Better Business Bureau Study Shines Light on Prevalence of Counterfeit Products in Online Retail
BETTER BUSINESS BUREAU® NEWS RELEASE
IL (May 14 2019) An in-depth investigative study by
Better Business Bureau (BBB) finds that fraudulent consumer goods are
ubiquitous, difficult to tell apart from the legitimate products they are
counterfeiting, and stem from a large network of organized criminals and
credit card processing mechanisms that are willing to support them.
Research shows that eight in 10 Americans shop online, and the
dominance of online retail means nearly anything can be bought online,
sometimes at discounts that seem too good to be true. However, nearly
anything available online can be counterfeited, and research also shows
that one in four people have bought something online that turned out to be
The risk of encountering counterfeit goods can affect any
online shopper. These goods range from brand-name sunglasses and handbags
to golf clubs and consumer electronics, as well as many other kinds of
products. BBB’s report finds that any shippable item with a reputation for
quality and sizable markup is a candidate for counterfeiting. While
counterfeit goods often are reputed to be deeply discounted, in reality,
counterfeit sellers regularly use selling prices that are close to the
price of the real product, so the prices offered are no longer a signal
that the product is counterfeit.
The cost of counterfeiting affects not only consumers who lose
money by receiving products not as advertised, but also the broader U.S.
economy. BBB’s report finds that counterfeiting and intellectual property
piracy cost the U.S. economy $200-$250 billion and 750,000 jobs annually.
In the last three years, BBB has received more than 2,000
complaints and more than 500 Scam Tracker reports from people who have
shopped for goods online and received counterfeits instead of what they
ordered. The Federal Bureau of Investigation’s (FBI) Internet Crime
Complaint Center (IC3) processed 2,249 complaints about counterfeit goods
(including pirated goods) in 2018, while the Federal Trade Commission (FTC)
processed 552 complaints representing a total financial loss of more than
$752,000. That being said, many victims do not file complaints, making it
difficult to get a firm grasp on how often people pay for goods that are
counterfeit or not as advertised.
A St. Louis man told BBB he saw a Facebook ad for a popular
drone with a reputation for quality. The website on which it was advertised
looked professional, contained pictures and videos from a well-known drone
company, and included many positive comments and reviews. He purchased the
drone he was interested in for about $200 as part of a clearance sale. The
man told BBB a week later, he received a cheap, plastic toy drone whose
value he estimated at about $10. He emailed the company to complain, but
said the company never responded.
According to BBB’s report, 88% of counterfeit goods come from
China and Hong Kong, with their smuggling and their online sale via
fraudulent websites widely thought to be coordinated by international
organized crime groups. Customs agents seized $1.2 billion in counterfeit
shipments in fiscal 2017, the most current year for which data is
available; however, shipping and smuggling methods vary widely, creating
major headaches for customs officials. Inasmuch as counterfeit goods are
almost always paid for with a credit card, the fraudulent websites that
process these sales make extensive use of the credit card and banking
system, with a small number of Chinese banks and an extensive network of
intermediary payment processors responsible for the vast majority of
processing for these purchases.
Active efforts are being made to fight the flood of
counterfeit goods. BBB attempts to identify and report on bogus businesses,
especially if they claim to be located in the U.S. and Canada. Trademark
holders also do a great deal of work and spend a considerable amount of
money trying to fight counterfeits. This is a major priority for customs
officials and law enforcement as well; U.S. Customs and Border Protection
has increased its seizures of counterfeit goods by 125% over the last five
years, and the White House recently issued an executive order directing
government agencies that work with brands to examine counterfeiting and
make it an enforcement priority.
The report recommends:
urges the credit card payment processors to engage their full efforts in
combating those that provide merchant accounts to sellers of counterfeit
consumers would benefit from a program to help counterfeit victims with
chargebacks like the one operated in Canada by the Canadian Anti-Fraud
Centre (CAFC). Such a program could help identify fraudulent credit card
merchant accounts, bogus websites, and possibly locations from which such
goods are being shipped.
enforcement agencies could make better use of complaint information
obtained by BBB, the FTC, and IC3.
study and investigation is needed for websites in China that deliver
nothing or where goods are sold deceptively – even if there is no trademark
or copyright involved.
recommends consumers check the reputation of the seller before making
payment at bbb.org and contact the manufacturer for a listing of authorized
What to do if you believe you have unwittingly purchased
a refund. Victims who don’t receive anything when buying online with their
credit card, or who receive goods that are counterfeit or not as described,
should call the customer service number on the back of their card and
request a refund. The report goes into great detail about the process of
obtaining a refund and the remedies available to victims.
counterfeit goods. Contact one or more of the following:
Intellectual Property Rights Coordination Center: U.S. Immigration and
Customs Enforcement (ICE) asks victims of counterfeit goods to file a
complaint with the IPR Center here.
Business Bureau: Victims can file complaints at
bbb.org about online sellers that claim to be in the U.S. or Canada.
BBB tries to resolve complaints and may help in getting a refund. There is
no cost for this service. BBB also looks for and reports patterns of
complaints. Consumers can report scams to BBB Scam Tracker.
markets: Victims can complain directly to eBay, Amazon, Facebook and
Instagram or other online marketplaces. In addition, Amazon has an “A-Z guarantee” for
goods sold by third parties on their site; victims who have purchased
counterfeit items from a third-party seller can seek a refund here.
Fraud Complaint Center (IC3): The FBI takes complaints about counterfeit
goods. Complain here.