Pandemic led to a surge of counterfeited goods sold online
As consumption patterns shifted online during the pandemic, e-commerce also became a key channel for trade in counterfeit products, posing a challenge to platforms and law enforcement.
It might be difficult to remember those days, but e-commerce was already growing fast in the years before the pandemic, with sales volumes rising by 82% from 2016 to 2019. When the pandemic hit in 2020, growth accelerated even more, increasing sales volumes by 25.7% in one year while the rest of the economy was partially shut down.
Not only did this massive shift in consumption send supply chains reeling under pressure and prices soaring, it also presented opportunities for counterfeit traders to expand their market.
“The organised crime groups that are behind counterfeiting look for high profits, and for them, the pandemic is like ‘wow, e-commerce is open, let’s go for it!’,” OECD illicit trade expert Piotr Stryszowski told EURACTIV.
Trade in counterfeits – Hunting high margins with low risks
Illicit trade in counterfeit goods remains a significant issue in EU trade and is most prevalent in product categories that show a large discrepancy between production costs and consumer prices. This can include watches, fake luxury handbags, and even fake COVID vaccines.
A 2021 report by the European Union Intellectual Property Office (EUIPO) and the OECD found that “some 63.9% of seizures of counterfeit items involved mailed items.”
However, because these counterfeits are usually sent in small parcels, hiding in a stream of identically looking, legitimate parcels, generally only small quantities are found.
“While customs officers in a port sometimes find an entire container full of counterfeited goods, they have to open up every parcel they want to control individually with their cutters,” said a spokesperson of the Belgian customs authorities who spoke to EURACTIV about the challenges they face.
This is why the total value of seized counterfeit items sent by mail amounts to only 10% of the total goods seized globally.
Fighting counterfeits on the ground and in the ether
Counterfeited products find their way across the internet in different ways. Some use big platforms like Amazon or Alibaba; others use small webshops that are easily established.
This complexity means that there is not a straightforward solution to the problem.
The Belgian customs authorities, for example, have begun shutting down websites that were selling counterfeited goods. However, they can only do this for the sites with an URL that ends with .be or .eu. Although such a takedown can interrupt a counterfeit trader for some time, nothing stops them from restarting the same website with another URL.
When it comes to big e-commerce platforms, shutting down the website is not viable for the police. In these cases, customs officials have to physically turn up in warehouses, cutters in hand.
Meanwhile, the e-commerce platforms themselves have been pressured into taking proactive steps.
“We […] have strict rules and sophisticated systems in place which assist us in identifying listings that violate our policies, and we take corrective action when we become aware of violations,” Alibaba told EURACTIV in emailed comments.
Amazon did not want to comment but referred to a blog post in which it hailed its cooperation with law enforcement agencies.
In emailed comments, Europol told EURACTIV, “cooperation with the private sector, including with e-commerce platforms, is an important aspect in the fight against intellectual property crime.”
‘Know Your Business Customer’
EUIPO-chief Christian Archambeau commended the platforms for having introduced some counterfeiting programs. His own agency is looking at giving platforms access to material and tools that would allow them to identify counterfeits more easily.
“[The platforms] are also under pressure from the authorities because, for example, in Europe, we see good progress being made on the Digital Services Act,” Archambeau told EURACTIV.
The Digital Services Act (DSA), which is currently being negotiated between the European Parliament and EU member state governments, might introduce a ‘Know Your Business Customer’ (KYBC) principle.
This principle would force platforms to verify sellers’ identity to ensure legal accountability if they sell illegal goods over the platform.
Whether the DSA and its KYBC principle will be implemented in Europe will become clear in the coming months. In the meantime, it is up to cutter-wielding customs officials to stem the flow of counterfeit products disguised as innocent parcels.
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