counterfeit goods Archives - SmartFrame

Counterfeit goods online: How big is the problem and how can you combat it?

Robert Sewell — Thu, 12 May 2022 09:55:54 +0000

The internet has brought great opportunities for retail, but it’s not all positive. We look at the growth of the counterfeit goods market and how retailers can protect themselves.

The growth of online shopping has been steady for a number of years, and with the global pandemic introducing many consumers to the convenience of e-commerce in everyday life, those numbers are now higher than ever.

The European Union Intellectual Property Office (EUIPO) reported that 70% of Europeans bought something online in 2020. US e-commerce sales, meanwhile, are projected to exceed $1tn in 2022 and to make up nearly 22% of total retail sales by 2026.

Such figures show the extensive reach, growth, and value of the e-commerce market, but where there is great value, there is inevitably the risk of bad actors – in this case, from the burgeoning online counterfeit goods market.

How big is the counterfeit goods market?

According to recent figures, the value of the global counterfeit goods market was $449bn in 2019 – larger than the entire economy of Ireland.

Furthermore, in March of the same year, the Organisation for Economic Co-operation and Development (OECD) reported that trade in counterfeit and pirated goods makes up 3.3% of global trade and stated that this figure was continuing to rise.

These are startling figures – and when you consider the potential impacts the fake goods market can have on economies, businesses, and everyday people, they become even more concerning.

What proportion of the counterfeit goods market is traded online?

While it is difficult to provide a definitive figure, a joint EUIPO-OECD study found that between 2017 and 2019, over 50% of counterfeit goods seized on entry to the EU were related to online transactions.

This could be seen as an indication of the potential overall scale of the problem. The knowledge that it is this significant online certainly makes sense when you consider that largely unregulated digital environments allow criminals to better maintain their anonymity and remain as elusive as possible to the authorities.

What is the impact of counterfeit goods on businesses?

The effects of IP theft and counterfeiting on businesses are huge. In 2020, global losses resulting from the sale of bogus goods amounted to €26.3bn in the clothing sector alone.

But while the sale of fake products at cheaper prices can have a big impact on bottom lines, the wider issue is the effect it can have on a brand’s reputation.

Counterfeit goods can lower customer satisfaction and erode brand value. For example, if a consumer receives a product they believe is genuine, they will expect a certain level of quality. Therefore, if that product is a substandard fake that arrives faulty or fails shortly after purchase, they will understandably be disappointed.

Research shows that 77% of consumers regularly read reviews when researching local businesses and that only 3% would consider buying from a business with an average rating of two stars and under.

In a marketplace where reviews are this powerful, dissatisfied customers can be particularly damaging to a brand’s reputation.

Additionally, businesses could find themselves wasting time and resources dealing with undeserved complaints and even making unnecessary refunds.

Learn more: Brand protection: The problems and solutions around keeping your brand safe online

What is the impact of counterfeit goods on consumers?

From a consumer’s point of view, counterfeit goods can present a tempting opportunity to buy expensive items at a fraction of their typical retail price, but this is often a false economy.

Rock-bottom prices usually go hand in hand with rock-bottom quality. This means it is likely that counterfeit items will need to be replaced long before their genuine equivalents would, which ultimately means higher costs in the long term.

The negative impact of fake goods isn’t just financial. In many cases, it can also pose a serious health risk.

One example is the global trade in counterfeit pharmaceuticals, which the EUIPO and OECD estimate is worth up to $4.4bn (and, according to the World Health Organization, has harmful effects in every region in the world).

Ineffective or weakened pharmaceuticals can leave ailments untreated or contribute to drug-resistant infections, while unknown ingredients could provoke unexpected side effects, allergic reactions, and, in some cases, even death.

Another example is electronic goods. A report from UK charity Electrical Safety First states that faulty electrical products are the cause of more than 7,000 house fires a year in the UK. The report goes on to state the results from tests of a number of counterfeit products, including phone chargers and hair straighteners, many of which were found to have posed a serious safety risk.

