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There has been a huge increase in counterfeit sales because of the increased popularity of online shopping. Europol considers the copying of well-known brands to be a structural problem.
Widespread
Its SOCTA (Serious and Organized Crime Assessment) report, the organization says the breach of intellectual property is a “widespread phenomenon”. Consumers love cheap versions of expensive brand products and organized gangs can get those made very cheaply and sell them worldwide on a range of internet platforms. The entire process is much easier than the so-called “car boot sales”.
Europol says counterfeit sellers focus on a whole range of product groups online, from clothing and food to medicine and pesticides. Unfortunately for consumers, these counterfeit items may actually harm their health, because it is not clear which (possibly harmful) substances can be found in these products. One such example is children’s clothing that contained a level of formaldehyde far above the allowed concentrations in the European Union.
The manufacturing process is not up to standard either for counterfeit items, because unlike major brands, the illegal industry does not care about child labour or fair labour conditions. This also shows in the product’s quality, because cheap counterfeit items are not comparable to the higher quality brand items. European retailers and manufacturers also suffer from this, because they cannot compete with these low prices and the unfair competition.
Grey area
The question remains how large the counterfeit issue really is. According to the SOCTA report, EU customs seized 80,000 shipments in 2015, containing fourty million products for a total of 642 million euro. Cigarettes were most popular, followed by batteries, air fresheners and toys. These are only the shipments that were caught, which means it is very difficult to assess how much actually gets through customs anyway.
The surge in eCommerce and online marketplaces facilitated the sale of counterfeit items and made things a lot easier for organized gangs, according to Europol. It frequently scans websites filled with these products and seized control of 4,780 websites in 2016. These were mostly low-key initiatives that probably relaunched elsewhere under another name. However, the major platforms also have issues dealing with counterfeit, mainly in China.
Blacklist
One of the most well-known websites is Taobao, which is part of the Alibaba empire. Back in 2011, the United States blacklisted the website because the government felt it failed to act on counterfeit items being sold on its platform. When it did, it was allowed in the United States again, but it was blacklisted again in 2017, although Alibaba CEO Michael Evans says this time America decided to do so as a part of its new government’s protectionist measures.
Not only Taobao and unknown websites bring counterfeit goods to consumers, sites like Amazon also face the same issue. Critics even highlight the fact that Amazon did nothing to block these sellers and their goods, which was a nuisance to the larger companies on Amazon. Back in 2013, Jamie Whaley and her husband sold 2,800 dollars’ worth of accessories and linen, but once Chinese sellers arrived in 2015 and started selling counterfeit BedBand products for half the price, their turnover plummeted. According to Whaley, Amazon did nothing to fight off counterfeit sales.
An CNBC report says Amazon wanted to become the global number one in online sales and therefore wanted to expand its Asian network. A growing media focus and harmful effects for local economy (Whaley was forced to fire 50 % of her staff) prompted Amazon to draft an anti-counterfeit policy. In this policy, it underlines the need for trust (in Amazon).
‘Only about the money’
It remains to be seen whether Amazon’s new policy will have an actual effect: considering the enormous volume of products and sellers, it is a “hell of a job”, especially since companies can just reappear under another “storefront” and continue their deals.
Greg Hankerson (Phoenix) took on Alibaba and several Chinese and Indian manufacturers copying his unique furniture. He contacted the Chinese website and got it to remove images and products counterfeiters took from the Vintage Industrial website. Nevertheless, it is still David versus Goliath: “The online platforms do not want to remove counterfeit items, because they still generate turnover.”
