Holiday Shoppers Warned to Watch Out for Counterfeits This Season

Kate Nishimura
·5 min read

Retail and homeland security experts advise consumers to be on guard for deals that seem “too good to be true” this holiday.

“The harsh reality is Santa is not the only one handing out toys this season—Black Market criminals have exploited the boom in online shopping by misleading consumers into buying stolen and counterfeit goods,” former active executive associate director of Homeland Security Investigations (HSI) and United to Safeguard America from Illegal Trade (USA-IT) spokesperson Alysa Erichs said Monday. At an event hosted by Inside Sources at the National Press Club in Washington, D.C., Erichs, along with representatives from HSI and the American Apparel and Footwear Association (AAFA), discussed the dangers of counterfeits on popular online retail platforms.

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“Following the Covid-19 pandemic we’ve seen a dramatic shift towards online shopping, and there’s no doubt that e-commerce ecosystem is here to stay,” Erichs said. Online and non-store purchases are expected to grow by 7 percent to 9 percent year over year, accounting for $28 billion in sales growth from 2022, according to National Retail Federation (NRF) data. Digital platforms now provide a cover for criminals, according to Erichs.

“These bad actors now hide between the anonymity of e-commerce platforms’ third-party listings and social media apps like Facebook and Tik Tok to lure consumers with deals,” Erichs said. A recent 17-country survey by Michigan State University’s Center for Anti-Counterfeiting and Product Protection showed that 66 percent of U.S. consumers have been deceived into buying counterfeit goods over the past year alone, with about 50 percent pointing to social media as the source and 45 percent saying they purchased through an e-commerce marketplace or platform.

“E-commerce is vital, and not just for businesses but also for consumers,” AAFA director of brand protection Jennifer Hanks said, noting that mobile shopping accounted for 74 percent of retail sales during a single quarter in 2023. “There is convenience with one-click shopping, but there’s also a great opportunity and responsibility that comes with that.”

One retail presents greater access to consumers, but it comes with different risks for brands. “U.S. law currently contains many guardrails to make sure brick-and-mortar retailers of all sizes do not sell counterfeit items—however, parity does not exist for online platforms,” she said. “Efforts to stop counterfeiters [online] have been rapidly outpaced by the internet itself.”

Marketplaces have been able to shirk responsibility for the goods sold on their sites, with some AAFA member brands finding that a keyword search for their products yields nothing but fake listings. “Our brands are flagging an alarming growth in fraudulent ads just within the last few weeks,” Hanks added. One company said it reported more than 50 fake online ads per day, and another told AAFA it was routinely flagging 200 fraudulent ads “every four to five days.” These ads and listings proliferate year-round, but tend to increase in the weeks leading into the holidays, she added.

Counterfeits do more than deceive shoppers—they can actually endanger them, an AAFA study confirmed. In a trial conducted last year, AAFA tested 47 counterfeit apparel and footwear items for harmful chemicals. Seventeen products, or 36 percent, contained dangerous levels of poisonous substances like lead, arsenic and phthalates. “Not only did these items fail U.S. safety standards, but they could have made consumers dangerously ill,” Hanks said.

Counterfeiters also cut into profits for legitimate businesses. “Their entire business model is based on stealing somebody else’s innovation and identity,” Hanks said. Many counterfeiters using shoddy suppliers and mistreat workers. “Meanwhile, the legitimate brands invest millions to build, train and inspect supply chains to ensure that the clothes, shoes and accessories bought and worn by American families are not only fashionable but affordable and ethically and sustainably sourced.” The National Association of Manufacturers estimated in 2019 that counterfeits sucked $131 billion from the U.S. economy, destroying over 300,000 jobs in the process.

“Be aware and educate yourself as a consumer to shop safely,” Hanks advised. “If you click on an advertisement that takes you to a website, look at the website. Are there misspellings? Is there a term of service? Was the advertisement that you clicked on from social media telling you that there should be a deep discount 90 percent off, and that you must act fast?” she said. “Well, it’s probably too good to be true. Think twice.”

“As the holiday season approaches, it’s crucial that we all remain vigilant about the dangers posed by counterfeit goods,” Michael Ball, acting deputy assistant director of HSI for global trade added.

“This illegal trade undermines legitimate businesses, stifles innovation, hampers economic growth and leads to loss of jobs,” he said. Furthermore, counterfeits often rely on unregulated and unethical production practices, including forced labor. “By purchasing these products, we’re inadvertently supporting these harmful practices, which have a devastating impact on the vulnerable communities worldwide,” he added.

U.S. consumers buying counterfeit goods are also contributing to “transnational criminal organizations and a thriving underground criminal economy,” he said. He pointed to an HSI operation in New York last week that led to the recovery of 500,000 pieces of counterfeit merchandise from 52 storage units. Worth over $1 billion, Ball said the haul would have funded larger crime syndicates. “Does anyone not think that money is going directly to organized crime?” he said. “The amount of money that we’re talking about is astronomical, and it absolutely is.”

As shoppers prepare to purchase holiday gifts this season, “it’s critical to be educated and informed consumers,” Ball said.

“Take the time to research brands and products that you intend to purchase,” he advised. “Look for signs of authenticity, such as holograms, serial numbers, Authorized Retailer logos.”

Ball also encouraged e-commerce shoppers to buy directly from brand-owned websites when possible. “Remain vigilant during your holiday shopping,” he said.