Though online marketplaces like Amazon may have helped make shopping easier, it can often be difficult to tell if what you are getting is the real thing or not.
People spent $861.1 billion shopping online with U.S. retailers last year, up 44 percent from the year before thanks to the pandemic per Digital Commerce 360. With the online shopping boom comes more opportunities to make money off fake items. While high price point items like fake watches and handbags have always been popular, cheaper things like hand sanitizer and masks have also increased in prevalence. "Counterfeit items respond to changes in consumer behavior," said brand protection company Incopro CEO Simon Baggs. "What's selling is what people are searching for."
And, it seems that the majority of fake items may be coming from the same sellers without anything to stop them. Incopro looked at more than 1.5 million IP infringement notices automatically filed on behalf of over 750 brands on 34 different online marketplaces including Alibaba, Amazon, eBay, Facebook, Instagram, and Twitter from November 2019 to November 2020. Overall, it estimates companies lose about $320 billion annually on consumers purchasing illicit goods, whether they know it or not.
What Incopro found that was about one out of five of these alerts involved just 3 percent of sellers, suggesting that most fake product sales were coming from accounts that had been flagged before.
"The big issue isn't just someone doing this kind of mistakenly or inadvertently, but it's repeat offenders," Baggs explained.
But the process of identifying if a good is indeed fake can be difficult, points out Forrester vice president and principal analyst Sucharita Kodali. Amazon, for example, has policies like Project Zero and Brand Registry to help protect consumers and companies. Still, it's difficult to track and monitor fake goods.
"Sometimes the counterfeit items may not even be sold with product titles or descriptions that make them easy to find," Kodali said. "And the volume of content makes it really difficult to easily manage. Unless they have a manual review process before every item gets uploaded, which would probably be too onerous, it would be really difficult to block this. And even so, Amazon wants as much merchandise as possible. Sometimes brands can't even tell the difference between gray market and counterfeit goods if the good looks sufficiently real."
The problem continues to persist because marketplaces aren't liable for counterfeit problems sold on their sites, so there's no incentive to really block these sales, she added. While Incopro found about seven out of 10 of the platforms it looked at had some sort of policy in place to prevent the same seller from continuing to offer counterfeit goods, only three of the group — Alibaba, Aliexpress, and Taobao — had a "three strikes" policy that would ban those offenders permanently. It estimated that if companies adopted rules that blocked sellers who had three instances of peddling fake goods, it could save brands and buyers up to $78 billion worth of illicit product purchases.
Consumers can also find it difficult to tell if a product is real or not just based on an online listing. If the price is too good to be true, Incopro's Baggs suggests taking a closer look. It's also important to note the source of the offer.
"A lot of counterfeit goods do come from Asia region unfortunately," he added. "Reviews are also a really important tool, but you need to look carefully. You can't just look at the star rating. You need to check what those reviews on the product you are trying to buy are saying."
But the bigger issue is that there are no federal or legal standards that govern what can or can't be sold in online marketplaces, putting the onus on the brands to fight violations, Forrester's Kodali said. These companies don't have enough resources to battle this issue, nor have they put enough resources into creating ways to verify their goods, like serial numbers. Online sales platforms have a "beg-for-forgiveness approach," which is more beneficial to sellers who can make a ton of money before they are caught.
"Given the volume of sellers and new accounts that can be created daily, rogue sellers love marketplaces and marketplaces make money from them in turn," Kodali said.
Baggs called for more legal and policy restrictions.
"We need legislators and platforms to also take responsibility," he added.