What to Do About Counterfeiters

Throughout this course, we’ve been focused on the threats facing your brand from both gray-market sellers as well as your authorized retail partners. But in all of our discussions to this point, we’ve been assuming that the retailers in these hypothetical scenarios—whether legitimate dealers or rogues—are selling authentic merchandise they’ve acquired through your company’s distribution channels.

But what about counterfeiters? If a company has somehow figured out how manufacturer phony versions of your products and sell them online through reputable marketplaces like Amazon, what can you do?

Although there is no surefire method to prevent counterfeiters from illegally trying to replicate your brand’s products and bring them to market, there are steps you can take to significantly reduce your company’s risks of being harmed by counterfeiters. 

This module will discuss:

• The rampant, growing problem of counterfeiting
• Best practices to protect your brand from counterfeiters

 

How Widespread Is the Counterfeiting Problem?

Thanks in large part to the Internet and the ubiquity of eCommerce, the sale of counterfeit consumer products has grown exponentially in recent years. As a result, counterfeiters are becoming more brazen, targeting more product categories, and taking aim at more brands than ever. 

 Consider these recent statistics:

• According to a 2017 AdWeek story, counterfeit goods represent a $460 billion market that includes fake versions of all categories of products: electronics, apparel, consumer electronics, toys, etc.
  
  The Internet has made selling these fake products easier than ever, because counterfeiters can hide more successfully behind websites and phony business names than if they had to set up shop at a physical location. This is why, as the AdWeek story points out, the majority of counterfeit goods today are sold online.

• In 2018, the US Government Accountability Office (GAO) issued a report detailing their findings from conducting test buys of different types of commonly counterfeited products—shoes, electronics, cosmetics, etc.—from popular eCommerce sites such as Amazon, Walmart.com, and eBay. Of the 47 products the agency purchased, they found 20 of these items were counterfeits.
  
  Although this represents only a small sample, it should still be concerning for any manufacturer or brand to learn that even at reputable marketplaces like Amazon there could be a 43% chance that any given product listed in a fake.

• In 2016, Apple discovered a retailer selling counterfeit versions iPhones, apple power adapters, and other products on Amazon. Test buys revealed that almost 90% of the retailer’s Apple product line were fakes, so Apple filed suit.

 Given the advances in manufacturing technology, the lack of regulatory oversight in countries like China where much of this manufacturing takes place, and counterfeiters’ access to a global market on the Internet, counterfeiting has become a problem every brand needs to address. 

Here are some best practices you should implement to protect your brand from these fake-goods sellers.

 

Best Practices to Fight Counterfeiters

 1. SET UP AN AUTHORIZED DEALER PROGRAM

We’ve discussed the importance of Authorized Dealer Programs throughout this course, and we devoted all of Module 17 to the topic. But in addition to its many other merits, an Authorized Dealer Program can also help make your team more systematically identify counterfeiters.

This is because these programs help you limit which retailers may acquire and resell your inventory, and this can help you more quickly spot the fakes.

 

2. UPDATE YOUR WHOLESALER AGREEMENTS TO REFLECT YOUR AUTHORIZED-DEALER REQUIREMENTS

As part of rolling out your Authorized Dealer Program, you’ll also want to update your agreements with distributors and wholesalers to ensure these companies know they are allowed to sell only to those retailers on your approved list.

Because this agreement will encourage your distribution partners to make sure they’re not allowing your inventory to “leak” to the wrong retailers, when you do find a company you don’t know selling your products, there will be an elevated chance the retailer is in fact selling counterfeits.

 

3. JOIN THE ANTI-COUNTERFEITING PROGRAMS FOR BRANDS OFFERED BY MARKETPLACES SUCH AS AMAZON

Another weapon in your anti-counterfeiting arsenal will be to sign up for programs such as Amazon’s Brand Registry and its newer program, Project Zero. Amazon develops these programs to help keep counterfeit goods off of its marketplace.

When your brand joins these programs, you receive access to sophisticated AI tools designed to help you and Amazon catch and remove retailers trying to sell counterfeits.

 

4. ADD SERIAL NUMBERS TO YOUR PRODUCTS

You’ll also want to add serial numbers or other unique identifiers to your products—ideally prominently placed on the packaging and on the products themselves.

The primary benefit of product serialization is to help you quickly trace the source of a listing that is problematic in some way—because the retailer is advertising your product for lower than your MAP pricing guidelines, or because you don’t recognize the retailer and need to find out if the item that they’re selling is authentic. 

 

5. BUILD SUBSTANTIVE ATTRIBUTES INTO YOUR PRODUCTS THAT MAKE THEM MORE DIFFICULT TO COUNTERFEIT

By adding warranties and other features to the product that a counterfeiter would have trouble offering, you can make it more difficult to sell fake versions of your products, or at least make it less attractive for counterfeiters to try.

 

6. SET UP A SYSTEM FOR MONITORING THE WEB FOR FAKES

One of the most important steps in your anti-counterfeiting strategy will to establish a system to keep a constant eye across the web for potential counterfeits of your products being sold.

 Joining programs such as Amazon Brand Registry can help, because Amazon itself will also be monitoring for fakes. But you’ll need to cast a wider net and monitor the entire Internet—all retail websites, all online ads, all marketplaces—at all times. This means manually monitoring the web for possible counterfeiters won’t be practical or cost-effective.

So, you’ll need the help of a brand protection software solution—ideally one that uses sophisticated search technology, AI, and is capable of big-data analysis.

 

7. CONDUCT TEST BUYS TO DETERMINE IF YOU’VE FOUND A COUNTERFEIT

When you (or your brand protection software) spot a possible counterfeiter online, you will want to take quick action. A smart strategy is to conduct a test buy from the possibly crooked retailer.

If you’ve serialized your products, you can use the serial numbers of the items you’ve bought to trace their source. If the products don’t have serial numbers, you might well have found a counterfeiter—and now your objectives are to 1) to take the offending listings down, and 2) take legal action against the counterfeiter. 

You’ll want to document the name (and address, if possible) of the retailer, as well as take photos of the test-bought package and the product itself, to prove it has no serial number and is therefore a fake.

 

8. HAVE A PLAN TO TAKE AGGRESSIVE ACTION AGAINST COUNTERFEITERS.

When you’ve determined that a retailer selling your products is indeed selling fakes, you’ll want to have a plan in place to go after that company as quickly and aggressively as possible. The longer those counterfeits are on the market, the greater the chances customers will buy them, have lousy purchase experiences, and start attributing those bad experiences to your brand.

So, you’ll want to start by tracking down the company selling these fakes. You might need to hire a private investigator, and you might want to enlist the help of an attorney—both to draft and send official warnings, and to help you build a legal case if you choose to go that route.