The counterfeit industry operates as a roughly $467 billion global enterprise. Counterfeit products represent over 2% of overall global trade. Two years ago, the counterfeit products and lookalike sites took longer to establish and were easier to detect.
With the advent of artificial intelligence (AI), how quickly brands are being abused has changed dramatically. The statistics from a recent survey on how brands are being impacted by AI indicate that 85% of brands report experiencing AI-generated fake listings and severe brand impersonation.
Damage incurred is no longer simply a legal matter; it directly affects the sales revenue generated by a brand.
As a result, 78% of brands estimate that, on average, they lose 5% or more of their annual revenue due to counterfeit products or brand impersonation. Brands can no longer rely on the traditional brand protection strategy of sending one or two legal notices and crossing their fingers.
To remain competitive, brands now require a system that will rapidly respond, report back the exact revenue saved, and capture/stop bad actors attempting to misdirect real purchasers.
Why You Need a New Brand Protection Strategy Today
Historically, brands have relied upon monitoring/listing removal as their primary means of brand protection. Many brands continue to do this and measure the wrong metrics to determine their success or failures.
This results in many brands focusing on the quantity of fake listings removed rather than the amount of money saved. The fastest-growing brands are now looking at brand protection as an avenue for generating revenue, not just as a legal cost.
Fake accounts and clone websites can emerge within a 48-hour period following any viral event. If your company depends on outdated internet research methods and outdated legal paperwork, then before you have even typewritten your first warning letter, the fake seller will have committed thousands of fraudulent sales.
Today’s operators are utilizing artificial intelligence and machine learning capabilities to conduct mass scans of millions of images in conjunction with real-time API connectivity to sales platforms to significantly decrease time spent taking down counterfeit accounts from two weeks to one day.
How to Build a Brand Protection Strategy That Saves Money
The majority of available guides will advise you on how to create a generic strategy that includes registering trademarks, searching for counterfeit products, and sending warning letters to the infringing party. However, this is too simplistic.
Rather than utilizing a generic strategy, utilizing a true revenue-first strategy requires you to map every activity you undertake back to either dollars saved or reduced risk.
Using Artificial Intelligence to Find Fakes
Due to the availability of technology, malicious actors are no longer using your exact name as part of their text to mask pre-set Google alerts based on keywords. Rather, they create generic text, and use your logos and/or product shapes/images to avoid traditional legal enforcement.
As such, it is essential to utilize vision-recognition artificial intelligence capabilities in connection with your enforcement efforts. Today, modern systems can scan up to 47 million images in one day (using visual recognition capabilities) and find exact copies of your products, even when names are missing.
The best way to avoid leaving your customers vulnerable to counterfeit products is to simultaneously monitor for threats across multiple sales platforms, social media, and search engine ads. A single oversight or gap on any one of the three channels will leave your customers unprotected.
Checking If the Fake Is a Real Threat
Not every alert should be considered an alert for a lost sale. A significant component of a comprehensive modern brand protection strategy must include sorting of alerts and providing your team with clear guidelines regarding distinguishing high-risk alerts from those that are harmless.
Upon finding a legitimate and high-risk counterfeit product, your team will generally conduct a test purchase and then perform an off-line investigation into the seller’s identity.
The evidence supports the existence of a counterfeit product and provides the necessary documentation for the seizure of the seller's account funds.
Getting Your Money Back Using Simple Math
Documenting raw totals of counterfeit listings is not enough to support your defense. You need to provide evidence of the amount of revenue that you've been able to recover from the sale of a counterfeit listing to date, which can only be accomplished by providing evidence of how much sales revenue you have lost based on a calculated percentage of lost sales.
For example, if you have evidence that a certain counterfeit listing has sold 1,000 units at $50 each, then you would not automatically report this as having lost $50,000 worth of sales; rather, you would apply a reasonable percentage of lost sales (e.g., 5% or a realistic 12%) and show how much of that revenue was redirected back to your store when the counterfeit listing was taken down.
Cutting Outside Costs and Saving Money
An effective defense reduces waste from your operations. By quickly eliminating duplicate websites, companies can save themselves from spending large amounts of money on defensive domain purchases.
The data shows that with proper digital risk management, a company can save well over $300,000 per year by preventing the need to purchase hundreds of random domains out of fear of having their business shut down.
The First 72 Hours: How Fast You Must Act
The clock is ticking. More than 57% of brands have encountered counterfeit websites within 1 week of the commencement of a viral marketing campaign, and nearly 25% encountered counterfeit websites within the first 24 to 48 hours after the commencement of the marketing campaign.
