Report: social media drives growth in counterfeiting

Social media is the most distinctive medium for communication on counterfeit goods and in facilitating intellectual property infringement, with Facebook one of the leading culprits, a new report reveals.

The report – titled Share and Share Alike: The Challenges from Social Media for Intellectual Property Rights – found that 17.5 per cent of transactions online were found to be of counterfeit products, and 88 per cent of these transactions were conducted by consumers who knowingly purchased a copied product.

Published by the UK's Intellectual Property Office, the report highlights the growing influence of social media in intellectual property and the trend that counterfeiting has moved online. The IPO sought "to gain an accurate picture on the impact that social media is having on IP rights holders and consumers of IP".

Based on literature reviews, interviews with companies and the three main social media platforms, Google, Twitter and Facebook, as well as the online monitoring of products and a consumer survey, the report aimed to assess the role that social media plays in the sale and distribution of fake goods from the alcohol, cigarette, clothing, footwear, perfume and watches sectors, and to understand the scale, impact and characteristics of infringements.

Facebook groups were found to represent the most "exposed location" for suspect communications, with suspect activity being much more prevalent in closed groups – 40.8 per cent of communications in closed groups deemed to be dodgy compared with 8.3 per cent of communications within open Facebook groups. "Closed groups have a strong influence on infringement with complicit consumers five times more likely to shop in closed groups than in open groups," the report said.

The IPO concluded that social media contributes to facilitating infringement, and plays a significant and growing role in the sale and distribution of counterfeited and pirated goods. "By providing relative safety within closed groups, as well as the ability to link to off-platform sites for payment, it is easy to see why social media can be regarded as a critical link in the counterfeiting chain."

"Despite the positives of social media for consumers, the dark side of internet-based commerce is shown by the ease with which both websites and social media pages can be manipulated to deceive consumers. However, our findings, indicate deceived consumers are a small minority (12 per cent) of those who use the platforms," the report added. That said, the IPO noted that deceptive copies were "a growing threat", and were more likely to occur with products like clothing but less likely with alcohol and tobacco.

The report, however, noted that the results are a "mere snapshot" as the research was unable to provide an accurate total of illicit activity, adding that more data and research was required.

Furthermore, the IPO also said that industry provided limited data and unverifiable claims as "no firm surveyed was able or willing to quantify the actual costs to their business". This made it difficult to assess the current scale of infringement in general, the IPO said.

Although, companies did express their concern over the proliferation of closed groups on social media platforms. "The social media platforms resist enforcement agencies and industry bodies' pressure to adopt more proactive policies for combating infringement," the report said. "This reactive-only policy towards IPR infringement has created a climate of distrust and suspicion between the platforms and rights holders, something made worse by what industry considers to be the platforms' cumbersome takedown policies."

In addition, the increased use of spambots and links to various payment sources off-site makes it harder than ever to control the full scope of illicit activity on social media, the report states.

On the plus side, according to the report, online platforms are most likely to act against illicit activity on their sites if their own business interests (such as advertising) are under threat. This is seen with Facebook, which is becoming more reliant on advertising from the brands whose goods are being infringed within their platforms.

The IPO said that more education and awareness campaigns were needed to better inform consumers about buying counterfeit products online, and that social media platforms needed to invest more in actively countering IP infringement.

"In the absence of greater cooperation from industry in supplying data, the focus of future research should be placed on disrupting the current levels of consumer complicity. This is an area where social media platforms have a role to play."

The full report can be found here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/641461/Share_and_share_alike_report.pdf