Counterfeit Detection: The Best Solution to Combat E-commerce Fraud

Why is Counterfeit Detection a must?

Counterfeit sales account for 5-7% of world merchandise trade today. Because counterfeiters can easily and cheaply set up e-commerce storefronts, their criminal activities will likely cost legitimate brands billions in lost revenue. The consequences of selling counterfeit goods on e-commerce websites cause direct damage to the legitimate brands that sell there.

Without a brand protection strategy in place, these damages can be devastating to any legitimate brand or business. And without an automated Counterfeit Detection product or service, the manual process of protecting brands can be a very painstaking task.

So what is the best solution for e-commerce websites in order to combat counterfeiting and fraud that is rife among their online storefronts?

Counterfeit Detection protects brands from fraudulent content using logo recognition technology. Here are four reasons why e-commerce sites need some form of Counterfeit Detection in order to protect the legitimate brands that sell on their site from fraudulent sales.

1. Costs for legitimate brands increase:

As a result of counterfeit sales, a legitimate brand’s costs can mount. As consumers experience quality issues with counterfeit products, the legitimate brand’s customer service and warranty costs can increase. Marketing costs can also climb as fraudulent sellers bid up paid search advertising charges. This means that legitimate SEO investments can completely disintegrate.

Counterfeiting also causes substantial damage to a legitimate brand’s reputation. If an e-commerce customer purchases a counterfeit product they assumed was legitimate, the inevitable difference in the quality of that product could cause the customer to negatively review it. That customer’s negative experience with fraudulent goods could blemish their view of the legitimate brand’s overall quality and could even discourage others from purchasing that brand’s products in the future.

2. Counterfeiters are experts:

It’s important to understand how skilled counterfeiters really are. They are experts at copying most, if not all, brand images, logos, and content online. This means that the digital protection of brands and trademarks on e-commerce sites requires advanced technology as over 230+ million domains and 23+ billion pages exist online. This also means that the advanced counterfeit technology integrated needs to be of excellent quality in order to accurately distinguish between legitimate and fake logos.

Because counterfeiters are so skilled, it’s important for e-commerce sites to have the best quality technology available to them. Otherwise, these counterfeiting experts will always be one step ahead of the sincere, legitimate brands trying to honestly sell their products.

3. Counterfeit sales drain the global economy:

According to Piotr Stryzowski, (an economist with the Organization for Economic Cooperation and Development) annual trade in fake products was worth $461 billion in 2013, which is around 2.5% of total global trade.

In 2008, the International Chamber of Commerce (ICC) estimates that the global economic value of counterfeit goods was $650 billion. In 2015, that value was a staggering $1.77 trillion. In addition, the negative impacts of counterfeiting and piracy are projected to drain $4.2 trillion from the global economy and put 5.4 million legitimate jobs at risk by 2022.

It’s clear that brand protection isn’t just about sheltering luxury brands, or even legitimate brands, from the impact of these counterfeit sales. Counterfeiting causes evident destruction to the global economy, so it’s in everyone’s best interest for online storefronts and e-commerce sites to try to prevent it and draw attention to it when it happens.

4. Ecommerce sites need external parties to detect counterfeits:

In order for luxury brands to survive on e-commerce websites, they need some form of brand protection. E-commerce sites, such as Amazon, simply aren’t secure enough for luxury brands to thrive.

For example, jewelry identical to that of Alex and Ani’s is a constant issue on the site. Although Amazon recently announced that it will be expanding the program to allow brands to register their intellectual property, it still requires external parties to detect and flag counterfeit items.

If a manual brand protection strategy is already in place, automating Counterfeit Detection can also reduce that manual input significantly, making it much more efficient.

With good quality Counterfeit Detection, fake products listed on any online marketplace can be found more efficiently using identification, tracking, and reporting. In doing so, legitimate brands are fully protected from fraudulent and counterfeit goods.