The longer it takes for you to react to a fraudulent website, the more money you will lose.
Taking Down Fakes Quickly on Big Websites
When you locate a false seller account on a large online platform and wish to report it, the speed with which you report the account is critical. Using the standard web forms to report the issue, the takedown process will take between five and fifteen business days or longer before the account is disabled.
The sellers of the products will make a profit before they vanish.
In contrast, high-level teams utilize preferred platform programs that give priority access for verified brands to their API to connect directly with platforms such as Google and eBay. By utilizing an API to submit a request for removal, the requested removal can be completed in 1-3 days. In many cases, the fake listing will be removed on the same day the request is made.
What to Do When Websites Won't Remove a Fake
One of the primary causes of delay is when a platform fails to remove a clear fake. This typically occurs due to the absence of a legal entity in a given area.
An example of this would be having a registered trademark in the US, but if a counterfeit seller is utilizing a platform located in Asia, the trademark would not have the right to have them removed from the platform.
Your teams should be mapping their legal blind spots, which is why for every listing marked as non-enforceable, an automatic review should be conducted of your global legal registrations.
The Best Software for Your Brand Protection Strategy
It is impossible to battle automated bots using a spreadsheet. The market for software that helps protect a brand is forecasted to reach nearly $7 billion by 2035 due to the need for faster ways to protect brands. Therefore, it is essential that you find the correct software partners.
1. Red Points and MarqVision
For brands that experience an excessive amount of marketplace abuse, Red Points and MarqVision are the two leading platforms in this space. Red Points offers unlimited takedowns for a set fee and utilizes heavy vision-based AI and actor clustering to find repeat offenders using multiple types of sites.
The revenue recovery program of Red Points has shown that, within a few months of the company's continued business relationship with an organization, they are successful in re-acquiring $120,000 on average for their clientele.
MarqVision also heavily uses AI image detection, with a big emphasis placed on moving away from just simple takedowns to focusing on revenue generated by the images being used.
2. Netcraft and Bolster
As stated above, when a company, through its marketplace, is threatened primarily by fake domains, cloned websites, and phishing attacks targeting the clients of that company, the companies that are at most risk (with respect to those marketplaces), are utilizing Netcraft and Bolster as a comprehensive suite of services to protect against these types of incidents.
While Netcraft specializes in advanced threat intelligence and phishing response, Bolster has an increasing emphasis on digital risk management.
Research has demonstrated that businesses that utilize automated systems such as Netcraft and Bolster tend to achieve significant return on investment (ROI) by preventing productivity losses and avoiding the substantial cost (both time and resources) incurred when attempting to develop a complete defence staff internally.
3. Corsearch and ZeroFox
Corsearch's integration of digital monitoring into a more traditional way of managing legal workflow has the added benefit of providing a place where large enterprises have the ability to manage their global legal rights via the digital realm while simultaneously being able to monitor their digital marketplaces.
However, ZeroFox takes a completely opposite approach and works in the area of executive level threats, impersonation on social media platforms, and chatter on the dark web that relates directly to that executive or other high profile members of the organization.
4. BrandShield, Tracer AI, and Other Risk Platforms
The risk management tools offered by BrandShield and Tracer AI provide real-time scoring of risks associated with apps and social media respectively. In addition to those two tools, there are many others that offer deep protection against phishing, including RiskIQ, PhishLabs, and RiskProfiler.
Ennoventure also provides services that allow for the monitoring of actual physical products through the implementation of identification technology that can be utilised to bridge the gap between physical product and digital tracking. Foresight offers a complete monitoring and recovery program for companies seeking to protect themselves against extensive security risks.
Where Fakes Are Being Sold Now
As the counterfeit goods marketplace continues to grow, so do the locations through which they are sold. While large retail marketplaces continue to create problems, new marketplaces have created an entirely different threat.
Fakes on Social Media and Video Sites
Video platforms and social media platforms are increasingly becoming the primary source for counterfeiters to promote their products. Scammers will take official video content from a company and then overlay their cheap link onto the video.
They then profit off of the views the authentic video received from prior sales on that site. Traditional text searches are ineffective at finding these counterfeit products because the videos move so quickly.
Analysis of the moving video frames and technological capabilities are necessary for a modern brand protection strategy to successfully prevent the selling of counterfeits before the viral nature of the video takes effect.
