Home / Ecommerce / Feds Plan Crackdown on Online Counterfeit Traffic | E-Commerce

Feds Plan Crackdown on Online Counterfeit Traffic | E-Commerce

Feds Plan Crackdown on Online Counterfeit Traffic | E-Commerce

The United States Department of Homeland Security final week launched a
report outlining its plans to fight on-line counterfeit product sellers.

The worth of counterfeit items traded internationally rose from US$200 billion in 2005 to $509 billion in 2016, in line with DHS. Infringing items valued at $1.four billion had been seized at U.S. borders in 2018, in contrast with $94 million price in 2003.

More than 85 p.c of the contraband seized arrived from China and Hong Kong. China is the one largest producer of counterfeit items in a wide range of industries.

The ease of establishing an e-commerce platform has exacerbated the state of affairs.

The DHS’ report was ready in coordination with the U.S. Secretaries of Commerce and State, the Attorney General, and numerous different federal authorities companies and departments, with enter from the personal sector.

The Need for Government Action

“If a new product is a success, counterfeiters will attempt, often immediately, to outcompete the original seller with lower-cost counterfeit and pirated versions while avoiding the initial investment into research and design,” the DHS mentioned.

Selling counterfeit and pirated items — particularly counterfeit prescription drugs — is extremely worthwhile, the DHS famous. The danger of detection is comparatively low.

Preventing counterfeit medicines from coming into the U.S. is “especially difficult,” in line with DHS, as a result of almost 40 p.c of medicine are made abroad and roughly 80 p.c of the energetic medicinal elements of medicine are imported. Further, many of those medicine are costly so decrease costs entice customers.

People who promote illicit items on-line are uncovered to comparatively little danger of felony prosecution or civil legal responsibility underneath present regulation enforcement and regulatory practices in lots of nations.

“The key is getting federal law enforcement in other countries where these counterfeit products are made,” mentioned James Thomson, a companion at
Buy Box Experts and former Amazon government.

Making an instance of counterfeit product sellers ought to assist curtail their exercise, prompt Rob Enderle, principal analyst on the Enderle Group, because it “would help showcase there are unacceptable risks connected to noncompliance.”

The DHS Action Plan

The DHS will undertake the next actions instantly, and it recommends that different departments and companies comply with go well with, to fight the trafficking of counterfeit and pirated items:

  • Ensure entities with monetary pursuits in imports bear accountability;
  • Increase scrutiny of the
    Section 321 setting;
  • Suspend and debar repeat offenders and act in opposition to noncompliant worldwide posts;
  • Apply civil fines, penalties and injunctive actions for merchandise imported in violation;
  • Leverage advance digital information for mail mode;
  • Form ACTION plan — Anti-Counterfeiting Consortium to Identify Online Nefarious Actors;
  • Analyze enforcement sources;
  • Create a modernized e-commerce enforcement framework;
  • Assess contributory trademark infringement legal responsibility for platforms;
  • Re-examine the authorized framework surrounding non-resident importers; and
  • Establish a nationwide shopper consciousness marketing campaign.

“The good news is, the DHS will do more random checks of imported products,” Buy Box’s Thomson instructed the E-Commerce Times.

However, “all that happens is the product is seized and doesn’t enter the country,” he identified. “You haven’t solved the problem of changing incentives for people to sell counterfeits.”

Enforcement will probably be troublesome with out implementing provenance of knowledge, noticed Ray Wang, principal analyst at Constellation Research. “For example, was that medicine being sold online kept at the right temperature throughout the whole process? Is it at the right level of efficacy or was the product diluted?”

One efficient tactic could be to put information in a blockchain or different immutable database to trace merchandise and validate their legitimacy, he instructed the E-Commerce Times.

The expertise utilized by counterfeiters is getting actually good, Buy Box’s Thomson noticed. “Even some brands can’t tell whether what appears to be their product is counterfeit.”

Historically, the federal government “isn’t very effective in policing technology,” famous Rebecca Wettemann, principal at
Valoir.

“Given the complexity of this problem, e-commerce is unlikely to be any different,” she instructed the E-Commerce Times.

Adding to the uncertainty, “President Trump tends to underfund his efforts, which would dramatically reduce the effectiveness of this DHS effort,” Enderle instructed the E-Commerce Times.

Suggested Best Practices

The DHS outlined 10 greatest practices for e-commerce platforms and third-party producers, together with the next:

  • extra vetting;
  • complete phrases of service agreements;
  • limitations on high-risk merchandise;
  • an indemnity requirement for overseas sellers;
  • clearly marked nation of origin; and
  • conducting transactions by means of banks complying with U.S. enforcement requests for data.

“Foremost among these best practices is the idea that e-commerce platforms, online third-party marketplaces, and other third-party intermediaries such as customs brokers and express consignment carriers must take a more active role in monitoring, detecting, and preventing trafficking in counterfeit and pirated goods,” the DHS mentioned.

Amazon already has mentioned that it might be
unable to forestall sellers from providing counterfeit, pirated or stolen items on its platform.

The firm presently is locked in battle with the American Apparel & Footwear Association, which has requested the U.S. Trade Representative to incorporate the web platform on its “Notorious Markets” checklist.

Amazon is just not alone. Alibaba, eBay and different B2C on-line platforms even have been accused of letting sellers provide counterfeit or pirated items on-line.

Amazon has invested greater than $400 million to fight fraud, together with within the type of counterfeit or noncompliant merchandise, and it has applications and processes that exceed its obligations underneath present U.S. regulation, a spokesperson mentioned.

In addition to blocking them, Amazon will start reporting confirmed counterfeiters to regulation enforcement. It additionally will file civil and felony lawsuits in opposition to counterfeiters.

More than 99 p.c of merchandise individuals view on Amazon don’t draw complaints about counterfeits, in line with the corporate.

However, that does not imply a lot, prompt Thomson, as a result of a shopper must make a purchase order after which be educated sufficient to identify a faux earlier than contemplating whether or not to lodge a criticism.


Richard Adhikari has been an ECT News Network reporter since 2008. His areas of focus embrace cybersecurity, cell applied sciences, CRM, databases, software program growth, mainframe and mid-range computing, and utility growth. He has written and edited for quite a few publications, together with Information Week and Computerworld. He is the creator of two books on consumer/server expertise. &#zero13;
Email Richard.

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