Housewares Magnifies Fight Against Online Counterfeiting

NEW YORK— Counterfeiters are challenging the housewares sector, retailers and vendors both, but opposition is rallying and, critically, teaming up to combat the sale of fake goods to consumers.

The effort is critical. The International AntiCounterfeiting Coalition, using an estimate developed by the International Chamber of Commerce/BASCAP, put the value of the counterfeit and pirated goods global trade at $1.77 trillion in 2015.

However, the struggle isn’t without internal conflict and has entailed finger pointing between vendors and retailers, even lawsuits. Still, the threat associated with counterfeiting has become sufficiently apparent that comprehensive efforts to counter the counterfeiters are gathering steam.

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The challenge, however, is enormous and constantly evolving. In part, that’s because digital retail has created a vast new opportunity for counterfeiters. Unscrupulous manufacturers that practice counterfeiting full or part time exacerbate the problem. Many do or have worked on legitimate goods and, so, are knowledgeable enough to produce fake goods that are very near the quality of the real thing, but typically produced with less investment.

The ability to copy, at least superficially, produce and distribute products that at least superficially appear like branded items is particularly insidious because what is outside can conceal substandard, even dangerous content. The problem is especially great and sometimes harrowingly dangerous in the pharmacy sector. However, counterfeit housewares products also can be dangerous, to users, as when cheap electrical elements turn hair care products into fire or injury risks.

To make matters worse, counterfeiters have gotten better at connecting with consumers through digital retailing, creating sites, sometimes near copies or even clones of established e-stores, to sell their goods. Counterfeiters have become adept at using online marketing tactics, both legitimate and otherwise, to lure in consumers. In particular, they have used online marketplace operations to establish storefronts and move fake goods to consumers.

Amazon’s Investments

Counterfeiters have caused contention for Amazon.com, which, for example, faces a lawsuit filed by Allstar Marketing Group alleging trademark infringement and other improprieties. The company has a policy and process for dealing with counterfeit branded products but some vendors insist that it has been inadequate especially as it applies to third-party sellers that operate through its marketplace operation. Removing fake branded merchandise requires too much time and effort, many vendors complain, although some concede the e-tailor is becoming more active.

The company has gone to court over counterfeiting, and not necessarily as the defendant. Amazon filed suit in the State of Washington Superior Court with marketplace participant Fitness Anywhere, against named and unnamed individuals who, the suit alleges, were involved in counterfeiting Fitness Anywhere’s TRX exercise equipment.

In its anti-counterfeiting policy statement, Amazon declares, “We are constantly innovating on behalf of our customers and working with manufacturers, content owners, vendors, and sellers to improve the ways we detect and prevent counterfeit products from reaching our marketplace. We work hard on this issue every day because we know that our customers trust that they are buying authentic products when they shop on Amazon.com. This is why we stand behind the products sold on our site with our A-to-Z guarantee. We also encourage anyone who has a product authenticity concern to notify us, and we will investigate it thoroughly and take any appropriate actions.”

Amazon spokesman Erik Fairleigh reiterated and expanded on the e-tailer’s policy when he told HOMEWORLD BUSINESS®, “Amazon has zero tolerance for counterfeits. Amazon’s customers trust that when they make a purchase through Amazon’s website— either directly from Amazon or from one of its millions of third-party sellers— they will receive authentic products manufactured by the true manufacturer of those products.”

Fairleigh added that, to preserve the trust it has worked to achieve, “Amazon is investing heavily in protecting the integrity of the Amazon marketplace for consumers, sellers, and manufacturers. Amazon is also working closely with rights owners to strengthen protections for their brands on Amazon. We remove suspected counterfeit items as soon as we become aware of them, and we suspend or block bad actors suspected of engaging in illegal behavior or infringing others’ intellectual property rights. We have taken independent legal action against bad actors and will continue to do so. And we work with law enforcement who present us with a valid legal process.”

Still, counterfeiters persist in their targeting of Amazon’s marketplace. Fairleigh asserted that Amazon has every intention of going after counterfeiters who target its operations, injuring its reputation and escalating its return and administrative costs. The retailer sees technology as a crucial means of targeting fake branded products.

“As part of our investment in brand protection, we are building powerful tools tailored to the needs of the rights owner,” Fairleigh said. “In order to detect bad actors and potentially counterfeit products, we employ dedicated teams of software engineers, research scientists, program managers and investigators to operate and continually refine our anti-counterfeiting program. When a business registers to sell products through Amazon’s marketplace, Amazon’s automated systems scan information for signals that the business might be a bad actor, and Amazon blocks those bad actors during registration before they can offer any products for sale. On an ongoing basis, Amazon’s systems also automatically and continuously scan numerous variables related to sellers, products and offers to detect activity that indicates products offered might be counterfeit.”

Fairleigh said that, going forward, Amazon would ratchet up its efforts to drive counterfeiters off its site by expanding and refining the technological tools it can employ against them.

“Amazon is also investing in innovative machine learning to improve our automated systems in order to anticipate and stay ahead of bad actors,” he said. “We take this fight very seriously, and we look forward to partnering with even more stakeholders to eliminate counterfeits from our marketplace.”

Amazon’s anti-counterfeiting lawsuit, filed in November of last year, goes into detail about what the company is doing to deter the sale of fakes on its site.

According to the complaint, “Amazon invests tens of millions of dollars annually developing sophisticated technology to detect bad actors and potentially counterfeit products, and it employs dedicated teams of software engineers, research scientists, program managers, and investigators to operate and continually refine its anti-counterfeiting program. Among other things, when sellers register to sell products through Amazon’s Marketplace, Amazon’s automated systems scan information about the sellers for signals that the sellers might be bad actors, and Amazon blocks those sellers during registration before they can offer any products for sale. On an ongoing basis, Amazon’s systems also automatically and continuously scan thousands of variables related to sellers, products and offers to detect activity that indicates products offered by a seller might be counterfeit. Amazon uses innovative machine learning to improve its automated systems in order to anticipate and stay ahead of bad actors. Numerous Amazon investigators around the world respond quickly to review any listing identified as a potential counterfeit product. These investigators also review notices of claimed infringement from rights owners, who know their products best. When Amazon finds counterfeit products from whatever source, it removes those products immediately. Amazon regularly suspends or blocks sellers suspected of engaging in illegal behavior or infringing others’ intellectual property rights.”

However, in the complaint, the company also acknowledged the difficulty vendors face in dealing with counterfeiters. The document stated, in part that, “counterfeit resellers, like the defendants, will often create new online marketplace accounts— on Amazon or other sites— under new aliases once they receive notice of a lawsuit. Further, counterfeit resellers, such as the defendants, typically operate multiple credit card merchant accounts and PayPal accounts behind layers of payment gateways so that they can continue operation in spite of TRX’s enforcement efforts. It is also common for counterfeit resellers to maintain off-shore bank accounts outside the jurisdiction of the court into which they routinely move the proceeds of their illegal sales.”

In such an environment, Amazon suggested, combining resources may be the only effective way for retailers and vendors to put a real dent into counterfeiting practices.

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