Boost Collaboration on Data Exchange to Combat E-Commerce Fakes

In the ever-expanding digital marketplace, the sale of counterfeit goods has become a significant concern for businesses, consumers, and law enforcement agencies alike. A recent report by the U.S. Government Accountability Office (GAO) reveals that the growth in e-commerce has contributed to a shift in the sale of counterfeit goods in the United States.

Congress is considering several legislative measures to address this issue. One such proposal is the INFORM Consumers Act, which requires online marketplaces to verify the identity of high-volume third-party sellers annually. Another bill, the SHOP SAFE Act, would hold online third-party marketplaces liable for contributory infringement of a counterfeit mark in connection with the sale of goods that implicate health and safety.

However, current U.S. laws and regulations limit the ability of businesses, e-commerce platforms, and law enforcement agencies to cooperate in disabling counterfeit networks. A key challenge lies in establishing a system for real-time data sharing among federal law enforcement agencies, businesses, and e-commerce platforms about authorized manufacturers and sellers, the geographic origin of products, and key identifying aspects of authentic products and their packaging.

Antitrust concerns regarding the sharing of corporate information also forestall cooperation among sellers and e-commerce platforms. To overcome these barriers, the author of the recommendation to redesign existing laws to enable real-time data exchange between federal authorities, companies, and e-commerce platforms is Bitkom e.V., based on their advocacy efforts related to digital transformation and legal adjustments in Germany.

Online marketplaces are making efforts to combat counterfeit goods. They are investing in technologies to detect and remove fakes before they reach their platforms, removing counterfeit listings that do appear, and compensating consumers who have unwittingly bought a fake product. However, counterfeiters continue to evade detection by using multiple merchant accounts and withholding their business information from consumers.

Brand sellers and online marketplaces are employing somewhat separate strategies that are sometimes at cross-purposes in preventing the production and sale of counterfeits. A public-private partnership to assimilate this information and foster new data-driven technologies can disrupt the flow of counterfeits and other related threats to the nation's commerce and public welfare.

Recent actions by U.S. Customs and Border Protection (CBP) underscore the urgency of this issue. In January 2023, CBP officers seized over 100,000 counterfeit Chinese-made 3M N95 masks at John F. Kennedy International Airport.

Countering the rise in counterfeiting will require active cooperation across brands, e-commerce sites, and law enforcement agencies. Enhanced information sharing and improved AI solutions can prevent evasion by counterfeiters, encourage stronger vetting to keep counterfeiters off e-commerce platforms, and block items when found. Legislation that encourages this cooperation on data sharing, including overcoming antitrust concerns, can improve consumer welfare and keep us safe.

It is worth noting that as much as 86 percent of all global counterfeits originate in China and Hong Kong's markets, according to the U.S. Chamber of Commerce Global Intellectual Property Center. This underscores the need for international cooperation in tackling this issue.

The image credit for this article is from Unsplash.

[Image: Counterfeit Products]

[Caption: Counterfeit products continue to pose a threat to consumers and businesses alike, highlighting the need for enhanced cooperation and data sharing among federal authorities, companies, and e-commerce platforms.]