On January 14, 2021, the Office of the United States Trade Representative (USTR) released its 2020 Review of Notorious Markets for Counterfeiting and Piracy (the Notorious Markets List, or NML). This publication enumerates online and physical markets that have been reported to engage in trademark, counterfeiting, and copyright infringement at scale. For the first time, the NML documents show how internet platforms play a part in bringing illicit goods into the US. It also shines a light on common scams and the impact on legitimate brands that depend on digital. 

Importantly, the 2020 report both lists the notorious infringing platforms and how legitimate digital channels are being abused to promote the distribution of illicit goods. On page 8 of the report, the USTR discusses the role of social media:

“Sellers of counterfeit and pirated goods have also recently taken advantage of social media and messaging websites and mobile apps to subvert detection controls and trick consumers. One fast, easy, inexpensive, and common tactic is to set up accounts on social media platforms and use posts or targeted ad campaigns to advertise counterfeit and pirated goods. The posts and advertisements convey authenticity by often containing the same or confusingly similar images, hashtags, and keywords used by the brand. The advertisements direct consumers to e-commerce websites designed to evade detection, or ask consumers to communicate via a messaging app for details on how to purchase the authentic-looking counterfeit or pirated goods. The advertisements and messages often conceal the unscrupulous nature of the transaction by claiming to be an exclusive bulk or wholesale purchase. An online payment service, typically connected to or affiliated with the social media or messaging platform, enables immediate and secure completion of the transaction.”

In Appdetex’s experience, we’ve seen less scrupulous operators use the same techniques to sell goods that they have no intention of delivering.  These malicious actors use popular social and advertising platforms to direct traffic to nearly exact duplicates of branded sites, entice visitors to purchase goods and media at too-good-to-believe prices, and never deliver upon their promise. Often unsuspecting consumers’ credit cards are charged for the goods. Sometimes the card and shipping and billing details are sold on dark web markets, or even used to buy advertising or goods to sustain the scam. 

Both consumers and brands are the victims of these scams. The obvious loss for the consumer is their cash, the lost goods, and, with some frequency, the loss associated with repairing their credit and restoring their stolen identity.  Brands suffer direct and indirect losses. They often spend hours of customer service time trying to help confused consumers. Their reputation suffers, too, in the mind of their loyal customers and in the public eye as news of their losses appears around the Internet. 

Implications for Brands

The NML is yet another indicator that the sophistication of malicious actors is increasing. With our increased reliance on digital channels and the floods of new users using those channels, brands must take action. Brands need to use the data found in promotional channels to help identify the full scope of the scams targeting their loyal customers. Bad actors are displaying a mastery of using social media, advertising, web sites, and branded materials in a way that makes them seem legitimate while evading detection and enforcement. 

Our research shows that the most sophisticated bad actors use mobile apps, websites, and social media profiles as interrelated components in sophisticated networks. These highly-organized bad actors are the ones that are causing the most harm to brands and their consumers. 

Brands must take definitive action against bad actor networks when discovering infringement by:

1. Investigating bad actor networks
2. Developing a mitigation strategy
3. Dismantling the network
4. Educating their customers about bad actors’ methods and how to avoid engaging with them.

Brands that use legacy enforcement techniques of the components of these scams usually do so sequentially.  These techniques may slow the scammer but seldom disable the scam for any sustained period of time.