Better Business Bureau warns of fake goods explosion

One in four US consumers have been caught put buying counterfeit goods online, according to a report from the Better Business Bureau on the illicit trade in fakes.

The organisation – which provides a portal for consumers to report websites suspected of selling counterfeits – says that sales of counterfeit goods have exploded worldwide in recent years, and many of them “pose significant health and safety risks.”

“Organized criminals operating out of China are behind the vast majority of this fraud,” it says in the report, adding that these groups are backed up by a network of groups that arrange for credit card processing, without whom “most of this fraud could not operate.”

The BBB argues that the complexities of setting up large-scale sales, marketing and distribution of counterfeits, as well as the payment infrastructure that is “difficult to identify and combat”, are evidence that the illicit trade is the work of organised and well-established criminal groups.

The group says it has received 2,003 complaints about counterfeit products and an additional 513 reports through its Scam Tracker service over the last three years, noting this does not necessarily include situations where an order was placed at a site offering counterfeit goods, but victims never received anything.

One expert, Barry Elliott, a senior fraud investigator with the Royal Canadian Mounted Police, estimates this happens in 70 to 80 per cent of online orders.

Other findings in the report reveal that the most common age group registering complaints about counterfeit good purchases was 30-39, according to the Federal Trade Commission’s Consumer Sentinel database, although younger people in their 20s are thought to be most at risk. The average loss for consumers to counterfeits is put at $350.

The scale of the problem is now attracting the attention of lawmakers, and in April President Trump signed a memorandum on combating trafficking in counterfeit and pirated goods that focuses on third-party marketplaces like Alibaba, Amazon and eBay as well as “carriers, customs brokers, payment providers, vendors and others.”

Trump wants to see an expansion and enhancement of efforts by the government to curb online trafficking in counterfeit and pirated goods, with closer cooperation between government and private industry.

BBB offers the following advice to consumers:

Know who you’re buying from. Check the website with BBB or do an internet search of the URL. Look in the “About” section for typos, grammatical errors and information about the business or website location. Fraudulent sites often do not provide physical addresses. If the site does not list a phone number, that is often another red flag that fraud is afoot.

Watch for quality issues. It is a good idea to look closely at goods received and make sure they are authentic. Items sold without packaging or with blurry images are red flags.

Watch out for fake reviews. Scammers often post fake reviews, even on sites such as Amazon. Don’t rely only on reviews. Make sure to look for reviews that report that they are counterfeit goods. BBB accepts and attempts to verify customer reviews, but there are no review sites that can screen out all fake reviews.

The group also urges credit card payment processors to step up efforts to tackle those that provide merchant accounts to sellers of counterfeit goods, and says US consumers would benefit from a programme to help counterfeit victims with chargebacks like the one operated in Canada by the CAFC.

Such a programme would also help identify “crooked credit card merchant accounts, bogus websites, and possibly locations from which such goods are being shipped.”

It also says law enforcement agencies could make better use of complaint information obtained by organisations like the BBB, FTC and Internet Fraud Complaint Center (IC3).