around knowing how to find the information our clients need and helping them to understand it. People here at OpSec take pride in their ownership of that specialized knowledge and their ability to apply it for the benefit of our clients.
The wholesale lots?
Over-runs. Yup, the classic “third shift” situation. Some call these over-runs counterfeits and others call them gray market, but whatever you call them, they’re not authorized. So how does this happen? The brand owner had enlisted a factory in the Far East to make this season’s hot new styles. They made ‘em all right – worked two shifts for a whole month to make all of the products that the brand owner needed, great quality goods, delivered on time. The retailers have been really happy with these goods. That is, until one of them found these wholesale lots online that look exactly alike and have a much lower wholesale price than the brand charges. Our research led us to a more detailed investigation of the goods. Test buys led back to the factory that the brand worked with and sure enough, the factory had been very busy that month. Two shifts a day for the brand owner . . . and a third shift running every night to make unauthorized product. These are people who have organized businesses specifically to line their pockets by moving large quantities of goods where their only costs are labor and materials. They make no investment in product development, they have little or no overhead, they don’t receive product returns. They don’t have to – the brand does all of that! They just pocket money that belongs to the Intellectual Property owner. With OpSec’s global footprint and close relationships with trusted partners globally, we can mobilize investigators virtually anywhere and even collaborate effectively with local law enforcement on raids, seizures and other enforcement activities. We go where the investigation leads us and where the client needs us.
The price comparison sites?
While price comparison sites typically are chock full of information interesting to the brand owner, pricing offenses are far from the only things we find there. Sure, we find miscreant authorized sellers who overlook contractual price floors. When we do, the brand owners will chat appropriately with them. Many times, low priced offerings on these shopper sites will turn out to be diverted or even counterfeit products. By the way, once the brand owner understands how diversion is happening their legal team can quickly tweak their contracts to head off this flavor of problem in future relationships and their brand protection managers should communicate with the existing resellers to “clarify expectations”. An unexpected benefit we have found in doing the work we do for such diverse clients is that a key tidbit that leads to a watershed development for one client sometimes comes from work have done for an entirely different client. For example, we had a situation not long ago where one of our analysts recognized an address associated with the domain registration for a site. That address had been connected to a network of shady operators the analyst had encountered in work she had done for another client. This time we were dealing with another branch of that same network. That one piece allowed us to connect the dots all the way back to the factory. Boy were we surprised when the brand owner told us they knew that factory well. Boy were they surprised when we told them what we knew of the network of criminal enterprises whose common link is that factory!
As for that convenient acronym - MAP – maybe it’s just as well that we tend to start off there. When you have a problem that you might not fully understand and you are not sure where it will lead, a MAP may be exactly what you need! Here at OpSec, though, the MAP we hand you is likely to have a host of other helpful tools along with it, and we will always provide a team of helpful experts to guide you along the journey.