How Big Sites Are Helping Remove Fakes
Major sales platforms are finally accepting responsibility for the counterfeit products being sold on their platforms by playing a much more proactive role in the removal of these products. Companies such as Temu have provided detailed reports showing that they have done extensive internal sweeps of their platforms to remove more than 16,000 stores for repeated violations.
They have reported a 331 to 1 difference in the number of counterfeit products removed through their proactive monitoring systems versus the number of complaints they receive from a brand. Weixin has also reported recovering more than $430 million in enforcement value by punishing the thousands of rogue stores selling to their customers.
Copied Products in AI Shopping
The latest evolving threat to the purchase of counterfeit products is the increase of large language models being utilized as shopping assistants. When consumers utilize AI to ask for recommendations of products, they will receive recommendations from links for counterfeit product websites that have improved their search ranking.
The traditional way to remove these counterfeit links by searching online search engines is no longer adequate. As part of an effective brand protection strategy, brands should utilize only their authorized URLs as sources when obtaining AI-Driven product recommendations through the creation of products such as Amazon Alexa.
Final Thoughts on Keeping Your Business Safe
Prior to this time, many organizations viewed brand defence as being done "in the background" with legal processes to defend against potential losses to counterfeiters. Today, however, counterfeit threats occur rapidly (within hours), and have a quick and serious financial impact on the company (immediate and ongoing).
How to Actually Win and Stop Losing Money
Organizations that wish to win during this time of emerging technologies must stop measuring the number of counterfeit listings they remove, and focus on quantifying the precise amount of revenue that will be protected through the combined effort of all individuals involved in the monetary defence tool.
Through accurate measurement of the value of these tools, and automating the majority, if not all, of the steps necessary to eliminate these counterfeit listings, organizations can develop solid monetary protections through defence tools.
Frequently Asked Questions About Stopping Fakes
How can we manage the overload of alerts received and the inability to detect false positives?
When your automated systems begin operation, you may receive hundreds, if not thousands, of alerts every day. To resolve this challenge, you need to implement strict scoring-type rules. Do not treat each alert equally in regards to potential counterfeit exposure—they should receive different levels of response based on severity.
You should implement an automated process that ignores any listing(s) that do not contain the visual markers of your brand or are priced above or below your normal pricing limits.
You then tier the remaining alerts into 'level 1', 'level 2', etc., where items submitted by experienced sellers or those that contain your brand's logo are escalated to a human review process (contracted with your legal department) for action, while all other items should be addressed through automated processes via your API(s).
What steps should be followed to promptly identify fraudulent websites when there are viral instances resulting in the establishment of fraudulent sites?
First 0-24 hours: The Vision AI systems should recognize the fraudulent site and immediately register it with the site’s hosting service and associated social platforms so that those services could be made aware and take action.
Next 24-48 hours: All links and URLs to fraudulent sites should be identified and utilized to trace which pages the fraudulent advertisers are forwarding potential customers onto. Contacting search engines during this time period to request removal of URL pages from the search results will prevent potential customers who are using traditional methods of searching from finding these sites.
Last 48 to 72 hours: The establishment of clusters will document any other fraudulent sites created by the person who created the site in question and allow our team to escalate the entire mapping of that group to the legal department for possible freezing of funds.
What evidence do we provide to our board in reference to the economic impact of protecting our brand?
Using the “raw/absolute” number of fraudulent sites taken down in a given time period does not bring economic value to brand protection to your board or investors. Create a detailed dashboard with three primary categories (clear quantifiable metrics);
the brand enforcement success rate demonstrating that 80% of the requests sent were successfully accepted and removed;
the total support hours saved attributable to the transition from form requests to API requests; and
the calculation of revenue generated from the removal of fraudulent sites.
Calculate the total value of sales found by each removed fraudulent site and multiply that figure by 12% (the current industry standard for lost sales) and show that the result is the amount of sales generated directly from consumers through your legitimate website.
Why do online marketplace sellers have items listed that should be removed because they are clearly infringing upon the rights of another brand?
Typically this stems from a discrepancy between where the infringing products will violate the rights of their rightful owner under national and local trademark law and where the seller has registered their mark.
For example, if a seller lists an infringing product in a domestic Chinese online marketplace but the mark of the seller is registered in Europe, the listing will not be removed because the platform will only consider local law for purposes of the removal of listings.
To identify and correct this type of situation, the legal department must collect and analyze all removal requests and identify the country with the highest concentration of refused requests. Subsequently, targeted protection registrations for the trademark must be filed in those regions.