Online auction sites provide captive market for bogus goods


Forgers are increasingly using the Internet to peddle bogus goods, according to anti-counterfeiting groups and software vendors.

The Washington, DC-based International Anti-Counterfeiting Coalition (IACC) reports that no less than $693 billion (US$600 billion) in knock off products are sold annually around the world.

Anywhere from five to seven per cent of all goods traded globally are counterfeit, according to the World Customs Organization.

Of this number, online sales of bogus products total $92.4 to 98.2 billion each year, according to MarkMonitor Inc., an online corporate identity management and protection firm headquartered in San Francisco.

“The online market for counterfeit products has grown by nearly 10,000 per cent since it was first tracked in 1980,” said Frederick Feldman, chief marketing officer, MarkMonitor.

The ubiquitous access and anonymity provided by the Internet is a boon to global counterfeiting rings, and makes it doubly hard for law enforcement agencies to catch up with the crooks, according to a Canadian-based anti-counterfeiting organization.

When merchandise and money change hands through the Internet, “there’s almost no way of tracing where the bogus goods are coming from,” said Lorne Lipkus, founding member of the Canadian Anti-Counterfeiting Network (CACN) and partner at Kestenberg Siegal Lipkus LLP in Toronto.

He said Canadian authorities and the CACN have coordinated with various businesses, including giant retail stores, which have been sold copies of high-tech goods.

“Hot items” peddled on a big scale recently include Bluetooth headsets, according to Lipkus. “In the past few weeks, police have seized phony headsets bearing the trademark of a popular brand.”

Counterfeiters, he said, have always enjoyed a lead over law enforcers, but Internet auction sites “have created a whole new marketplace that is even more difficult to police.”

“Tens of thousands of transactions are taking place each day at venues such as eBay, craiglist, and other sites,” said Lipkus.

MarkMonitor’s Feldman says there are strong reasons why counterfeiters like to do business on the Web. “It’s a near risk-free environment for unloading goods, and you have instant access to a multitude of buyers.”

For instance, he said, a person selling a fake Rolex watch on the street has a market limited to the people he sees. “Through today’s technology, that same vendor can present a better facade of legitimacy and attract buyers across the globe using the Internet.”

Microsoft Corp. said last year – along with online auction company eBay – it intervened in around 50,000 online auctions of what appeared to be forged Microsoft products.

“In test purchases of over 550 copies of physical media purchased over eBay in the last 24 months, Microsoft found almost half were counterfeit,” according to Diana Piquette, license compliance manager at Microsoft Canada.

Piquitte advises against enterprises purchasing software online. She said it’s best for businesses to set up a comprehensive software asset management program with a reliable vendor.

Such a program will “determine your software needs, sales procedures and agreements, as well as set product replacement lifecycles.”

For those who insist on buying technology products online, Piquette has these six tips:

• Do your homework – Always check the legitimacy of the vendor you are contacting;

• Know the product – Makers often include security features in their products to prevent tampering. Contact the producers to find out what these are, and how to tell the bogus from the genuine;

• Visit only reputable sites;

• Make sure products come with appropriate documentation. The absence of manuals and accompanying documents is often a red flag that the product is a fake;

• Demand a receipt – Just in case things go wrong, you’ll have some record of the purchase in your hand;

• If you suspect you’ve been handed counterfeit goods, contact the authorities and the maker of the original product.

“And if the price looks like it is too good to be true, it usually is,” said Piquette.


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