Online fakes saw 15% increase in 2014; Most counterfeit goods coming from China.

A comprehensive report released today by NetNames, a leading online brand protection company, reviews the “global pandemic” of counterfeit goods flooding the consumer market, particularly through online channels. The report, “Counting the Cost of Counterfeiting,” finds that the proliferation and purchase of fake branded goods have exploded, raising serious dangers for brand holders and consumers alike, with online pharmaceuticals being the worst affected. Additionally the review outlines the ongoing role of China in bringing the vast majority of these goods into U.S. and European markets.

The data-rich report, which draws on hundreds of up-to-the-minute data points as well as NetNames’s own research, frames the alarming speed with which counterfeiting is growing, pointing to a 15.6 percent global increase in the sale of counterfeit goods online in 2014 alone.[2]With the rise of social media and mobile, the online landscape is being fragmented, increasingly exposing global brands to counterfeiting as well as phishing, cybersquatting, traffic diversion and other forms of online fraud.

NetNames CEO and report co-author Gary McIlraith said, “Counterfeiting has been with us for centuries, but today it is exploiting the high-growth potential of the internet. Counterfeiters have proven every bit as adaptable and creative as big business, with the internet allowing them to refine approaches, increase reach, and target the lucrative world of online buyers.”
The U.S., with 55.7 million jobs dependent on IP- and brand-intensive industries,[3] annual losses of $225 billion to counterfeiting[4] represent a growing economic crisis. Though fake Louis Vuitton handbags have become an emblem of casual consumer attitudes about the illegality of these products being sold, the online pharmaceutical sector has been worst affected, with counterfeits claiming a third of the entire market (around $200 billion)[5] and worse, the consequences of ineffective or toxic fake drugs, with up to a million people affected each year.[6]

Other findings of the study include:

  • 98 percent of data transferred in peer-to-peer networks is copyrighted;[7] in 2013, 1/3 of counterfeit software contained malware[8]
  • 70 percent of counterfeit goods seized worldwide come from China[9]
  • 23 percent of customers changed financial institutions due to unsatisfactory resolutions to experiencing fraud[10]

Notes Gary McIlraith, “Although we are undoubtedly seeing an explosion of counterfeiting in many forms worldwide, its collision with the online world is what is pouring the most fuel onto the fire. Now is the time to develop and deploy a proactive and effective anti-counterfeiting strategy to safeguard customer confidence, brand equity, sales and revenues.”

For a pdf of the study, please email Meir Kahtan at mkahtan@rcn.com.

About NetNames
is one of the world’s leading online brand protection and domain name specialists, helping organizations to be present, protected and prosperous on the internet. Through its industry-leading online security, anti-piracy and domain acquisition services, the company is responsible for keeping organizations and brands one step ahead of online threats across the globe. The company is headquartered in London, with offices in Australia, Denmark, France, Germany, Singapore, Sweden, Switzerland and the USA. Please visit NetNames online at www.netnames.com or on Twitter @NetNamesDomains.

1 Michigan University, Center for anti-counterfeiting and product protection, The Global Risk of Product Counterfeiting: Facilitators of the Criminal Opportunity, 2015: http://www.jeremywilson.org/sites/default/files/PC_Opportunity_Backgrounder_FINAL.pdf
2 IP Crime Group, IP Crime Annual Report 2013/14, 2014: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/374283/ipcreport13.PDF
3 International Anti-Counterfeiting Coalition, 2015: http://www.iacc.org/counterfeiting-statistics
4 Havocscope, 2015: http://www.havocscope.com/losses-tocounterfeit-goods-by-country/
5 Sophic Capital, Counterfeiting, 2014: http://sophiccapital.com/wpcontent/uploads/2014/10/Download-Full-Counterfeiting-Report-Here.pdf
6 Ibid.
7 NetNames, Sizing the piracy universe, 2013: https://copyrightalliance.org/sites/default/files/2013-netnames-piracy.pdf
8 Zurich, Risk Nexus: Counterfeit products: new risks in global value chains, 2014: https://www.zurich.com/_/media/dbe/corporate/docs/whitepapers/risk-nexus-november-2014-counterfeit-products.pdf
9 IP Crime Group, IP Crime Annual Report 2013/14, 2014: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/374283/ipcreport13.PDF
10 ACI Worldwide and Aite Group, Worldwide Global ConsumerFraud Survey, 2014: http://www.retailsolutionsonline.com/doc/globally-victimized-card-fraud-0001


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