Counterfeiting is big business. A 2021 study by the Organisation for Economic Cooperation and Development (OECD) estimated that the international trade in counterfeit and pirated products was worth up to $464 billion in 2019, or around 2.5% of all world trade[1]. A significant proportion of this trade occurs via digital channels, where global annual expenditure on e-commerce is more than $4 trillion[2]. A 2018 study by the US Government Accountability Office found that two in five branded products purchased online are counterfeits[3]. Europol’s 2017 Situation Report on Counterfeiting and Piracy noted that counterfeit goods are increasingly distributed via online marketplaces, with many of the items originating from manufacturing centres in China and the Far East[4]. Its updated 2022 study found that other online channels, including social media and instant messaging services, are also becoming more significant[5]. Similar trends have also been noted by other recent studies[6,7], with the COVID-19 pandemic having further driven an increased online trade in counterfeits[8,9].
In response to the increasing size of this problem, several pieces of legislation have been developed or proposed to drive increased online safety. The US Shop Safe Act aims to place increased pressure on marketplaces to prevent infringing listings, by including requirements to ensure verified seller identities, proactive screening of items for counterfeit indicators, and the suspension of repeat infringers. Furthermore, the INFORM Consumers Act (an extension of the SANTA Act) requires regular marketplace verification and disclosure of details (where available) for high-volume sellers[10]. This change in landscape is pushing many online marketplaces to develop more proactive programs to identify and remove listings offering infringing products.
Despite the safety and quality implications associated with counterfeit items, there remains a consumer appetite for replica products, particularly where the original branded products sell at a high price point. This demand has resulted in the emerging tactic of using hidden links to sell infringing items.
What are hidden links?
Hidden links are used to circumvent marketplace restrictions on the sale of counterfeit products. They involve an online seller creating an external listing for a counterfeit item (e.g. on a standalone e-commerce site) that links to a decoy marketplace listing. The item displayed on the marketplace is usually an unrelated generic product, and the referring site incorporates instructions for buying the counterfeit item via the marketplace listing. This may involve the buyer selecting a particular colour and size combination (Figure 1).
Figure 1: Example of a marketplace listing using a hidden link, that is in fact associated with the sale of counterfeit luxury watches
From a brand protection point of view, it is difficult to explicitly monitor for and detect hidden-link listings in isolation, since the only visible characteristics are a standalone e-commerce listing for a branded product, linking to a marketplace listing for an unrelated product. It is not even always straightforward just to search for the presence of an embedded link to the marketplace site in the referring listing, because the links often proceed via affiliate redirection URLs - meaning there may be no reference to the marketplace domain name in the HTML of the referring page.
That said, the counterfeiters often construct sites explicitly to promote the hidden links and give instructions on their use (Figure 2). In some cases, the referring sites may also infringe on the names of the brands or marketplaces being abused, by using official brand terms in the domain name or official branding on the page. Therefore, detection is usually based on a combination of monitoring for brand terms in conjunction with keywords relating to hidden links and other keywords, such as 'replica' (Figure 3). Similar content is typically also found on other channels like social media (Figure 4).
Figure 2: Example set of instructions on a site promoting hidden links
Figure 3: Examples of websites featuring hidden-link listings
Figure 4: Examples of a social media group and profile promoting hidden links
Insights for businesses
As a brand owner, monitoring for content relating to hidden links can form part of an online brand protection strategy that deals with counterfeit activity. It can help brands reveal instances where the sale of infringing items on the marketplaces themselves is not apparent from the content of these listings, and therefore may sit outside the platforms’ IP protection programmes.
From an enforcement perspective, taking down the marketplace listing is typically reliant on having the appropriate IP protection in place, and on proof of infringement. The exact requirements vary between marketplace platforms, but generally involve test purchases to verify the actual nature of the goods being shipped. An alternative option might be to carry out enforcement against the referring site, dependent on the presence of any IP infringements, since removal of the hidden-link instructions can essentially render the marketplace listing unusable.
References
[1] https://www.oecd.org/gov/global-trade-in-fakes-74c81154-en.htm
[2] https://business.adobe.com/resources/digital-economy-index.html
[3] https://www.gao.gov/products/gao-18-216
[6] https://ustr.gov/sites/default/files/IssueAreas/IP/2021%20Notorious%20Markets%20List.pdf
[7] https://www.retaildetail.eu/en/news/general/meta-platforms-centres-counterfeit-trade
[8] https://euipo.europa.eu/ohimportal/en/news/-/action/view/9231590
[9] https://www.infosecurity-magazine.com/news/counterfeit-pirated-imports-surge/
[10] https://www.buysafeamerica.org/informed-consumers-act
This article was first published on 25 April 2022 at:
https://www.cscdbs.com/blog/breaking-the-rules-on-counterfeit-sales-the-use-of-hidden-links/
Also published at:
https://circleid.com/posts/20220510-breaking-the-rules-on-counterfeit-sales-the-use-of-hidden-links
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