As social media platforms become the new marketplaces, the line between authentic and counterfeit blurs. How do we navigate this brave new world of fakes and forge a path for genuine products?
Jason Govender, Candidate Attorney, and Jarred West, Partner at Spoor & Fisher explore the intricate web of counterfeit sales on social media and discuss strategies for IP owners to monitor, report and take action.
‘If it’s too good to be true, it probably is’, remains a timeless lesson for a valid reason. When confronted with an opportunity to purchase an item at a lucrative price, should you question the offer or second guess your decision to leap at the opportunity? Currently, online scams, counterfeit goods sales, and e-commerce crimes, are burgeoning, so nothing should be accepted at face value.
Social media has paved the way for e-commerce services to be incorporated into social online marketplaces, where anyone can list products and/or services, with little or no barrier to entry.
One danger of this free-for-all is that counterfeit goods are increasingly being sold on these platforms, and it’s often very difficult to tell the difference.
Decoding Counterfeits: Fakes v The Real Deal
The Organization for Economic Cooperation and Development (OECD) defines counterfeit goods as products created to closely imitate the appearance of a genuine product to mislead a consumer. The proliferation of these items in the market and their subsequent purchase presents concerns for both the safety and welfare of the consumer, as well as the reputation of the company whose products are being imitated. The use of products that are not genuine and that have not been subjected to the appropriate quality control processes, can pose a threat to users, especially when those products relate to foodstuffs, safety equipment, pharmaceuticals or vehicle parts and accessories.
Digital Dangers: Why Online Platforms are Counterfeiting Hotspots
Several factors operate conjunctively to create a perfect storm. Social media marketplaces present a golden opportunity for counterfeiters to capitalise on three notable advantages:
Firstly, they can exploit the inability for consumers to conduct a holistic examination of the goods by controlling the information given. Consumers are falsely lured by offerings that appear to be genuine items at face value, at an attractive price. For example, the pictures that accompany an advertisement on social media can be selectively taken to hide key indicators pointing towards the goods being counterfeit. A common trend noticed during online enforcement efforts is the advertisement of goods for a suspiciously low price where, instead of a photo of the actual item, the seller uses a generic image of the item, typically from the manufacturer’s website, to bolster the impression of authenticity.
Secondly, counterfeiters benefit from circumventing geographical barriers by using couriers to ship their products nationwide, thereby dispensing with conventional brick and mortar premises. In addition to this, the online sellers no longer have to keep large volumes of stock, and simply fulfill online orders from their suppliers, thereby reducing the risk of law enforcement efforts.
Lastly, counterfeiters are not always subjected to any form of rigorous screening or verification that guarantees the goods are genuine, thereby enabling them to advertise their goods without encountering much or any friction at all. This results in an opportunity to anonymously reach a wide audience of people who, in the absence of being able to inspect the goods, are deceived into buying items they desire, for what they believe to be is a bargain.
Beyond the Screen: The Challenges of Policing Counterfeit Goods on Social Media
It may be argued that the platforms advertising counterfeit goods should be screening the goods they display or vetting the sellers. However, to do so would be a logistical nightmare requiring specialist knowledge of goods to verify their nature, which is not feasible for the social media platforms to carry out. Instead, many platforms have an ‘online report’ feature that can be used to initiate a ‘social media take down’ of an advertisement or post for a variety of reasons, including an infringement of the relevant intellectual property rights. This serves as a quick and effective method for an interested party to, at the very least, have the content removed.
As mentioned, what is often overlooked when dealing with counterfeit goods are the risks that are posed by them. Counterfeit goods are not held to the quality and regulatory standards that equivalent genuine goods are subjected to, and sub-standard ingredients and materials are often used in their creation. Depending on the nature of the goods, the consequences can be dire. For instance, a selection of fake beauty products was seized in the United States of America and upon testing, they were found to include lead, cyanide, arsenic and mercury. Those products were also found to be contaminated with high levels of dangerous bacteria such as E. coli. One does not need to wonder what effects will ensue when a substance containing these compounds are applied to one’s skin.
There is an obvious need to curtail the spread of these goods in the market, but enforcement poses its own unique set of challenges. Although the Counterfeit Goods Act, 37 of 1997 criminalizes the act of dealing in counterfeit goods, the use of social media platforms have created a paradigm shift to which the current enforcement structure cannot be applied. Brand holders and law enforcement are required to think outside the box and rely on IT advances, as well as cooperation from the various platforms, to effectively identify, enforce and shut down counterfeit operations.
The counterfeit goods trade is growing at an exponential rate which poses risks to the reputation and brand image of the registered intellectual property rights holders, as well as a risk to the general public in many instances. The Counterfeit Goods Act needs to be reviewed to deal more substantively with the online activities of counterfeiters.
Main image: Institute of Entrepreneurship Development