Finally, an often overlooked negative impact of fake products is that of privacy. There are reports of fake software updates and cases of Android phones being imported from the gray market with malware pre-installed, both of which are designed to expose a user’s personal data to fraudsters.

What is the impact of counterfeit goods on society?

There are many implications that counterfeit goods have on a country’s economy, and the most obvious of these is the loss of tax revenue. Because revenues bypass official channels, governments lose funds from value-added tax, corporate income tax, and personal income tax that could otherwise be invested for the good of communities.

One OECD paper reported that in 2016, forgone tax revenue from the UK retail and wholesale sector amounted to £3.1bn. The same paper stated that at least 86,300 jobs were lost due to counterfeiting and piracy.

Other knock-on effects include an increase in the prices of legitimate products, as brands try to recoup the billions of dollars of global losses, and the aforementioned dangers to public health.

There is also a major humanitarian issue to consider. The United Nations Office on Drugs and Crime (UNODC) identifies clear links between counterfeit goods and transnational organized crime networks, stating that the sale of fake products could be connected to the trafficking of drugs, firearms, or people.

The role of images in the online counterfeit goods market

Before the days of e-commerce, it was possible to hold, inspect, and even test the product you were buying before handing over your money. However, in today’s digital environment, all you have to go on is the presentation of the website, the description of the item, and most importantly of all, the images used.

As it currently stands, anyone can go to a brand’s website and make copies of every official image they can find using a right-click, drag-and-drop action, or a screenshot. Using these images, they are able to create highly believable online product listings.

Possibly the most common place where fraudsters list their bootleg products online is e-commerce marketplaces. It is relatively quick and easy to set up a seller profile on one of these websites and, in doing so, criminals can gain fast access to a truly global market.

Alternatively, counterfeiters will often build an entire website that’s little more than a clone of an official site. By copying logos, matching brand colors and typefaces, and most importantly of all, using stolen official product photography, these websites can be astonishingly convincing.

How to combat the sale of counterfeit goods online

The big players in e-commerce have measures in place to stop the sale of counterfeit goods on their platforms. For example, eBay’s VeRO program and Amazon’s investment in AI to help weed out the fakes.

However, many believe it is too little too late, with Birkenstock having already left Amazon.com, and Nike having withdrawn as a first-party vendor from Amazon worldwide, each due to concerns over counterfeiting.

Preventing image theft

While any efforts to tackle the problem of counterfeit goods online are of course well-received, prevention is often better than cure.

A highly effective step towards achieving this is for brands to protect their images from theft at source. After all, the fake websites and listings mentioned above would be far less convincing without the use of official product photography.

By streaming images instead of displaying them in formats like JPEG and PNG, brands can ensure there is only ever one high-quality copy of each product photograph online.

For example, each of the images you can see in the body of this article is being streamed. This means they are protected from theft and can be displayed on an unlimited number of URLs without a single copy being made. It works in a similar way to embedding a YouTube video.

It is even possible to monitor where an image appears and control its distribution by preventing unwanted domains from embedding it. Furthermore, by attaching captions and credits at source, which will follow the image wherever it is embedded, it is possible to ensure the image always appears in context.

By preventing bad actors from stealing and repurposing valuable product photography, there’s no doubt that a counterfeiter’s job becomes much more difficult.

Conclusion

The online counterfeit goods market is undoubtedly a big issue for brands, consumers, and governments around the world. There will never be a quick fix for a problem of this scale, and indeed no single solution. However, by making changes to the way in which products are promoted, and protecting a brand’s assets at the same time, it could be possible to restrict these criminals’ ability to appear legitimate.

The post Counterfeit goods online: How big is the problem and how can you combat it? appeared first on SmartFrame.

Brand Protection: Everything You Need To Know

Peter Townshend — Tue, 21 Sep 2021 10:47:25 +0000

What are the various threats that your brand could face online? And how can image security and ad safety form an integral part of your brand protection strategy?

Keeping your brand safe has never been more important, but in a largely unregulated digital world, it can be difficult to achieve.

