Why do some consumers intentionally buy counterfeits? Who is the typical counterfeit buyer? Should there be separate rules for counterfeits that impact health and safety? How can those doing business in the payments industry disrupt counterfeit fraud?
These questions and many others were answered when Kari Kammel, director of the Center for Anti-Counterfeiting and Product Protection (A-CAPP), joined payments industry thought leader and EverC VP Melissa Sutherland for an informative talk on counterfeit fraud as part of our Safer Ecommerce webinar series.
Kammel said that in almost 10 years since she’s been leading A-CAPP, counterfeiting has grown exponentially. “It’s gone from something that happens in back alleys or in other countries to something that is on the forefront everywhere, that’s even impacted my own family. And it’s becoming something that’s such a pervasive threat now … It’s something that crosses any industry in almost any product line that is successful,” she said.
A-CAPP researches counterfeiting to drive global impact
Based at Michigan State University with approximately 35 global research experts, A-CAPP has worked with or engaged with over 500 organizations globally, including brands, law enforcement and legal experts, and stakeholders in the payments and digital commerce space such as payment providers, ecommerce platforms, and social media giants.
“We focus on three things, primary research, education, and outreach,” Kammel said. “Our research deals with looking at this problem [counterfeiting] from a variety of disciplinary backgrounds, trying to move the needle a bit in the right direction.” A-CAPP's comprehensive report, based on responses from over 17 countries, represents the culmination of much of their research on counterfeiting.
How can the payments industry disrupt counterfeit fraud?
The payments industry has a unique role to play in disrupting counterfeiting, according to Sutherland, simply because counterfeiting is a financial crime: “We can’t stop the development, creation, or theft, but we can stop the money flow.”
Kammel said it’s necessary to look at the crime triangle theory to understand how to disrupt counterfeiting. “It’s the idea that in order for a crime to take place, there has to be a meeting of the offender, the victim, and that time and place. So if the three legs of the triangle never come together, the crime never occurs, said Kammel, describing this as proactive disruption.
According to the theory, Kammel said, “There is a type of guardian around each of those legs of the triangle. So there’s one that would be in theory around the ecommerce site, which would actually be the platform itself. That would protect the platform and make it in a way that is really challenging for bad actors to even access it to be able to post something. There’s something on another level up that might be called a super controller, which might be the legislature that might even change the requirements of how that meeting in time and place could happen. There’s another one that would be a way to prevent the bad actor from getting into that space. So that might be enhanced vetting … it might be vetting the seller, vetting the post, something proactive to keep them from getting there.” Then the guardian around the consumer would provide them with education before they get to the point of purchase to help them make better decisions.
Guarding the “legs” of this triangle is an essential part of stopping the crime, Kammel explains: “If you wait until after it’s already come together, that’s all of the reactive work that we see everybody doing. That’s the notice and the takedown. That’s the web scraping, trying to find postings and pull them.
Sutherland added, “I think from a technology perspective, everybody’s got a lot of work to do to keep consumers safe. At the end of the day, we are protecting consumers from themselves, and bad actors are motivated by profit to get in front of them. Fraudsters don’t have budget constraints or egal concern, and they don’t take PTO.”
Who’s a typical buyer for counterfeits?
- Based on recent A-CAPP research, forty percent of people bought counterfeits from ecommerce platforms and almost 40% from social media platforms as well. Counterfeit buyers also tended to be male, younger, more religious, and frequently from low-income households.
- While some people buy counterfeits for economic reasons – to save money or get a deal – there are hedonistic shoppers who buy counterfeits for the joy of doing it. They enjoy being part of the “dupe culture” and may even brag about it on social media.
Why should marketplaces get involved in counterfeit disruption?
Although the law doesn’t require platforms to take down counterfeit items reported by consumers (yet), marketplaces must remove counterfeits within a reasonable amount of time if they are reported by the brand owner or the owner of a copyright mark. Detecting counterfeits or IP-infringing products before the brand sees them can help marketplaces in 3 ways:
- Establish trust and safety systems that protect consumers
- Protect your reputation and revenue
- Avoid enforcement fines or lawsuits
- Build stronger partnerships with brands
At this writing, there is no effective consumer reporting mechanism for counterfeits. A-CAPP research revealed that consumers don’t know what to do after they purchase a counterfeit or how to report counterfeit fraud.
What they might do is leave a review, or tell all their friends they got a bum deal on your marketplace.
You can delve more deeply into this issue by viewing the full conversation on the EverC YouTube channel
If your organization is one of the legs of the triangle – payment provider, acquiring bank, ecommerce or marketplace platform – then EverC can help you disrupt illicit activity and identify counterfeits in your portfolio, so you can take action against this crime.
Contact us today and find out how our tech-forward solutions can help!
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