The Covid crisis has boosted the trade in counterfeit goods: nearly 6 % of all products currently entering the European Union are fake. E-commerce and social media are valuable new sales channels.
According to a new report by Interpol and the EU, counterfeiting and product piracy have picked up momentum during Covid. The growth of e-commerce, the increased demand for products and the scarcity in some industries have created opportunities that criminal networks have been quick to exploit. In the EU, the total worth of counterfeit goods is thought to have reached 119 billion euros, accounting for 5.8 % of total imports.
The producers and distributors of counterfeit goods are also becoming more ingenious, making use of digitisation by focusing heavily on online platforms, social media and instant messaging services. In addition to stores and physical markets, clothing and accessories are increasingly sold through live streaming, videos and sponsored adverts on social media, tempting customers with misleading discounts or low-priced ‘branded’ products.
As a result of these online marketplaces, counterfeit goods have increasingly been brought into the EU in small parcels via courier services in recent years. Thus, they avoid customs checks, which mainly affect regular freight traffic. The pandemic has also meant that fewer controls have been carried out.
Illegal factories in Europe
Although most counterfeit production still takes place in China and elsewhere in Asia, Interpol has detected an increase in manufacturing at illegal laboratories and (sometimes truly modern) factories within the European Union. The researchers have noticed this because the import of fake packaging and even semi-finished products is rising. Everything from phones to cosmetics gets assembled locally, causing law enforcement major headaches: these illegal laboratories are difficult to track down, the report confirms.
In many European countries, production sites have been discovered, including laboratories producing fake pharmaceutical products, factories labelling counterfeit clothing and luxury goods, production and repackaging facilities for illicit pesticides and cigarettes, factories refilling both authentic and fake empty bottles of alcoholic beverages and clandestine factories repackaging fake perfumes.
Available before it even exists
The most popular product categories for counterfeiting remain clothing, accessories and luxury goods. Counterfeiters are increasingly targeting luxury items and a wide range of everyday products, but they are also eagerly exploiting the shortage of chips. Not only are they bringing fake semiconductor chips to the market, sometimes counterfeits of popular electronics (such as smartphones and game consoles) can be found on online marketplaces even before the real product is launched.
The report reveals that the production of illegal food products, especially beverages, is becoming increasingly more professional and sophisticated. “Some counterfeiters operate an end-to-end business model covering the whole supply and distribution chain”, the report states. Within the perfumes and cosmetics category, it is remarkable that mainly everyday products, such as shampoo, toothpaste or detergents, get produced illegally.
“Counterfeiting and piracy are very lucrative criminal activities with relatively low detection risks”, Interpol and EUIPO say. The institutions also stress that the growth in online sales encourages counterfeiting.