In this article, we look at how both digital images and digital advertising can damage your brand’s reputation. We also explain how a combination of protection over image theft and innovative contextual targeting can provide robust security.

What is brand protection?

Brand protection is the process of taking measures to prevent third parties from using your intellectual property without permission.

Intellectual property is defined as anything that’s created by the mind. This could range from a product name or a company logo to the design of a product, a written work, or an artistic creation.

This unauthorized use results in brand infringement or brand abuse, which can come in many forms, from counterfeiting and copyright infringement to brand impersonation. But they’re all designed to achieve the same thing, namely to allow bad actors to piggyback on your brand’s reputation for their own gain.

An obvious consequence of this is the loss of revenue. But what’s arguably more important is the potential for it to erode trust in your brand – and this can be devastating.

Why is brand protection important online?

Brand abuse is a well-established problem, but the arrival of the internet has seen it proliferate.

Recent statistics that provide a sense of the scale of the issue include the value of the global counterfeit goods market, which was estimated to be close to $2.8 trillion in 2022.

This is not just because the internet has given fraudsters a global reach, but also because of the impersonal nature of modern online shopping habits.

In the days before e-commerce, the process of buying a product or service usually meant inspecting that product or speaking to a professional in person before handing over any money.

With global retail e-commerce sales rising from $1.34 trillion in 2014 to $4.28 trillion in 2020, however, it’s clear that in modern times, we’re far more comfortable basing our buying decisions on what we see on-screen.

With this in mind, if there is a listing on a well-established e-commerce platform displaying the correct logos, design, and colors of a well-known brand – and backed up by official-looking images – can we really blame a less risk-aware shopper for clicking on the “buy” button?

Brand abuse through digital images

Digital images play a huge role in convincing online shoppers that what they’re purchasing is genuine.

A study by Etsy, for example, found that 90% of shoppers considered the quality of photos to be either ‘very or extremely important’ to a purchase decision. Such figures go to show just how valuable professionally taken images are when garnering trust.

And the threat goes beyond listings on e-commerce platforms. With high-quality, official brand photography freely available to steal online, what’s to stop a fraudster from creating a false social media account or, worse still, an entire imitation website?

When you consider that 5% of all Facebook profiles – a total of 142 million – are reportedly fake and that more than three billion phishing emails that typically direct users to scam websites are sent every day, the potential size of the issue becomes clear.

Damaging digital advertising

Another potential source of damage to your brand’s reputation is digital advertising.

With the rise of programmatic advertising, human intervention in the ad-selection process has been almost eliminated. On one hand, this complete automation has improved efficiency.

On the other, it has led to a reduction in quality control and the potential for big problems for both advertisers and publishers.

Poor ad placement

With the ever-more complex processes of selling digital ad inventory, badly placed ads have become a common occurrence. Astonishingly, one study revealed that only 2.8% of participants thought the last digital ad they saw was relevant.

Often this involves an ad appearing next to inappropriate content and, while it is possible to see the comedy in unfortunate placements, there’s a far more serious side too.

A 2020 study by Integral Ad Science (IAS) found that 70% of UK and 62% of US consumers will cease using a brand’s products if their ads are found near unsafe content.

And it’s not just dangerous or offensive content that causes problems – quality plays a big part too.

For example, the same study from IAS found that 52% of consumers are likely to engage with ads surrounded by high-quality content, as opposed to 13% when viewed in a low-quality environment.

All of this goes to show the importance of ad placement in the success of your advertising and, in turn, the protection of your brand.

Retargeting gone wrong

Retargeting is a form of behavioral targeting that uses cookies to target users who have left a website without converting.

If you’ve ever searched for something online one day, and then noticed it following you around the internet for weeks afterward, this will have been down to retargeting.

While in some cases this form of digital advertising has proven to be extremely effective, it does have its flaws.

For example, you may have changed your mind since you visited the website, or potentially bought the product on the high street already. Worse still, the advert could regard a personal or sensitive product that you’d rather not be reminded of.

