Cracking Down On The Counterfeit Culture

Amazon: Cracking Down On The Counterfeit Culture

All Deborah Copaken really wanted was a warm coat.

A good coat.

A Canada Goose coat.

Sure, it cost more than $900 – but she rationalized that, spread over the next three decades, that was only $31 a year. And besides, if she died before getting her money’s worth, she could bequeath the coat to her eldest daughter. The problem was, she couldn’t find her size in the style she wanted on the Canada Goose website, or on other retailers’ sites. So Copaken did what everyone does when they want to buy something online: She went to Amazon. She was deluged with offers for the coat she wanted, listed on the site as “by Canada Goose,” which she took to mean she was buying from the brand itself.

That wasn’t the case, she soon learned.

“My new Canada Goose coat was on its way from Singapore, by way of Hong Kong. Wait, what? Wasn’t the whole point that the coats were made in Canada? I checked the small print, and the seller of my coat was no longer listed as Canada Goose, but as someone named Greg Adamserft,” Copaken wrote for The Atlantic.

As it turned out, the coat was a fake – and thus began a long odyssey as the writer worked with Amazon and the Royal Canadian Mounted Police to prove the fraud and get her money back. She eventually succeeded, and bought a $112 coat that kept her “warm enough.”

She also bought that next coat on Amazon.

And while Copaken’s tale is a bit more involved than most claims of fakery, it is not an uncommon story. Counterfeiting of everything from makeup to clothes to prescription drugs to household cleaning products is a big business – worth between $1.2 and $1.5 trillion annually worldwide, according to the International Anti-Counterfeiting Coalition (IACC).

In the U.S., counterfeit goods, software piracy and the theft of trade secrets cost the American economy as much as $600 billion year, according to a report from the Commission on the Theft of American Intellectual Property. Fake fashion items and accessories alone represent a $500 billion global business annually.

It’s a big problem, which is why this week, Amazon announced that it is stepping up its game in an attempt to wipe the phonies and fakers from its platform – and keep them off.

But counterfeiting is a sticky problem, and even if Amazon were to manage its full eradication, it seems likely that fake Canada Goose coats will continue to be sold.

The Amazonpire Strikes Back

Amazon this week announced the launch of Project Zero, an anti-counterfeiting measure that aims to drive counterfeit sales on the site down to zero.

The program will hinge on AI technology, machine learning and Amazon’s intellectual property expertise, combining the three to continually scan the site to search and remove violations. To aid in the efforts, brands can provide logos, trademarks and other key data, so Amazon can unleash its digital watchers on five billion product listing updates per day.

In the past, Amazon has reacted to fraudsters only after volumes of consumer complaints have rolled in or brands have filed an official counterfeit report. The new tools are designed to get ahead of the problem – both through Amazon’s action and the actions of brands looking to protect their intellectual property. Going forward, brands participating in the program will have the power to take down knock-offs themselves instead of waiting for Amazon to do it.

As part of the Project Zero offering, Amazon is also offering product serialization, which will allow the site to confirm the authenticity of each product purchased. A unique code will be placed on each of the brand’s products during the manufacturing process. When a product is ordered, Amazon scans the code and then either approves or stops the purchase.

According to a study by advocacy group The Counterfeit Report last year, there have been roughly 58,000 counterfeit products on Amazon since May of 2016. Some brands have complained that Amazon enables counterfeiters instead of shutting them down and dealing with the consequences. With the announcement of Project Zero, it seems those critics will have less room to complain. The project could also help Amazon recruit brands like Swatch and Birkenstock, both of which left the platform over counterfeiting concerns.

Amazon reports that Project Zero tools have been in testing with several brands, including Vera Bradley, pet anxiety products manufacturer ThunderWorks, mobile accessories maker Kenu and lint remover manufacturer Chom Chom Roller. Those tests were said to be favorable, stopping 100 times more suspected counterfeit products compared to what the site reactively removes based on brands’ reports.

“Project Zero, with its automated protections and the self-service removal of counterfeit products, is a significant development that will help ensure our customers receive authentic Vera Bradley products from Amazon,” said Mark Dely, chief legal and administrator officer at Vera Bradley.

Project Zero is placing a lot of trust in the brands submitting the claims, so Amazon noted that it will monitor usage to ensure accuracy of their reports. “We are providing brands with an unprecedented level of responsibility, and we are willing to do so because we believe that the combined strengths of Amazon and brands can drive counterfeits to zero,” the company wrote on the Project Zero website FAQ.

Can they drive counterfeits to zero? And even if they did, would it matter at all?

Why Counterfeiting Is So Stubbornly Persistent

Even if the most successful application of technology, brand-Amazon cooperation and fraud-fighting acumen in the history of eCommerce brought the counterfeit fraud down to zero, it might make a huge difference for consumers shopping on Amazon – but not much of one in the global market for fakes.

Because the world is full of platforms – and counterfeiters are promiscuous listers. Even if Amazon manages a miracle and runs them all off, there are plenty of other digital marketplaces to try.

Last year, federal investigators purchased counterfeit products from virtually every major eCommerce marketplace. Amazon, Walmart, eBay, Newegg and Sears all had fakes listed, ranging from makeup to mugs to Air Jordan shoes to phone chargers.

And that’s just U.S. firms – the marketplaces owned by Chinese eCommerce giant Alibaba have counterfeiting issues so severe that the IACC nearly ripped itself apart two years ago when Alibaba tried to join.

Moreover, Amazon will likely make significant gains in reducing its counterfeit population, but getting all the way to zero (or even really close) poses two very big challenges.

The first is spotting the fakes, as they are in some cases really, really convincing. As Jack Ma pointed out, not every counterfeiter is “Greg Adamserft” selling badly done Canada Goose knockoffs.

“The problem is, the fake products today are of better quality and better price than the real names,” he said at Alibaba’s investor day in Hangzhou. “They are exactly the same factories, exactly the same raw materials, but they do not use the names.”

Those fakes are hard for platforms to spot, he noted – and it’s even harder to tamp down demand for them.

Moreover, IACC President Robert C. Barchiesi of the IACC noted in a conversation last year, consumers find it difficult to spot good fakes. In many cases, they don’t even realize they have bought a counterfeit, so they don’t log complaints to platforms like Amazon, Alibaba or eBay. That means it’s up to the brands to find the counterfeits – but across billions of product listing changes on platforms worldwide, there is no way they can keep up.

Plus, Ma pointed out, not every consumer is fooled into buying a fake. Some expressly seek them out.

That demand, he noted, is likely to persist – and there will be platforms that pitch to it. But with strategies like automated scanning, and future innovations like digital manufacturing tags (of the type Amazon is providing) or blockchain-backed supply chain tracking tags, it is possible that a lot of progress can be made.

Which means Amazon may not be able to drive counterfeiters out of business en masse, or off their own platform entirely. But they can make it harder, and hopefully ensure that shoppers seeking a high-end splurge don’t end up with a high-class fake.