Facebook, Instagram Owner Flagged for Counterfeit Failures
The parent to Facebook and Instagram was flogged for failing to keep its platforms free of counterfeits.
It’s one of the five companies that the American Apparel and Footwear Association (AAFA) recommended for inclusion on the U.S. Trade Representative’s (USTR) Notorious Markets list.
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AAFA cited Meta and its subsidiaries including Facebook, Instagram, WhatsApp and Threads, as well as Alibaba Cloud, Shopee, DHgate and Lazada as hubs for counterfeiting and piracy crimes that impact American businesses. On Friday, AAFA submitted its recommendations to USTR in a letter urging that it add the offenders to its annual roster of online and physical markets that reportedly engage in or facilitate trademark infringement or IP theft.
“The annual Notorious Markets submission to the Office of the U.S. Trade Representative is a critical part of AAFA’s work to collaborate with the U.S. Government on matters of intellectual property protections for brand-owners plus cross-cutting safety and accountability measures on behalf of consumers and workers,” AAFA director of brand protection Jennifer Hanks said.
“While our members work tirelessly to create quality products and to invest in continuous improvements in social and ethical compliance, counterfeiters have a different view of the world and operate in an entirely different sphere,” she added. “Their entire business model is based on stealing somebody else’s innovation and identity, so it is with little remorse that they exploit workers, engage in wage theft, employ shoddy factories, and dabble in other methods of scams and thievery that put Americans at risk.”
AAFA routinely submits recommendations to USTR on behalf of its members, which have been increasingly threatened by the activities of counterfeiters operating online. Hanks said the organization’s submission underscores its recent efforts to address counterfeiters operating online, including testimony before Congress earlier this month supporting the SHOP SAFE Act. The legislation would “ensure online platforms take greater actions to prevent the promotion and sale of counterfeits that harm consumers on their sites, or be held liable.”
Four of the five companies recommended by AAFA for the Notorious Markets list are based in Asia, with Meta representing the only U.S. nominee. According to AAFA, which has recommended Meta for inclusion on the list three years running, the peer-to-peer platform remains rife with counterfeits.
Michigan State University Center for Anti-Counterfeiting and Product Protection (A-CAPP) research showed that 74 percent of consumers who have purchased counterfeits did so mainly through social media and e-commerce platforms, and 68 percent of those who bought fakes through social platforms did so through Facebook. Apparel and footwear were the top purchased counterfeits, A-CAPP’s 2023 data showed. A report by Ghostdata.io found 26,770 active counterfeiter accounts on Facebook and more than 20,280 active counterfeiter accounts on Instagram from June-October of 2021. It also characterized Meta-owned WhatsApp as a popular tool for infringers, used more than 76 percent of the time over other online communication tools.
AAFA also pointed to anecdotal evidence from its own members as a reason for recommending that Meta be added to the Notorious Markets list. One unnamed member said that when it reported infringing listings on Meta platforms, the company’s rulings on the listings were inconsistent, as were efforts to remove them. Another member said counterfeiters and scammers have capitalized on the “reputational value” of the brands consumers favor, preying on shoppers with “IP infringing content, profiles, and paid ads” that have proliferated month over month. The company said it expected the take-down rate for listings that infringed on its IP would be the highest ever recorded in 2023.
AAFA pointed to Meta’s lack of proactivity in vetting sellers, its lack of overall transparency surrounding counterfeit reporting, the growing number of fraudulent ads and repeat infringers and the lack of anti-counterfeit enforcement in Facebook groups as its greatest weaknesses.
The group has again recommended that China-based Alibaba Cloud be added to the Notorious Markets list given the number of counterfeit websites it hosts. “Although Alibaba Cloud is not a marketplace, per se, the fact that it hosts so many fake websites merits” mention in USTR’s report, AAFA said. The sites hosted by Alibaba Cloud replicate brand-owned e-commerce sites, often using protected trademarks like logos and images to trade on a brand’s reputation and likeness. These sites deceive shoppers into purchasing counterfeit goods, or steal their personal financial information. Efforts to work directly with Alibaba Cloud since October 2022 have yielded little progress, AAFA said.
Separately, AAFA has formally named Alibaba-owned Lazada Group for the third time since 2019, including its operations in Thailand, Singapore, the Philippines, Malaysia and Vietnam. In addition to reporting an “overabundance of counterfeits,” brands have also seen genuine products comingled with fakes in brand flagship stores on the platform. “Brands have reported delays with counterfeit removals, little to no communication, and limited (if any) platform staff to help address one-off concerns with the operation of brand protection tools or to address technical issues,” AAFA said.
The group has nominated Singapore-based Shopee Pte. Ltd. five times since 2018, “and the association does so again in 2023 due to the overwhelming volume of counterfeits available through [the global platform],” which operates marketplaces across Brazil, Chile, Columbia, Thailand, Mexico and Malaysia.
One AAFA member said, “Shopee is one of the most concerning e-commerce platforms, consistently ranking atop of list of platforms targeted for ongoing enforcement activity.” AAFA said it has been working with Shopee’s brand protection team and appreciates its willingness to engage in conversation multiple times this year. AAFA’s Notorious Markets recommendation stems from an abundance of counterfeits across all global Shopee platforms, weak policies to address repeat infringers, and a difficult reporting structure for impacted brands.
