Counterfeit and pirated goods are nothing new. They have been sold on street corners and out of car trunks for years. In some countries this is still the case. It was not too difficult for consumers to identify the merchandise as illegitimate. The price, the quality and of course the place where these products were sold were clear giveaways. Like many other parts of our lives, however, the trade in counterfeit goods has gone from analogue to digital. In the online world, distinguishing what is real and fake can be much more difficult for consumers and can leave them with a faulty product that malfunctions, falls apart quickly, or doesn’t meet their expectations. Often the blame is placed on the genuine company, which forms a damaged brand image. Genuine brands face a tough battle against counterfeiters who operate online very effectively by stealing a company’s designs and branding and even mixing their fake products with the brand’s online product reviews. The images used of the product are sometimes actual photos of the brand owners, leaving the customer to guess between what is real and what is fake.
On the occasion of World Anti-Counterfeiting Day, Amazon released its second Amazon Brand Protection Report, sharing its progress in combating the protection of sellers and customers against counterfeit merchandise, fraud and other forms of abuse.
In 2021 alone, Amazon invested over $ 900 million and over 12,000 people in the enterprise. The effort stopped more than 2.5 million attempts to create new sales accounts, preventing these bad guys from listing a product for sale. As in real life, where eliminating a vendor on a street corner doesn’t stop them from finding a new location, the fight against online counterfeiting needs to be broader than a shop. Industry collaboration between online sellers and between the private and public sectors is a must, so Amazon has created a project aimed at maximizing impact.
“We strongly believe there is no competition in a counterfeit world,” said Mary Beth Westmoreland, Amazon VP of Brand Protection, “We have tried to create our own program, so it is not specific to Amazon. The IP Accelerator, which helps brands gain a brand, protects their brand everywhere, not just on Amazon. The Counterfeit Crimes Unit identifies and seizes counterfeit products so they don’t get back into the supply chain. Whether a brand is sold or not. on Amazon, it can still share IP information with us, share product information, and send notifications of potential infringements. “
Amazon’s work to ensure customers can trust their shopping experience focuses on robust and effective proactive techniques to protect stores and brands and hold attackers accountable. Bringing the bad actors to justice is the only way the industry can get the upper hand over counterfeiting. This is why Amazon created the Amazon Counterfeit Crimes Unit (CCU) in 2020, a team of former federal prosecutors, FBI agents, experienced investigators and data analysts. Trafficking in counterfeit goods is a multi-million dollar global crime involving well-known organized crime groups. Offering high profits and low penalties, partly due to social acceptance, the sale of counterfeit goods remains a very attractive business. Last year, Amazon filed civil lawsuits against over 170 counterfeiters in US courts and sued or indicted over 600 criminals in the US, Europe and China, an increase of more than 300% from 2020.
Increasing buyers’ peace of mind is a two-pronged business. On the one hand, there must be the assurance of suppliers who have access to the store and, on the other hand, there must be the power to protect, rather than contest, intellectual property (IP). And machine learning can help with both.
The process begins with a robust seller verification process that includes an in-person verification program, which requires prospective sellers to have one-on-one conversations with Amazon team members to verify their identity and documentation. This verification is further reinforced by proof of the seller’s physical location and payment instruments. Machine learning models are also used to detect risk using hundreds of data points on the potential account, such as payment methods, business location, previous activities, and even previously enforced malicious relationships.
The technology is also used to constantly monitor Amazon.com for potential breaches. For example, Amazon’s automated technology scans more than 8 billion modification attempts to product detail pages daily for signs of abuse. In 2021, Amazon blocked over 4 billion bad ads before they hit the store. These lists were suspected of being fraudulent, counterfeit, at risk for other forms of abuse or presenting significant product quality problems.
Fighting bad actors is only one side of the coin. The other is to ensure that brands and their IP are protected. Amazon has created a Brand Registry, a free service for brand owners to manage and protect their brand and intellectual property rights regardless of whether they sell on Amazon. In 2021, the Marche Registry recorded an increase of 40% compared to the previous year, with over 700,000 registered brands. Additionally, improvements in automated protections, powered by machine learning models, have resulted in fewer counterfeit products in the Amazon store. As a result, the average number of valid infringement notifications submitted by a brand in the Brand Registry has decreased by 25% compared to 2020.
For many businesses, especially small businesses, the barriers to securing their IP start with actual registration. The time and finances involved are too much for some to bear. Amazon IP Accelerator helps businesses obtain intellectual property rights faster by enabling brands to protect their IP in every store, not just on Amazon. IP Accelerator connects businesses with a curated network of reputable IP law firms, providing high quality trademark registration services at competitive rates. In 2021, 5,900 small and medium-sized enterprises benefited from the IP Accelerator.
All of these tools feed Amazon’s machine learning algorithm with millions of data points to identify and detect intellectual property infringement before it impacts the customer. Sharing information between the private and public sectors will only help improve these machine learning models. That’s why, in 2021, Amazon improved communication and support with the United States Patent and Trademark Office (USPTO). Amazon now directly uses USPTO information so that fraudulent trademark applications and registrations are not used to sign up for its trademark registry. In return, Amazon shares information about abusive behavior and trends within its stores to support the USPTO’s investigation of potential fraud by their applicants and registrants.
However, all of these efforts would be somewhat useless if consumers weren’t better educated on shopping with confidence and intentionally avoiding counterfeits.
A 2019 study by the International Trademark Association showed that while Generation Z members have a strong respect for the value of people’s ideas and creations and 74% think it is important to buy genuine products, 57% believe that their money better go to the local counterfeit seller than a large company. This thought is related to a somewhat fictionalized idea of the people who deal with the sale of counterfeit goods. As mentioned, most of the time these bad actors are part of organizations that exploit workers and engage in other illegal activities. For example, Europol has found links between migrants who have been smuggled across the border and organized criminal groups with children used to produce counterfeit goods.
The International Trademark Association study also showed that 91% of Generation Z members expressed openness to change their views on the subject of counterfeiting based on the new things they have learned, pointing out that education is a key part of how counterfeiting could be defeated in the long run.
We often believe that technology can solve all of our problems, even the ones it somehow helped create in the first place. Reality, however, shows that while technology such as machine learning can help, we need to drive behavioral change at the root of the problem. First, we need to educate consumers about the hidden cost of buying counterfeit products and, in doing so, change the public perception that this is not a crime to be taken lightly. Secondly, we should support companies more in IP protection, which is crucial for innovation.
Clarifications: The Heart of Tech is a research and consulting firm that engages or has engaged in research, analysis and consulting services with many technology companies, including those mentioned in this column. The author does not hold any equity positions in any of the companies mentioned in this column.