Outsmart and Shop Smart: Fighting Counterfeit Goods During the Holidays

Quick Takeaways:

• The U.S. Chamber’s Global Innovation Policy Center (GIPC) is raising awareness about counterfeit goods, the dangers of fake products, and the prevalence of online fraud and scams—which costs the global economy over $500 billion a year.

• During the global pandemic, consumers are ramping up their online purchasing and counterfeiters are exploiting this trend. Criminals have adapted to our new online-shopping standard, and it’s more important than ever for consumers to remain vigilant.

• Help us keep small business and consumers safe this winter by sharing the ShopSmart Toolkit on your social media channels, website, or with your networks.

Black Friday – the day after Thanksgiving – is known as the start of the holiday shopping season for Americans. It’s when retailers delight customers with bargain prices, waive shipping fees, and extend their business hours. But, during the COVID-19 pandemic, fewer Americans will be lining up for the in-store experience and will click their way to bargains instead.

Already, major retailers signaled that they are releasing their best deals right now, hoping to prevent tightly packed lines and crowded stores, as well as more expensive logistics and shipping costs. They’re warning consumers: Shop early and, if you can, shop online.

Consumers are taking heed. Some estimates suggest online holiday sales will grow up to 35% this year over last – online sales for retailers in popular gift categories will see a serious surge, with health and beauty sales up 23%, consumer electronics up 20%, and fashion up 19% by the end of the year.

While great news for American business and for the American economy, it is also a ripe opportunity for counterfeiters. Criminals have adapted to our new online-shopping normal, and created convincing online imagery and schemes to trick consumers into buying their fake goods.

Consider the popular gifting categories mentioned earlier: health and beauty, consumer electronics, and fashion.

Counterfeit cosmetics have been found to contain high levels of mercury, arsenic, and even traces of urine and feces, all of which can cause severe allergic reactions and possible long-term harm to your skin, eyes, and hair. Counterfeit electronics, like phone charges and battery-powered gadgets, can explode, melt, or catch fire. Counterfeit clothing, too, often fails fire safety standards, not to mention fastenings, dyes, and other materials used in the production process reeks of chemicals and metals that can affect your health.

Even popular children’s toys are not exempt. Law enforcement officials have already seized counterfeit holiday toys that pose undisclosed choking hazards and contain high levels of lead and other harmful compounds.

It might seem like these examples are the exception to the rule, but they’re not. The global scope of physical counterfeiting is the largest it has even been – measured at $509 billion dollars by the Organization for Economic Cooperation and Development. According to the Department of Homeland Security, from 2008 through 2018, seizures of infringing goods increased from 6,500 to 33,810 while the domestic value of seized merchandise — increased from $94 million in 2003 to $1.4 billion in 2018.

These numbers are striking, and e-commerce platforms are responding to the challenge. Certain online third-party marketplaces are working with brand owners extensively to adopt swift takedown procedures, pursue joint criminal actions, and encourage information sharing, among other efforts. The teams are following new trends collaborating to remove counterfeit advertising and fraudulent listings on websites and on social media.

Still, it is increasingly clear that to fully protect consumers, businesses cannot do it alone. They need partners in progress, specifically through public-private partnership. Together, the government and industry can pursue better enforcement against counterfeiters – a few best practices they should consider include:

• Prevent: Online sellers should be vetted and verified as safe before they’re able to attract consumers to their online marketplace. That verification process should be revisited on a regular basis, and that verification system should ensure that multiple online accounts by the same seller are tracked to the originating seller.
• Respond: The process to register and request enforcement action against counterfeiters for rights holders – the companies or individuals that own the intellectual property attached to products, like the brand name of a fashion label or the patent behind a popular toy or electronic – should be streamlined and simplified. Once that process is completed, takedowns and measures to prevent re-listing of the illicit goods should be fast and effective.
• Report: The public should have access to a rating system that tracks online sellers’ history, including past counterfeiting violations.

Government and industry have their marching orders. But what about everyone else? We can make sure we know how to avoid the counterfeit trade, and then we can help teach our friends and family. In that spirit, GIPC has compiled the top ten tips to #ShopSmart. As you navigate the holiday shopping season, attach this list to your wish list.

Additional Resources:

• Shop Smart: Learn more about the U.S. Chamber’s efforts to protect consumers and small businesses from the dangers of counterfeit goods by visiting the Global Innovation Policy Center’s Shop Smart webpage.
• Save Small Business Initiative:This holiday season, the U.S. Chamber is encouraging everyone to support small business and shop small as often as possible as many small businesses are struggling to stay afloat throughout the COVID-19 pandemic. For more information on shopping small and how you can support small business this season, visit the Save Small Business Initiative here.

External Resources:

• Report unsafe products to the Consumer Product Safety Commission by calling 800-638-2772 or by visiting their website, https://www.saferproducts.gov/.
• If you suspect you have received a fake, counterfeit or substandard product, report it to the National Intellectual Property Rights Coordination Center at https://www.iprcenter.gov/referral/view or to your local law enforcement.