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You Better Watch Out—Counterfeiters are Going to Town!

You Better Watch Out—Counterfeiters are Going to Town!

As we settle into the new year, set new budgets, and determine where our spending dollars will go in 2017, it is important to take a quick look back at the holiday shopping season where The New York Times reported that hundreds of counterfeit applications had popped up on Apple’s App Store pretending to be well-known retailers, such as Nordstrom, Zappos, and Christian Dior. Fraudulent activity in the e-commerce sphere, such as fake applications and counterfeit websites, brings with it rampant problems, such as the sale of counterfeit items, identity theft, credit card fraud, and disclosure of personal information. While consumers are the obvious victims of such harms, the brands whose goodwill is being traded upon must also be aware of the detrimental impact such behavior can have on its reputation.


A counterfeit product is an item that uses the name or logo of a company on products not made by that company, and without that company’s permission. The intent of such behavior is to deceive and defraud the purchaser or user, and is criminalized under both federal and state law.   Such goods are usually made using materials and processes that are subpar in quality when compared to the materials and processes that the company who rightfully owns the name or logo uses. Counterfeiting is a trillion dollar industry, with the International AntiCounterfeiting Coalition (IACC), a non-profit that reports on counterfeiting, reporting that the projected value of the global trade in counterfeit and pirated goods was $1.77 trillion in 2015. In fashion, counterfeiting is a major issue, and fashion items such as bags, shoes, clothing, and jewelry make up 20 percent of seized counterfeit products in the U.S. alone, with an overwhelming majority coming from China. Such statistics become even more troubling due to the fact that funds gained from this activity have been linked to organized crime and drug cartels.


Counterfeiting has the potential to ramp up around the holiday season for two main reasons. First, consumers are on a hunt for a good deal. They may be so excited about a deeply discounted product that they fail to use due diligence to determine if the seller or website is trustworthy. Second, counterfeiters prey on this flurry of excitement for bargains by producing more fake products and creating more channels in which to buy such products.


Brands would be well advised to take precautions during this time, since this type of activity can have a detrimental impact on their company’s reputation. Customers, believing they have gotten the real McCoy, could be less than enthused when their new handbag falls apart after a few months or their watch puts a rash on their wrist. This threatens the reputation that a company would have worked hard to build for such a product, as not only could that customer decide to no longer buy from that brand, but also, they could quickly spread word about their negative experience.


How can brands and consumers combat counterfeits this holiday season when shopping online? Companies can create anti-counterfeiting strategies that include understanding how counterfeiters of their brand work, identifying actors that can help them in preventing counterfeiters, and taking concrete steps to address counterfeiting. A fashion company’s marketing, sales, and legal departments would be invaluable in working together to create anti-counterfeiting plans of action. Brands should also familiarize themselves with web search engines’ policies for reporting and removing sites that sell counterfeit products, and take advantage of such policies when necessary. Additionally, fashion companies that have registered trademarks with the United States Patent and Trademark Office can work with U.S. customs officials to prevent counterfeit products from entering the country. Finally, companies can educate their customers on how to spot fakes and fraudulent websites that sell counterfeit versions of their products by creating videos and pictures showing the differences between their own products and counterfeit products.


Consumers can also take steps to avoid spending their money on fake goods and fraudulent websites this holiday season. In addition to using educational tools on companies’ websites, consumers can also take advantage of lists of authorized vendors and resellers that retailers provide on their sites. By cross-referencing such lists with the websites that reportedly sell products from these brands, shoppers can decrease the chances of purchasing from counterfeiters. Additionally, by accessing brands’ websites from their mobile devices, visitors of such websites are usually prompted to download the brand’s application, if it has one. By following the prompts on their phone’s app store and downloading the application, shoppers can ensure they are shopping on the official application for that particular brand.


So while you prepare to give and celebrate the myriad of festivities coming up in 2017, consider following some of the above listed steps, brands and recommendations.

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