Counterfeiters ‘Prey on Our Population’, AAFA Leader Tells Senate

Kate Nishimura
·3 min read
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The American Apparel and Footwear Association’s (AAFA) top executive testified on Tuesday before a Senate committee about the impact of counterfeits on American commerce a week after the SHOP SAFE Act was reintroduced in Congress.

Before a U.S. Senate Committee on The Judiciary hearing of the Subcommittee on Intellectual Property entitled “Back to School with the SHOP SAFE Act: Protecting Our Families from Unsafe Online Counterfeits,” AAFA president and CEO Steve Lamar urged Congress to protect the U.S. market from counterfeits by quickly passing the measure.

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“Nobody wants to buy clothes or shoes that will sicken their kids, or that were made by forced labor, or that were produced in sweatshops, or that destroyed the environment,” Lamar said. “But that’s exactly what happens when consumers buy counterfeit fashion.”

Lamar said AAFA members have invested millions of dollars into building ethically compliant and sustainable supply chains, as well as developing measures that ensure transparency. U.S. brands and retailers have also funneled “considerable resources” into policing third-party marketplaces for counterfeits, getting “shady websites” and fraudulent ads removed. This is a burden for small businesses, which may not have the resources to take these actions.

“Counterfeit products not only harm our members’ reputations and hurt their sales, but they also put our members’ customers in harm’s way with fake products that could sicken them or create other risks,” Lamar said. An AAFA-commissioned study of counterfeit clothes, shoes and accessories found that 36 percent contained harmful materials and chemicals.

Lamar cited evidence of how counterfeits affect U.S. retail. The National Association of Manufacturers estimated that counterfeits did $131 billion in economic damage in 2019, destroying over 300,000 jobs and contributing to the loss of almost $10 billion in federal, state and local tax revenues. “This is an issue for governments and businesses of all sizes,” Lamar said.

Though e-commerce has its merits, Lamar said the online landscape requires new measures to enforce accountability. “U.S. law currently contains many guardrails to make sure brick and mortar retailers of all sizes do not sell counterfeit items,” he said. “[Brands] don’t have to go through lengthy takedown fights with these physical stores, only to find fake goods pop up again shielded by a new name.”

Lamar acknowledged that the same online platforms that are overrun with counterfeits are also “pioneering amazing technological advancements that can put up more effective roadblocks against illicit actors.” But they must be accountable for the third parties active on their platforms, he said.

Under the SHOP SAFE Act, “[Platforms] will need to meet the same requirements, and face the same accountability, as brick-and-mortar retailers, your mom-and-pop store down the street, when it comes to stopping the sale of counterfeit or illicit products,” Lamar said. This includes asking sellers for critical information, implementing screening processes for listings before they’re displayed publicly, and blocking repeat offenders from making new profiles. Those who fail to comply will be liable for the counterfeits sold on their sites.

AAFA will submit comments to the Office of the U.S. Trade Representative (USTR) about the platforms its members have identified as “Notorious Markets,” Lamar said. USTR is expected to issue its report on these marketplaces in the coming weeks, while U.S. Customs and Border Protection (CBP) will publish its own analysis of the volume of counterfeit apparel, shoes, accessories, electronics, auto parts, jewelry, and toys it stopped from entering the country last year. CBP’s last report revealed that 70 percent of items seized at U.S. borders were counterfeit.

“This all causes more acute damage to our economy, our workers, and our citizens. And every year, we keep preparing these reports, and every year they get more dire,” Lamar said.

“We have before us legislation that can break this cycle and change the narrative of those reports and those statistics and finally deny the ability of counterfeiters the ability to prey on our population,” he added. “It is time to pass the SHOP SAFE legislation now.”