With Christmas on the horizon, online retailers are expecting a bonanza, but so too are counterfeiters. Stuart Fuller looks at how you can avoid falling victim.
As I write this there are just 40 shopping days until Christmas. I feel pretty smug this year, as I completed the majority of my shopping in October, thanks to ordering online, home delivery and the benefit of a well-prepared hidey hole, safe from tiny prying eyes who still believe in the magic of Father Christmas. When other shoppers will be running around on Christmas Eve trying to find those lastminute presents, I will be enjoying a festive drink while watching The Sound of Music on TV.
I am convinced I got some good deals from shopping around online and, where I could, using vouchers to buy my Christmas With Christmas on the horizon, online retailers are expecting a bonanza, but so too are counterfeiters. Stuart Fuller looks at how you can avoid falling victim. presents. I am also as sure as I can be that my purchases are 100 percent genuine.
In reality though, come Christmas Day the number of fake products being unwrapped will be the highest ever. Unfortunately, we live in a world where brands are constantly targeted by cybercriminals. We still think of website hacking as the most significant threat to a business, but it is the ‘unseen’ activity that causes the most damage to a brand’s reputation.
Online counterfeiting is still a fast-growing market sector. NetNames estimates that counterfeit goods currently represent between 5 and 7 percent oftotal trade in the world*. Certain types of goods are more affected by this issue than others.
Digital piracy, for example, is a $75 billion business and research has shown that one in every three CDs bought today is pirated. With very low barriers to entry, low production costs and portability of products, pirated DVDs and music CDs are still the most frequently faked items that will end up in Christmas stockings during the festive period.
For youngsters, sporting a pair of Dunlop Green Flash trainers in the playground simply doesn’t cut the mustard these days. Their Christmas lists have to include brands like Apple, Beats by Dr Dre and Abercrombie & Fitch. The pressure on parents to buy branded items has never been greater, and this is why the counterfeit market is burgeoning.
Some shoppers will knowingly buy fake products lured by the heavily discounted pricetag, and willing to trade quality for exterior branding. A simple search online for any major brand can produce completely different results by prefixing the words ‘fake’ or ‘not real’ to it.
You may think that counterfeiters would want to keep a low profile—after all, counterfeiting is an illegal activity. However, the rewards are high and in most cases, the websites sit outside the jurisdiction of the UK authorities, meaning that the risks appear worth taking.
The saying ‘too good to be true’ applies perfectly when it comes to buying well-known brands that are heavily discounted online. Assuming the products are actually delivered (since many websites are simply portals that take customers’ cash and then disappear off the face of the earth), they may look the part but rarely will they act the part.
Last year US Customs officials confiscated25,000 shipments containing counterfeit electronic items with a street value of more than $100 million*. These are only the items that they managed to intercept—hundreds of thousands more made it on to the high streets and online market places.
While on the face of it, counterfeiting seems like a victimless crime, it does significant damage if left unchecked. Fake goods are nearly always of inferior quality, and in some cases dangerous, such as fake medicines which currently accountfor 10 percent of worldwide drug sales*.
Last year alone pharmaceutical companies spent more than $46 billion dealing with fake medicines— money that could otherwise have been used for research and development to find cures for illness and disease. Anyone who purchases these fake drugs could potentially become seriously ill, which can damage the reputation of the counterfeited company simply by association.
Consumers have a choice when deciding where they want to spend their hard-earned money. The Internet has been the greatest invention known to consumers, offering the ability to move from retailer to retailer at a click of a button. Barriers to entry are low, which means that competition is high and pricing aggressive.
But add counterfeit products, sold at unrealistic discounts, to the mix and the dynamic begins to shift. Our natural instinct as consumers is to hunt out a bargain, and while on the face of it, buying a counterfeit item may satisfy that natural itch, the damage is already done.
Every time a pirated Disney DVD, a fake Ralph Lauren polo shirt or a bootleg JLS CD is bought, anywhere in the world, those brands are inadvertently damaged. Not only do the brands not receive the revenue for their original products, but the end user of the product also receives a poor brand experience. Brand reputation is damaged and sometimes organised crime or terrorist organisations benefit.
"Companies must have a robust brand strategy that covers three basic principles: protecting their customers, defending their online reputation and safeguarding their brand revenue."
So what can businesses do to combat the growing problem of brand abuse? Companies today must have a robust brand strategy that covers three basic principles: protecting their customers, defending their online reputation and safeguarding their brand revenue.
As Warren Buffett, one of the world’s most trusted voices in times of economic trouble, once said: “It takes 20 years to build a reputation and five minutes to ruin it.” Good and bad news spread like wildfire across the Internet today, fuelled by our addiction to social media.
A story about a brand that has been attacked can become a viral story long before the company involved even knows there is a problem. This is why it is essential for companies to have a clear strategy on how they monitor potential threats, defend attacks on their brand and counterattack effectively and definitively.
The good news is that there are simple steps any company can take to reduce the risk of brand damage and reputation infringement. The starting point is to assess the current brand risks by undertaking an online brand audit of the threat landscape, and indentify what immediate steps can be taken. This will form the basis of developing a strategy that will protect the brand, increase business revenues and safeguard valuable customers.
A daring method
Some of the largest brands in the world have already adopted a simple, four-step approach to combating issues surrounding online reputation. This approach, known as DARE, is identified as follows:
• Detect the problems a brand faces. This can be done by monitoring online and offline marketplaces for counterfeit goods, monitoring social media sites for reported reputation issues or false claims of association and monitoring the web for rogue, fake or lookalike websites.
• Assess the nature and the size of the problem and understand the potential impact eachinfringement will have on the brand’s reputation, revenue and customers. Some problems simply cannot be tackled with finite resources and companies need to be able to take a tactical approach to solving the right issues at the right time.
• Report on the impact of these infringements on the brand, both internally and externally. If a company is aware of potential issues, it can at least be prepared for any media fallout. Likewise, internally the business needs to understand the nature of the long-term impact of any brand abuse and determine what cost-effective steps can be taken.
• Enforce your IP rights, aggressively but accurately, and act to remove brand infringements, whether they are the sale of counterfeit goods, false claims of association, trademark or domain name infringements, phishing attacks, streamed pirated content or copycat websites.
This four-step DARE approach is used successfully by companies including NetNames to manage reputation risk for major global brands for all such infringements.
Consider the desired outcome and do not shy away from engaging with appropriate bodies such as law-enforcement agencies, government bodies or private companies that can help your brand achieve its desired outcome.
With a clear online brand protection strategy, any company can rest assured that this Christmas consumers will be buying its products and services, and not counterfeits. Perhaps those brand owners will be able to join me on the sofa to watch The Sound of Music, just in time to address the real problem of counterfeits today. How do we solve a problem like Maria? Even the greatest Internet minds still haven’t fixed that one!
*All statistics and references are available in the NetNames One Step Ahead in the Digital World animation, infographic and white paper, hosted on www.searchfindstop.com
Stuart Fuller is director of communications at NetNames Ltd. He can be contacted at: firstname.lastname@example.org
This article was first published on 01 December 2012 in World IP Review
christmas, counterfeits, piracy, brand protection