Either way, the result is the same: a disgruntled user, which is bad for both advertisers and publishers.

Bad ads

Whereas above we spoke about the effect bad content has on a brand’s digital ads, it can also work the other way. Bad ads can be just as damaging to a brand’s carefully curated content.

The term ‘bad ads’ in the digital world is used to describe digital ads that make for a bad user experience. They could contain offensive or inappropriate content, promote fraudulent products or services, or even spread malware through a practice known as malvertising.

Bad ads are a big deal. To give you an idea, Google blocked and removed 5.2 billion bad ads in 2022 alone. A problem of this scale presents a very real threat.

With the anonymous nature of the programmatic landscape creating the perfect environment for bad actors to distribute this type of ad, you must take the correct security measures to protect your brand’s reputation.

Preventing brand abuse with image security

We believe that securing all imagery associated with your product or service is an essential part of any brand protection strategy. With proper protection in place, it becomes difficult for fraudsters to copy, manipulate, and redistribute your images as their own.

One way to do this is by using image streaming, which enables you to control the online use of every single image you upload.

By using this technology, all your brand’s images can be streamed from a single bank of individual, accredited master copies. This allows you to view a list of every page on which an image is displayed, with the ability to block domains as you wish.

A further advantage of this is that it gives those publishing your images peace of mind, in that they can be sure the images they’re using have come from a reputable source.

Potential abusers of your brand, on the other hand, would face multi-level theft prevention. Dragging and dropping are made impossible while right-clicks are met with image-obscuring copyright messages, and image-scraping bots are also deterred.

Such a strong combination of protection makes it extremely difficult for abusers to gain the imagery they need to impersonate your brand online with any credibility.

Ensuring brand safety through contextual in-image advertising

The risks that come with digital advertising boil down to two things: context and protection. If ads are not displayed in the right context for the brand in question, or if there are insufficient security measures in place to detect and block bad ads, even the most impeccable reputation can be very quickly tarnished.

Contextual in-image advertising is one way to ensure safe and effective online advertising. At SmartFrame, for example, we collaborate closely with image owners and libraries to contextually target in-image ads with complete accuracy.

Advanced technology analyzes the contents of the webpage, the image itself, and the user’s geolocation to build an accurate picture of the environment in which an ad will appear. Ads are then matched perfectly to their surroundings to ensure they’re always relevant.

To complement contextual advertising, it’s important that ad inventory is completely protected from bad ads and vetted to maintain maximum quality.

In summary

Brand protection is a broad term that can cover countless areas, both online and offline, and such scope can make it hard to know where to start.

While image security and contextual advertising alone will not make your brand impervious to harm, they should form a vital part of your overall brand protection strategy. With this in place, you’ll have a strong basis from which to build comprehensive online brand safety.

The post Brand Protection: Everything You Need To Know appeared first on SmartFrame.

Black Friday and counterfeit goods: Should we be more vigilant?

Matt Golowczynski — Sat, 04 Apr 2020 14:01:01 +0000

Do Black Friday and Cyber Monday sales create additional risks for retailers and consumers?

The Black Friday–Cyber Monday shopping period is now firmly established as a highlight in the calendars of both retailers and shoppers. While the nature of the event has changed over the years, an increasing number of retailers continue to get in on the action, shaping how, where and when we shop during these four days.

While neither day on its own can match Alibaba’s Singles’ Day in terms of revenue, Black Friday sales in the US hit $7.4bn last year, with an additional $9.2bn spent on Cyber Monday. In total, around $29bn was spent over the entire four-day period.

Whether we end up getting genuinely good deals on Black Friday and Cyber Monday, or whether the frenzied nature of the event clouds our decision making, is something that’s debated every year. But when it comes to the risks around counterfeit goods, should we be more or less concerned at this time of year?

Strengthening the new with the old

Regardless of when it is that we choose to shop online, there are always certain risks that we didn’t concern ourselves with when brick-and-mortar retailing was our only option. We can never be entirely sure, that what we’re being shown in an image online is what we’ll end up receiving, for example, or that we’ll receive it in the condition expected.

