Each year, the Office of the United States Trade Representative (USTR) publishes a report known as the Notorious Markets List, or NML. The report reviews data from the previous year to “motivate appropriate action by the private sector and governments to reduce piracy and counterfeiting.”
We know that regulators are already turning their attention to the problem of counterfeits, initiating legislation such as the Shop Safe Act and the INFORM Consumers Act in the US. There is a strong trend toward brands being empowered to hold marketplaces accountable for counterfeit products.
Increased accountability for everyone in the payments chain
In addition, regulators are calling on everyone in the ecommerce ecosystem to fight counterfeits—from payment providers to marketplace platforms. This expansion of accountability for the industry is clear from the very first page of this year’s report.
The USTR called attention to the potential health and safety risks posed by counterfeit goods, stating that the report “highlights prominent and illustrative examples of online and physical markets that reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial piracy or counterfeiting.”
Counterfeit risk: A key issue
The NML’s Issue Focus segment shines a light onto a problem that holds particular significance. This year’s segment emphasized the potential health and safety risks of counterfeit trademark goods. This is because counterfeit goods are produced outside regulatory oversight, increasing the likelihood that they are crafted from inferior materials, contain harmful chemicals, or exhibit failures that pose potential dangers to consumers.
The following products were featured in the report due to the significant risks posed to user health and safety:
- Children’s Toys and Other Children’s Products
- Car Parts
- Electronics
- Pharmaceuticals and Other Medical Supplies
- Personal Care Products, Apparel, and Footwear
One striking example of the potential dangers of counterfeits is illicit OEM (Original Equipment Manufacturer) products, specifically electronics or car parts, which were mentioned in the report.
The risks of illicit OEM products
An OEM is a company that manufactures products or parts that are then used in the final product of another company. This includes companies which design and produce electronic items based on a buyer’s specifications to sell a completed, final product – with their company name or logo placed on the product by the OEM.
In this way, companies often look to overseas OEMs to save costs on product development, labor, or other production expenses, while still benefiting from the product expertise and warranty offered by the OEM. This is a common and legal practice across various industries. That said, counterfeiters and other bad actors often manipulate this business model and falsely label counterfeit or substandard items as genuine OEM products.
The USTR’s report highlights counterfeit automotive parts and electronics, due to the seriousness of the risks – these products have enormous potential to harm consumers. For example, counterfeit electronics are at risk of overheating, self-igniting, or shorting-out, and could cause burns or electrical shocks. And non-OEM car parts can cause severe malfunctions, such as airbags over inflating or even exploding metal shrapnel during deployment in a crash.
Counterfeit OEM products pose a substantial risk to brands, legitimate manufacturers, financial institutions and online marketplaces. Why? Because when consumers lose faith in the authenticity of the products they purchase, it erodes the reputation of the companies facilitating those sales (and, consequently, the revenue).
Wide category coverage
At EverC, our goal is to create solutions that meet our customers’ needs – now and in the future. Our solutions cover a wide range of categories (also known as verticals or LOBs) to ensure that our customers have the flexibility to expand into different lines of business as opportunities arise. And within those categories, we are constantly working to sharpen the precision of our findings, with a unique combination of AI-driven core technology and expert insights.
