BBB: Counterfeit Products Make Online Retail Risky for Consumers

An in-depth investigative study by Better Business Bureau finds that fraudulent consumer goods are ubiquitous, difficult to tell apart from the legitimate products they are counterfeiting, and stem from a large network of organized criminals and credit card processing mechanisms that are willing to support them.

Research shows that eight in 10 Americans shop online, and the dominance of online retail means nearly anything can be bought online, sometimes at discounts that seem too good to be true. However, nearly anything available online can be counterfeited, and research also shows that one in four people have bought something online that turned out to be counterfeit.

The investigative study – “Fakes Are Not Fashionable: A BBB Study of the Epidemic of Counterfeit Goods Sold Online” – looks at the prevalence of counterfeit consumer goods and the criminal systems that circulate them. It digs into the scope of the problem, who is behind it, the multi-pronged fight to stop it and the steps consumers can take to avoid it.

The risk of encountering counterfeit goods can affect any online shopper. These goods range from brand-name sunglasses and handbags to golf clubs and consumer electronics, as well as many other kinds of products. BBB’s report finds that any shippable item with a reputation for quality and sizable markup is a candidate for counterfeiting. While counterfeit goods often are reputed to be deeply discounted, in reality, counterfeit sellers regularly use selling prices that are close to the price of the real product, so the prices offered are no longer a signal that the product is counterfeit.

The cost of counterfeiting affects not only consumers who lose money by receiving products not as advertised, but also the broader U.S. economy. BBB’s report finds that counterfeiting and intellectual property piracy cost the U.S. economy $200-$250 billion and 750,000 jobs annually.

In the last three years, BBB has received more than 2,000 complaints and more than 500 Scam Tracker reports from people who have shopped for goods online and received counterfeits instead of what they ordered. The Federal Bureau of Investigation’s Internet Crime Complaint Center processed 2,249 complaints about counterfeit goods (including pirated goods) in 2018, while the Federal Trade Commission processed 552 complaints representing a total financial loss of more than $752,000.

But many victims do not file complaints, making it difficult to get a firm grasp on how often people pay for goods that are counterfeit or not as advertised.

Local Cases

An overwhelming number of consumers in BBB of Central New England’s service area who filed reports related to counterfeit products on BBB Scam Tracker since January 2018 did not receive the products they ordered. Many complained that they ordered through an advertisement on Facebook or other social media sites; others said they used a website.

Celene of West Springfield, Mass., filed a Scam Tracker report in January after the Fortnite sweat suit she bought for her 6-year-old son for Christmas never arrived. She said that she was given a “phony” tracking number. She saw the sweat suit advertised by a company claiming to be binnvy.com on Facebook and paid $36. “They claimed to be out of Tampa, Florida, but they’re really out of China,” she said. “So there’s no recourse.”

In the case of Nicole from Chicopee, Mass., she responded to a post on the internet classified website Craigslist. She filed a report on BBB Scam Tracker in January explaining how she ordered a Red Sox quilt advertised by a company claiming to be Amelia Quilt on Craigslist. The company took her payment of nearly $60, but repeatedly sent her emails saying that her quilt was backordered, she said. The last email from the company said her quilt had been shipped. But it never arrived, she said, and the company stopped responding to her emails.

Theresa of Barre, Mass., filed a report on Scam Tracker in January after realizing that the fitness watch she ordered from a company claiming to be Keep the Trend was “complete junk.” She ordered the product after seeing it advertised on Facebook. She has contacted the company about returning the product and getting a refund of $31.50, but has yet to hear back.

A Millville, Mass., consumer filed a Scam Tracker report in April about three quilts she ordered back in November 2018 from the company claiming to be Amelia Quilt. She responded to an advertisement on a social media site. The company repeatedly sent her emails saying that her order was in transit. She began asking for a refund of $150 in February because the quilts had been purchased as Christmas gifts.

A Brookfield, Mass., consumer filed a BBB Scam Tracker report in December 2018 about ordering a counterfeit battery-powered snow shovel from an ad on Facebook. She paid $69 via credit card, but only received a scraper from a company claiming to be 2ubutterfly of Beijing, China. She had seen ads for the product on Instagram as well as Facebook. She was unsuccessful in trying to contact the company.

Kathryn of Worcester reported to Scam Tracker in August 2018 that the products she bought from a company claiming to be Diddle Fashion through an ad on Facebook never arrived, even though she was charged for shipping. Diddle Fashion has an F rating with BBB.

A Southwick, Mass., consumer filed a Scam Tracker report in July 2018 about ordering a swing set from a website claiming to be alpusshopforkids.com after seeing it advertised on Facebook. She was charged over $150 on her bank debit card, but never received the swing set. She tried to contact the company to no avail.

Sources of Counterfeit Products

According to BBB’s report, 88% of counterfeit goods come from China and Hong Kong, with their smuggling and their online sale via fraudulent websites widely thought to be coordinated by international organized crime groups.

Active efforts are being made to fight the flood of counterfeit goods. BBB attempts to identify and report on bogus businesses, especially if they claim to be located in the U.S. and Canada.

Trademark holders also do a great deal of work and spend a considerable amount of money trying to fight counterfeits.

This is a major priority for customs officials and law enforcement as well; U.S. Customs and Border Protection has increased its seizures of counterfeit goods by 125% over the last five years, and the White House recently issued an executive order directing government agencies that work with brands to examine counterfeiting and make it an enforcement priority.

What to do if you believe you have unwittingly purchased counterfeit goods:

• Ask for a refund. Victims who don’t receive anything when buying online with their credit card, or who receive goods that are counterfeit or not as described, should call the customer service number on the back of their card and request a refund. The report goes into great detail about the process of obtaining a refund and the remedies available to victims.
• Report counterfeit goods. Contact one or more of the following:
  • National Intellectual Property Rights Coordination Center: U.S. Immigration and Customs Enforcement (ICE) asks victims of counterfeit goods to file a complaint with the IPR Center here.
  • Better Business Bureau: Victims can file complaints at bbb.org about online sellers that claim to be in the U.S. or Canada and report counterfeit product scams to BBB Scam Tracker.
  • Online markets: Victims can complain directly to eBay, Amazon, Facebook and Instagram or other online marketplaces. In addition, Amazon has an “A-Z guarantee” for goods sold by third parties on their site; victims who have purchased counterfeit items from a third-party seller can seek a refund here.
  • Internet Fraud Complaint Center (IC3): The FBI takes complaints about counterfeit goods. Complain here.
  • Federal Trade Commission: You can complain to the FTC by calling 877/FTC-Help or file a complaint online.