And the risks vary across categories: at best, you could end up with a perfectly convincing item of clothing that’s almost impossible to tell from an original piece; at worst, you could purchase something that doesn’t conform to the necessary safety regulations, which may then cause you or others harm.

Not everything bought online is delivered to our door, of course. The principle of purchasing an item online and picking it up in a retail store has gained popularity over the years, marrying the convenience of locking in a seeming bargain with the option to collect the item at our leisure. This is one way in which retailers with physical stores maintain an advantage over online-only retailers, and this gives shoppers more protection, not least because they can examine the purchased or reserved product before it’s taken home. The ongoing coronavirus pandemic, however, means that we should see far fewer shoppers transacting in this way this year.

As fraudsters understand consumers’ buying habits and the products they’re most likely to be drawn to, they can calculate how best to target them. Given that electronics, technology and clothing tend to be the main spending areas for consumers over this period, extra attention should be paid to suspicious marketing in these categories.

In some ways, a relatively niche product with a high price tag is a safer bet for the consumer; fewer people will be drawn to it, so there’s less likelihood of counterfeit copies being produced, and in turn, fewer people being deceived.

Black Friday and Cyber Monday deals vary from retailer to retailer, and across product categories. The secrecy of Black Friday and Cyber Monday deals prior to the event taking place means that fraudsters have little chance of responding on this level, and manufacturing copies of those specific products. Instead, they’re more likely to go to the effort to create a website that either aims to replicate a better-known site, or that simply appears as a genuine website under its own brand with its own ‘deals,’ as well as infiltrating legitimate supply channels with perennially popular products.

This works because the ways in which shoppers find specific deals during this period is likely to be different from the norm. Whereas many shoppers’ first port of call may ordinarily be a Google Shopping result, or a direct visit to a specific retailer’s website, the Black Friday period sees many websites aggregate deals and redirect the user to all kinds of external sites, and some of these sites may be unfamiliar.

Social media sites are also typically awash with posts promising all kinds of time-limited deals, and if the shopper does get drawn into comparing deals across many sites, it might be easy for them to forget where they first found a link, or just how legitimate it appeared to begin with.

Checking needn’t be time-consuming

As Black Friday revolves around time- or supply-sensitive deals, it’s easy for consumers to forget the usual checks they should carry out when buying from an unfamiliar website. Furthermore, as many shoppers expect steep price drops during this period, the maxim about something appearing too good to be true often being just that becomes easy to forget.

But even just taking a few seconds to investigate a website can make a difference. Checking the toolbar for an address that begins in https:// for example, takes no time at all. Searching for the company’s presence on review sites needn’t take longer than 30 seconds or so. Fraudulent websites often give themselves away with little or no detail on their Contact, About Us and Terms and Conditions pages, and a dead link to any of these should be taken as a warning sign.

Another risk is pharming, which sees fraudsters redirect traffic from a genuine website to their own, either by installing malware on the user’s machine or by infiltrating a DNS server. This is sophisticated and much harder for the consumer to spot, but the same checks as above can protect them against this kind of activity.

Headache for retailers

It’s not just consumers that miss out by buying counterfeit products, but those selling genuine articles too. Retailers should take steps to protect themselves from fraudsters, not least by safeguarding their websites and images from theft and bot attacks; it is, after all, much harder for a fraudster to sell a product online if the image they need is sufficiently protected.

Spotting and reporting any suspicious sites, and taking prompt action over phishing emails designed to encourage users to submit financial details, should also help them to maintain both their sales and reputation.

The Black Friday shopping period is a key opportunity for many retailers to balance the slump felt at other times of the year, and a well-coordinated sales and marketing strategy can make a vital difference to revenues. But both retailers and consumers should be wise to how attractive that spike in online retailing appears to fraudsters, and the necessity for vigilance in the face of constantly changing threats.

The post Black Friday and counterfeit goods: Should we be more vigilant? appeared first on SmartFrame.