Research shows that eight in 10 Americans shop online, and the dominance of online retail means nearly anything can be bought online, sometimes at discounts that seem too good to be true. However, nearly anything available online can be counterfeited – and research also shows that one in four people have bought something online that turned out to be counterfeit.
An in-depth investigative study by Better Business Bureau (BBB) – “Fakes Are Not Fashionable: A BBB Study of the Epidemic of Counterfeit Goods Sold Online” – finds that fraudulent consumer goods are ubiquitous and difficult to tell apart from the legitimate products they are counterfeiting. The study further finds that these counterfeit goods stem from a large network of organized criminals and credit card processing mechanisms that are willing to support them.
The risk of encountering counterfeit goods can affect any online shopper. These goods range from brand-name sunglasses and handbags to golf clubs and consumer electronics, as well as many other kinds of products. BBB’s report finds that any shippable item with a reputation for quality and sizable markup is a candidate for counterfeiting. While counterfeit goods often are reputed to be deeply discounted, in reality, counterfeit sellers regularly use selling prices that are close to the price of the real product, so the prices offered are no longer a signal that the product is counterfeit.
In the last three years, BBB, the Federal Trade Commission (FTC) and the Internet Crime Complaint Center (IC3) processed thousands of complaints about counterfeits goods.
The cost of counterfeiting affects not only consumers who lose money by receiving products not as advertised, but also the broader U.S. economy. BBB’s report finds that counterfeiting and intellectual property piracy cost the U.S. economy $200-$250 billion and 750,000 jobs annually.
A St. Louis man told BBB he saw a Facebook ad for a popular drone with a reputation for quality. The website on which it was advertised looked professional, contained pictures and videos from a well-known drone company, and included many positive comments and reviews. He purchased the drone he was interested in for about $200 as part of a clearance sale. The man told BBB a week later, he received a cheap, plastic toy drone whose value he estimated at about $10. He emailed the company to complain, but said the company never responded.
According to BBB’s report, 88% of counterfeit goods come from China and Hong Kong, with their smuggling and their online sale via fraudulent websites widely thought to be coordinated by international organized crime groups. Inasmuch as counterfeit goods are almost always paid for with a credit card, the fraudulent websites that process these sales make extensive use of the credit card and banking system, with a small number of Chinese banks and an extensive network of intermediary payment processors responsible for the vast majority of processing for these purchases.
BBB recommends consumers check the reputation of the seller before making payment at bbb.org and contact the manufacturer for a listing of authorized sellers.
What to do if you believe you have unwittingly purchased counterfeit goods:
• Ask for a refund. Victims who don’t receive anything when buying online with their credit card, or who receive goods that are counterfeit or not as described, should call the customer service number on the back of their card and request a refund.
• Report counterfeit goods. Contact one or more of the following:
• National Intellectual Property Rights Coordination Center: iprcenter.gov
• Better Business Bureau: bbb.org
• Online markets: Victims can complain directly to eBay, Amazon, Facebook and Instagram or other online marketplaces. In addition, Amazon has an “A-Z guarantee” for goods sold by third parties on their site.
• Internet Fraud Complaint Center (IC3): ic3.gov
• Federal Trade Commission: ftccomplaintassistant.gov.