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From 3D printers revolutionizing the industry, to checkout systems on social media, as well as delivery logistics becoming more trustworthy, technology has given sales a huge helping hand for authentic brands and counterfeiters alike.
Today’s brands have struck gold when it comes to creating a closer relationship with their potential clients, largely thanks to recent tech improvements.
Unfortunately, it has also been a huge win for the selling of counterfeit goods online, making it easier for counterfeiters to provide a better service for their potential client base.
The growing accessibility can most clearly be seen within the high-quality counterfeit products known as “super fakes” which have been appearing more frequently in recent years. Fake watches, cell phones, high-end fashion products, and more are seen created to a near-exact standard nowadays.
Although it is still difficult to measure the impact of 3D printing in counterfeit goods, it is clear that it translates into major improvements in production quality for counterfeiters. All that is needed to create counterfeit items with 3D printers that are identical to their original version are the design blueprints, which can be found in the deep/dark web. The 3D production technology is less labour-intensive, which diminishes the production costs significantly, making it an attractive new ally for counterfeiting products.
Instagram’s new checkout feature is a prime example of how counterfeiters are now able to cunningly find their target audience and strike a sale through sponsored Instagram Stories. The added bonus: they disappear after 24 hours. This time-lapse makes it easy for counterfeiters to advertise their knock-offs, with little chances of getting caught.
In 2016, Ghost Data reported that up to 20% of posts about top fashion brands on social media that were analyzed were featuring counterfeit and/or illicit products. In their more recent report, they found over 1.6 million Stories every month which were blatantly advertising fakes. The platform recently reached the 1 billion monthly user mark, giving these modern counterfeiters an audience that only seems to be growing in strength, which will undoubtedly generate more counterfeit fashion manufacturing.
And while Instagram is one of the most popular social media platforms for counterfeiters, their first choice of direct contact with their end customer is Whatsapp. Almost 57% of counterfeiters choose it as their commercial instant messaging tool. The end-to-end encrypted security proves to be virtually risk-free for counterfeiters to sell their products. The absence of regulations and third-party monitoring makes it an ideal platform for counterfeiters. All you need is a phone number to create your account, which can also be changed quite easily. This makes it next to impossible to locate the counterfeit culprits.
Another prime advantage of instant messaging their prospects is that communication is direct and personal. Being able to speak to someone directly about the item they’re buying builds trust and a sense of accountability. This is due to the fact that throughout the entire process, someone is at hand to answer any questions. The messaging strategy also gives customers an opportunity to negotiate prices, ask for pictures and anything they feel fit to say directly to the seller.
WeChat Pay has set the trend for social media platforms to enable direct payments, with Instagram implementing it in June 2018 and Whatsapp testing a similar feature. Whatsapp’s end-to-end encryption gives counterfeiters (and those involved in many other criminal activities) an array of opportunities at hand if they aren’t tracked down previously on social media or on traditional ecommerce platforms.
Trusted and protected payment methods like Paypal are used by more than 35% of counterfeiters, which make it an easy choice for the consumer and almost impossible to retrace, as it too is encrypted. This provides potential buyers with a sense of security when purchasing goods from counterfeiters, which in turn plays a big part in their ever-growing success.
Instead of having to pay commission to ecommerce sites, the conversational ecommerce strategy for counterfeiters means that they are able to pocket 100% of their sales revenue, thanks to protected payment platforms such as Paypal.
The secured payment options have also helped counterfeiters give a message of trust to their client base. Paypal for example, has a ‘Pay After Delivery’ option, giving buyers more confidence when buying counterfeiters’ products. If they see that the quality is poor upon receiving their purchase, they simply send it back, without having to go through the process of a refund.
Of course, these online payment methods have a strict policy regarding this criminal market, but tracing back to their origins can prove to be tricky. Each aspect of their counterfeit strategy is meticulously encrypted.
Instead of the traditional and risky transport method that was traditionally through shipping containers, which hold bigger volumes of counterfeit goods, smaller, individually-wrapped packages are now favored. In the 2018 OECD Executive Summary Trade in Fakes in Small Parcels, it was recorded that nearly 63% of customs seizures of counterfeit and pirated goods were in the form of small parcels.
For counterfeiters, this transport solution means a lower risk of detection by customs, as the volume of these is far greater than CBP can handle. There’s a wide range of industries affected, however the sectors that prevail are: counterfeit footwear (84%), fake optical, photographic and medical equipment (77%), and information and communications technology devices (66%), as well as watches, leather articles, handbags and jewelry (63%).
The main advantage for counterfeiters sending these smaller packages is that if it does end up in the hands of customs, the capital loss is minimal due to the lower volume of items contained in the seized package (up to ten items at a time on average can be sent in a small package).
Express delivery operators provide the end customer with reliable services such as door-to-door customs cleared services, next-day delivery, as well as track and trace services. The real-time tracking systems make re-ordering and sending the desired item to the customer a simple and swift task for counterfeiters. They are able to provide an effective service to their end customers, thanks to the technology improvements in the transport and delivery of packages.
Counterfeiters benefit perhaps even more from the new tech improvements than the original brands themselves. Ecommerce platforms now prove to be a riskier choice for counterfeiters, as better measures have been put in place to tackle counterfeiters. Most social media platforms have not yet been able to crack down on counterfeiting effectively.
The advantages which favor counterfeiters are clear: 3D printing which is making counterfeits almost unrecognizable, apps with end-to-end-encryption, direct contact with end customers and simple, protected transactions. As the global online community grows alongside the soar in tech solutions for brands to sell their goods effectively, counterfeiting products can only grow in strength if it is not effectively addressed by brands.