Meta Platforms, which owns Facebook, is struggling to stop counterfeiters from pushing fake luxury Gucci products to Chanel on its social media apps, according to surveys and interviews, as the company moves into e-commerce.
Its platforms have emerged as hotspots for counterfeiting criminals who exploit their range of social and private messaging tools to reach users, according to interviews with academics, industry groups and counterfeiting investigators, who compared brands’ attempts to police services. like Facebook, Instagram and WhatsApp as a game of “whack-a-mole”.
“Facebook and Instagram are the main markets where counterfeit products are sold to the public. It used to be eBay 10 years ago and Amazon five years ago,” said Benedict Hamilton, managing director of Kroll, a private investigation firm hired by brands harmed by counterfeiting and smuggling.
Searchled by social media analytics firm Ghost Data and shared exclusively with Reuters, it showed counterfeiters selling knockoffs of luxury brands including Gucci, Louis Vuitton, Fendi, Prada and Chanel.
It identified over 26,000 active counterfeiter accounts operating on Facebook in a June-October 2021 study, the first time its counterfeiting research focused on Meta’s main app, and found over 20,000 active counterfeiter accounts on Instagram, above their count the year before, but below their peak in 2019, when they identified around 56,000 accounts. About 65% of accounts found in 2021 were based in China, followed by 14% in Russia and 7.5% in Turkey.
Ghost Data is an Italian analytics company founded by cybersecurity expert Andrea Stroppa, who is also a data analytics consultant at the World Economic Forum. The company has a history of exposing the use of social media by counterfeiters, Islamic State supporters and digital propaganda.
A Reuters keyword search identified dozens of Instagram accounts and Facebook posts that appeared to promote counterfeit products, which Meta removed for violating its rules after Reuters flagged them.
Online commerce is a top priority for Meta, which has pushed new shopping features that can help boost its revenue as it faces pressures like ads that track user changes and growth, and has signaled a tough stance against counterfeiters. Instagram said luxury brands like Dior, Balenciaga and Versace had adopted in-app shopping features and said some like Oscar De La Renta and Balmain were using in-app checkout.
But users who exploit its platforms to sell counterfeit goods present a lingering problem for the company, which also faces scrutiny from lawmakers and regulators over its content moderation.
“The sale of counterfeits and frauds is a problem that has always persisted with new technologies,” a spokesperson for Meta said in a statement. “We are getting better every day at stopping these sales and cracking down on fraudsters,” the person added.
Most buyers know they are not getting the real deal when they pay US$100 (approximately Rs. 7,480) for a bag that sells for over US$5,000 (approximately Rs. 3.7 lakh). But the damage includes impacts on sales and brand reputation, potential safety issues from unregulated products and links between counterfeiting and organized criminal activity, experts said.
Meta has joined e-commerce sites and online marketplaces in the fight against the sale of counterfeit goods. But unlike public listings on shopping sites like eBay and Amazon, social platforms also provide offenders with multiple channels to post indoors, send private messages and use disappearing content like Instagram Stories, experts said.
“They are creating a lot of unique opportunities for counterfeiters to hide,” said Lara Miller, vice president of corporate strategy for the International AntiCounterfeiting Coalition. “We’re all playing tag.”
Counterfeiters took advantage of features such as WhatsApp product catalogs, which are unencrypted and available through the app’s “business profile” option, to showcase their wares, the Ghost Data report said.
Ghost Data’s Stroppa said he’s seen a growing trend of spoofed entire transactions taking place on the company’s platforms rather than links to external websites.
Some high-profile brands remain wary of the ability of a broad spectrum of major online platforms, from e-commerce sites to social apps, to deal with counterfeiters.
In 2020, Chanel, Lacoste and Gant left a European Commission initiative aimed at increasing cooperation between brands and websites, including eBay, Alibaba and Facebook’s Marketplace, to fight counterfeiting, saying it was not effective.
Chanel’s finance chief Philippe Blondiaux said in an interview last year that Chanel, which only sells cosmetics and perfumes online, does not believe Facebook or Instagram is “the right environment to sell luxury items,” adding that the brand wanted a “very protected” environment. and intimate environment for its customers.
The Organization for Economic Co-operation and Development, which estimated that the global trade in counterfeit goods reached US$464 billion (approximately Rs. 34,71,400 crore) in 2019, said a boom in e-commerce in 2020-21 had led to massive on the market. supplying counterfeit products online. Academics said fraud grew rapidly during the COVID-19 pandemic, while legislation in the United States and the European Union remained unable to combat it.
Chanel, Gucci and Prada said their fight against counterfeiters resulted in hundreds of thousands of social media posts taken down in the past year, but did not comment specifically on Meta’s services. LVMH, which owns Vuitton and Fendi, which in a document said it spent $33 million (approximately Rs. 250 crore) to fight counterfeiting in 2020, declined to comment.
According to a lawsuit filed by Meta with Gucci last year, the platform has struggled since 2015 to shut down a woman in Moscow accused of selling counterfeit goods on its services through a network of more than 150 accounts.
Meta having more user purchase data can help with ad targeting, filling an information vacuum left after Apple began allowing device owners to block companies from accessing user information.
Meta’s legal directors told Reuters that cracking down on counterfeiters was critical as their trade plans ramped up. “As commerce has become a strategic priority for the company and we are building new shopping experiences, we recognize that we want to ensure these experiences are safe and trusted for brands and users,” said Meta director and associate o IP’s general counsel Mark Fiore said last summer.
Meta, which says it has 3.59 billion monthly active users on its apps, launched an updated tool in October for brands to search for and report counterfeits in posts, ads or commerce features, and says it typically responds to complaints from such infractions within 24 hours.
On a recent report, the company said it removed 1.2 million fake content from Facebook, including accounts, from January to June 2021 and about half a million on Instagram. The company said that in that period it also proactively removed 283 million content from Facebook that violated spoofing or copyright infringement rules, and about 3 million from Instagram, before it was reported by brands or before it was released.
© Thomson Reuters 2022