Independent research from the Intellectual Property Office (IPO) has identified how social media platforms exacerbate the sale of counterfeit goods online.
What were the key findings?
- 5% of total online sales were found to be copied products with 88% of consumers being aware of the copying. Therefore, only a minority of consumers are actually being deceived.
- Research found that complicit consumers choose counterfeit products because they cannot afford to buy the ‘real thing’.
- Five times more counterfeit goods are sold in closed groups (invite-only), rather than open groups on Facebook and Twitter.
- The vast majority of counterfeit sales are conducted by a small number of sellers, thriving on the “haven” and “anonymity” that closed groups provide.
- Counterfeiters use near-identical photographs from legitimate websites and pitch their products at a similar price point to the genuine articles in an effort to confuse and deceive consumers.
- It may not come as a surprise that China was identified as the main origin of counterfeit products and that “criminals are light years ahead of law enforcement”.
What is the effect on brand owners?
The financial impact of consumers substituting counterfeits for authentic goods can have a damaging effect on brand owners through a direct loss of sales. However, the most damage (economic and reputational) occurs when a consumer has been deceived.
Indirect reputational damage can occur when consumers experience problems with low-quality counterfeit products and they “blame the brand”.
As well as direct losses and reputational damage, there is a wider detrimental impact on the government and community though the indirect loss of taxes and impact on employment.
What can brand owners do?
- Plan ahead: understand the scale of the problem, gather evidence and monitor social media and sales platforms.
- Deploy resources strategically: apply resources in a targeted way to handle cases effectively.
- Be co-operative: work with legal advisers, social media platforms, Trading Standards and the Police.
Burges Salmon’s intellectual property team can assist with online monitoring, strategic advice and enforcement action.
Read the IPO's Share and Share Alike (PDF) report.