With a nice web design and a few pictures sourced from other sites, online counterfeiters are able to convince many buyers that the products they sell are branded items, even though what the shoppers ultimately receive are fakes. Whether the shoppers are aware of the counterfeit and happy to have a low priced option or unwitting dupes, the market is expanding to include innumerable online sellers.

Rather than setting up a card table on a city corner, sellers of fake handbags and boots can promise high quality. Because online buyers lack the ability to feel and inspect the items, it is far easier to fool those who think they are getting a Gucci purse or UGG boots. Instead, they receive less expensive versions, usually produced in questionably safe factories in Asia.

Previously, counterfeit products shipped from factories to U.S. sellers had to come through customs, so U.S. law enforcement agencies halted and searched the shipments at the borders and docks. But with online ordering, the individual shipments move directly from the seller to the customer, making it virtually impossible for U.S. Customs to check each package. Still, Customs continues to coordinate its efforts with various law enforcement agencies, and in the past three years, it has intercepted approximately $1 billion in counterfeit goods annually.

For brands that realize that law enforcement is outmanned, other options appear necessary. For example, UGG boots provides a link on its brand site, which shoppers can use to check whether the website from which they are buying the fuzzy shoes is an authorized retailer. If not, they know they are likely dealing with a fake.

Discussion Questions:

1. What is counterfeit merchandise?
2. How have counterfeiters altered their supply chain in recent years?
3. How has this changed supply chain affected counterfeiters’ ability to sell their merchandise?
4. What can be done to stem the tide of counterfeit merchandise?

 

Source: Erica E. Phillips, The Wall Street Journal, November 28, 2014