The Corrosive Impact of Counterfeits Trafficked Across Platforms
Today, criminal networks and nefarious operators have flooded online platforms with counterfeit products, duping unsuspecting consumers, destroying brands’ reputations, and jeopardizing the health and safety of consumers and workers alike.
The legal system is woefully inadequate in addressing today’s counterfeiting problem, while trusted online platforms are not held accountable for promoting and/or selling counterfeit products.
Masked behind the anonymity provided by online platforms—due to little, or no, front-end verification—fakes are showing up on a scale never before seen. Dupe influencers, fraudulent advertisements and fake websites all contribute to the destructive value chain of counterfeit products sold by illicit sellers.
In its recent comments for the U.S. government’s Notorious Markets report, the American Apparel & Footwear Association detailed the industry’s online challenges, including working with members to quantify counterfeits across a variety of platforms. AAFA members found that, on many platforms and in multiple instances, nearly 100 percent of products were counterfeit, though this is not the case across the board.
This is unsustainable. It is dangerous for consumers and to national security.
Earlier this year, AAFA unveiled the results of a counterfeit testing study that showed the health and safety dangers that counterfeit clothing, shoes and other accessories present for consumers. Over 36 percent of the products failed to comply with U.S. product-safety standards. The study found dangerous levels of arsenic, cadmium, phthalates, lead and more that have been shown to cause adverse health outcomes.
In 2020, the National Association of Manufacturers reported counterfeiting as a $131 billion loss to the U.S. economy, impacting valuable U.S. jobs and businesses.
Additionally, transnational criminal organizations are finding holes within the current system, risking U.S. national security.
SHOP SAFE coalition members noted in a letter to Congress that, according to the United Nations, “counterfeiting plays a key role in the operations of transnational criminal organizations and ‘helps fund other criminal activities such as extortion, illegal drugs and human trafficking; compromises the international financial system for money-laundering purposes; and, ultimately, makes it more difficult for existing law-enforcement measures to be effective.’ Furthermore, it is widely known that terrorist networks utilize online sales of counterfeits to finance their operations. More should be done to safeguard national security as outlined in the U.S. Department of Homeland Security’s Combating Trafficking in Counterfeit and Pirated Goods report.”
We must all continue to advocate for two complementary bills currently in front of Congress to combat counterfeits—the SHOP SAFE Act and the INFORM Consumers Act. Both bills are bipartisan and bicameral and have generated a wide range of support. With INFORM, law enforcement would be better positioned with vital tools to go after criminals. With SHOP SAFE, e-commerce platforms would be held liable for selling counterfeit clothes, shoes and accessories that threaten the health and safety of consumers. SHOP SAFE also includes proactive measures to try to prevent counterfeits from being listed by illicit sellers on a platform. Thus, SHOP SAFE and INFORM are both needed by brands and consumers.
These measures would also level the playing field for bricks-and-mortar shopping so that consumers find the same level of security online as when they shop in person.
We owe consumers a federal strategy versus state patchwork fixes; we thank California for leading the way with California Gov. Gavin Newsom’s signing of SB 301, California’s INFORM Consumers Act and his leadership, with state lawmakers, to allocate resources in the 2022–2023 budget to combat organized retail crime.
Advocacy around these issues is even more vital today as supply chains remain constrained, inflation stays near historic highs and online social commerce is expected to grow. AAFA member products remain at the top of the IPR most-seized items by U.S. Customs and Border Protection.
As a member of the global fashion industry, and even as a consumer at large, you have a voice in this fight.
If you are ready to push for smarter policies to combat the crippling impacts of counterfeits and to protect consumers, we’ve got a platform for you to help change the status quo.
A Sacramento native and graduate of UC Davis, Jennifer Scoggins Hanks is the chief advocate and spokesperson for AAFA on intellectual-property and brand-protection issues. She serves as the staff liaison to AAFA’s Brand Protection Council, connecting with government officials and representatives of global e-commerce, social and digital platforms to advance AAFA member online and offline priorities. Before moving to Washington D.C, her career began working in the California State Legislature and the California Governor’s Office.
Learn more at aafaglobal.org.