We owe it to consumers to stop counterfeits in their tracks
As a working parent, our home became a school and an office; day morphed into night, and we had to find ways to make it all work. As a result, many of us turned to online ordering to conserve time, and many brands made heavy investments to meet consumers where they were most comfortable.
What’s concerning, however, is the astounding prevalence of unsafe counterfeits lurking across a number of trusted, and emerging, e-commerce platforms. Government agency after agency continues to raise red flags about the dangers of counterfeits. In fact, the U.S. Department of Homeland Security even took down an ISIS website advertising fraudulent masks during the pandemic.
The American Apparel & Footwear Association recently worked with an international testing firm to examine 47 seized counterfeit products, including purses, cloth facemasks, accessories, shoes, clothes, and more. Of these products, 17 failed a basic chemical test and tested positive for lead, arsenic, phthalates, or other dangerous toxins. We are still analyzing the data and additional details will be coming.
AAFA members go to great lengths to ensure the safety and quality of products and protect consumer financial information. They work around the clock to ensure that manufacturers comply with labor and environmental requirements. Counterfeiters don’t care about any of this.
Small brick-and-mortar stores are required by law to sell only legitimate and safe products, or else they are held liable. Meanwhile, third-party ONLINE marketplaces are NOT HELD LIABLE when they sell counterfeit products that threaten the health and safety of consumers and their families.
Counterfeiters are criminals. One brand protection manager chronicled in a TED talk how counterfeit handbags fund terrorism and organized crime. A recent report found that active counterfeiters’ accounts across social platforms were primarily based in China, Russia, and Turkey. It is clear that “The illicit economy, whether in the form of human trafficking, arms smuggling, counterfeiting, money laundering, cybercrime, or illegal wildlife trade, is a force stealing stability from communities, causing corruption, impacting national security, and destabilizing the lives of so many around the globe.” We must take away the ability for criminals to sell counterfeits online by unmasking and removing counterfeits from third party online platforms.
Unsafe counterfeits go beyond clothes, footwear, and knock-off bags. Counterfeits extend across toys, car parts, industries, and international borders. Criminals selling counterfeit goods online fleece consumers of financial data, rob governments of much needed revenue, and destabilize societies. Counterfeits threaten the health and safety of American consumers, steal American jobs, increase costs for consumers, and hamper American innovation and creativity.
Estimates show that counterfeits steal nearly $131 billion from the U.S. economy, with $22.3 billion in lost income for American workers, 325,542 fewer American jobs, $5.6 billion in lost federal tax revenues, and nearly $4 billion in lost state and local tax revenue.
In short, counterfeit goods are un-American and hurt America’s bottom line.
E-commerce and social media platforms can, and should, prioritize and establish algorithms to protect consumers from the promotion and sale of counterfeits online. Luckily, policymakers have an opportunity to make real and impactful changes to protect consumers and brands.
Two complementary bills are in front of Congress to combat counterfeits—the SHOP SAFE Act (SHOP SAFE) and the INFORM Consumers Act. Both bills are bicameral, bipartisan, and have generated a wide range of support. Here’s why each is important and carry different protections:
- SHOP SAFE and INFORM require online sellers to comply with the SAME, long-established federal health and safety regulations that govern small mom and pop brick-and-mortar retailers.
- SHOP SAFE sets scalable requirements based on e-commerce platforms and the annual revenue generated.
- SHOP SAFE requires screening for illicit goods in e-commerce, improved third-party seller transparency, and accountability for online platforms that sell unsafe goods. Most importantly, it holds online platforms contributorily liable if they do not put best practices into place to prevent the sale of counterfeit products that put the consumer’s health and safety at risk.
- SHOP SAFE specifically includes an exemption for small or personal sales.
- INFORM modernizes the nation’s consumer protection laws, and better equips law enforcement officials to go after organized theft rings that have made a business out of selling counterfeit goods online.
Without SHOP SAFE, e-commerce platforms are not held properly liable. Without INFORM, law enforcement lacks vital tools to go after criminals. Both are needed.
We call on Congress to keep these vital pieces moving forward in the America COMPETES Act. No seller—or platform—of legitimate products should be against ANY effort to stop the sale of dangerous counterfeits, especially right now.
Jennifer Hanks is the chief advocate and spokesperson for the American Apparel & Footwear Association (AAFA) on intellectual property and brand protection issues and the staff liaison to AAFA’s Brand Protection Council. AAFA represents more than 1,000 world famous name brands, three million U.S. workers of the apparel and footwear industry, and its contribution of more than $350 billion in annual U.S. retail sales.