18th September 2019

Not good enough to be true

As regulators struggle to deal with the surge in counterfeit goods online and off, what can be done to better protect consumers from the growing menace of untested, low-quality, and often dangerous fakes?

By Temoor Iqbal
Freelance writer for JTS
The fact that fake goods are becoming more dangerous has not fully seeped into the general mindset
No counterfeiters produce goods to the original manufacturer’s specifications or standards

In June 2018 Ozan Melin, a London-based cosmetic practitioner, was jailed for four years after two women he treated with Botox injections suffered severe injuries. One of the victims was left with facial burns and a drooping brow, while the other developed permanent sinus problems. Reporting at the time focused primarily on Melin’s apparent lack of medical qualifications, but there’s another, equally sinister side to the story: the products he used. Police found that Melin ordered an unlicensed product from China and what the two women paid for when they thought they were getting a good deal for Botox turned out to be an unknown, extremely harmful substance.

It’s tempting to put this unfortunate story down to a misunderstanding around a relatively modern and complex product, but harmful counterfeit versions of everyday goods abound too. In 2015, for example, City of London Police warned that rat droppings, human urine and arsenic had been found in fake beauty items on the UK market, putting buyers in danger of skin irritation, rashes, burns and long-term conditions. However, the warnings appear to have fallen on deaf ears – in February this year, the same police force told Valentine’s Day shoppers to be on their guard after £40,000 worth of fake designer perfumes were seized and found to contain the same contaminants.

Does this mean that, in spite of the clear and well-known dangers, consumers are keeping demand for counterfeit goods alive? In a word, yes.

“Over the years that I have been involved in intellectual property crime enforcement, it has never diminished”, says Handley Brustad, Joint Lead Officer for Intellectual Property at CTSI. “Trends change over the years, but sales go on.”

It seems the human passion for bargains runs so deep that the chance of a cheap deal is worth the risk of harm to many consumers. Of course, not all goods available on the black market are counterfeits. In April 2019, YouTube make-up artist Jeffree Star announced that $2m worth of his new concealer line had been stolen, and fans were quick to respond with screenshots of the products on sale on Facebook Marketplace, Depop and other online platforms. Star is now working with the FBI in the US to track down the thieves, but the damage to his brand has been done; the market is awash with his genuine items being sold at a fraction of their intended retail price in unregulated spaces.

What’s more, there are plenty of knock-offs on the market that consumers knowingly and willingly buy because of the cheaper price tag. Recently, a small business owner from Cardiff bought a counterfeit version of ColourPop’s Ultra Matte lipstick online. “I knew it would be counterfeit, but I bought it because I didn’t want to spend £10 on a similar product that did that same thing,” she says.

Caveat emptor

So, with a mix of ‘convincing’ fakes and genuine products acquired by shady means on offer, it might seem that the counterfeit market is not such a bad place after all, and that the old ‘buyer beware’ adage means those who come to harm should simply have been more careful. However, this is a fundamental underestimation of the scale of the problem, as well as the threat the unregulated marketplace poses to health, life, and the economic systems that underpin our society.

“Consumers today have a bargain-hunter mentality”, says Carol Levin of the Anti-Counterfeiting Group (ACG), a body that represents intellectual property owners internationally and lobbies on their behalf. “The fact that fake goods
are becoming more dangerous has not fully seeped into the general mindset,
and this has resulted in serious injuries and deaths.”

On top of this, the idea of the ‘knowing buyer’ is often a fallacy – while a small proportion of consumers might actively search for cheap variants of popular items, research by brand protection specialist Incopro in 2018 found that more than a quarter of UK consumers had unwittingly purchased counterfeit goods online, thinking they were genuine.

“This represents a significant level of consumer detriment”, explains CTSI Joint Lead Officer for Intellectual Property Gavin Terry. “In my experience, no counterfeiters produce goods to the original manufacturer’s specifications or standards. They are of inferior quality, unknown origin, and manufactured as cheaply as possible.”

And it’s not just buyers, unwitting or otherwise, who suffer. The EU Aviation Safety Agency, for example, maintains a Suspected Unapproved Parts list, monitoring aircraft components that
have not been properly tested and approved, and which could endanger hundreds of lives.

National and international organised crime syndicates also use counterfeit goods as a source of income, a link specifically highlighted by the UN Office on Drugs and Crime, meaning that a seemingly innocent online purchase could fund violent crime, exploitation and human trafficking, among other things. Finally, OECD figures reveal that the UK loses around £2.4bn per year in tax revenue due to counterfeit goods; money that could be invested in public services, healthcare and education.

Stemming the flow

In spite of this knowledge, the sector keeps on growing. This year, the global counterfeit market is estimated to be worth $2.2trn, up from around $1.7trn in 2015. However, work is being done to slow the spread of counterfeit goods. The National Markets Group, of which Terry is Vice Chair, recently launched the Real Deal Online programme. Run in conjunction with the National Trading Standards eCrime Team, the programme focuses on online selling groups with a local base, such as those on Facebook Marketplace, which are the main consumer-facing endpoint for counterfeit goods in the UK.

The scheme obliges participating group administrators to invite local trading standards officers into the group, and to agree to: prohibit the sale of counterfeit goods; act on information from intellectual property owners who highlight the sale of illegal goods; notify trading standards if they believe illegal goods are being sold within the group; exclude known sellers of illegal goods; highlight warnings and advice notices posted by trading standards; and make sure that all members of the group are aware of the policy. In recognition, participating groups can use the Real Deal logo, which will reassure shoppers that they are not at risk of buying counterfeit items.

The ACG, meanwhile, is using its international network to fight the large-scale supply chains that facilitate trade in fake goods. Intelligence sharing between members has directly led to multi-agency raids involving international authorities; last year, these raids secured and removed counterfeit goods with a street value of £5m from the market.

The organisation also lobbies national and international agencies to improve intellectual property protection and enforcement, encouraging the building of safeguards into free-trade agreements that otherwise make the spread of counterfeit goods much easier.

These approaches are making a real difference by addressing the root causes of the problem: consumer demand and regulatory laxness.

However, educating buyers about the dangers of fake goods and stemming the flow of counterfeits can only go so far without buy-in from the platforms that supply end-users. The Real Deal programme shows that Facebook is willing to participate, but unless the company, along with Wish, Depop, eBay, Amazon and all other online selling platforms, commits to overhauling its easy-to-use systems, the problem will continue to exist and grow.

Platforms need to enforce seller registration and insist on transparent supply chains in order to stop counterfeit goods being bought and sold, but this would require a lot of time and effort, and would lose them a lot of trade. Unsurprisingly, then, it’s unlikely to happen any time soon, and the best that the anti-counterfeiting lobby can do is ensure consumers are equipped with the knowledge and common sense to spot fake goods and recognise the harm they can do, both to individuals and to society as a whole.

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