The world is awash in counterfeit products; phony goods account for some 3.3% of the world's trade, and possibly a lot more. Pharmaceuticals, Apparel & Accessories, car parts – if someone makes it, someone else is faking it.

This large-scale counterfeiting is thanks to the ever-growing e-commerce environment. The anonymity, global outreach, ease of use, and the plethora of online markets have made it easier than ever for sites to sell counterfeit products and services. Unlike with the sale of “classic” illicit goods like weapons, selling counterfeits entails less risk. Counterfeiting helps support some of the world’s worst criminal groups - and many of the goods are manufactured by forcing the most vulnerable, such as children, into forced labor, according to the United Nations.

The effects of counterfeit products can be devastating – and dangerous. If a pair of sneakers says Nike on them and they quickly fall apart due to low-quality workmanship, that's likely one fewer customer for Nike next time. If the product is a phony prescription drug sold as the real thing, it could pose a major health risk. The World Health Organization calls such fakes “a growing threat,” while a U.S. pharmaceutical safety group says that “people are dying from counterfeits in over half” of U.S. states. A 2015 report (the last year for which figures are available) says that as much as $200 billion of the $1.1 trillion in pharmaceuticals sold worldwide were counterfeit - only slightly less than the $246 billion in illicit drug sales. The numbers have surely increased since then.

Counterfeiting is actually one of the main factors hindering the advancement of technology and medicine. Companies spend millions of dollars attempting to thwart counterfeiting. This money could otherwise be used for research on new technologies and lifesaving medications. How can companies halt this flood of counterfeits?

Governments are doing what they can to protect legitimate brands – and hapless consumers. Strong laws have been passed in many jurisdictions, and widely enforced. In 2017, U.S. authorities seized about $1 billion in counterfeit products during raids on illicit operations.

And nobody is checking up on the goods being sold online. Thus, purveyors of counterfeit products set up a multitude of websites as well as shop and seller accounts on online marketplaces, sell their goods, and shut down, using the resources of the marketplace to conduct sales, advertise products and ship products globally. By the time the fraud is discovered, the crooks are long gone and on their way to find another platform to utilize for their counterfeit product operations.

Obviously, no marketplace wants to be in the position of facilitating the sale of counterfeit goods, and neither do PSPs and credit card processors; legally, they could be liable, and their reputation among consumers is likely to suffer. Additionally, they could become subjects of ongoing law enforcement investigations. The worst part is that many companies don’t have solutions to stop this, and the solutions they do have do not keep pace with the ever-changing e-commerce landscape. As a result, we can expect to see more serious fraud.


To protect themselves, sites that sponsor marketplaces are going to have to implement their own solutions. Fortunately, online retailers and marketers have one big advantage; because all business is conducted on the web, all of the data surrounding a transaction – who bought a product from whom, where it was sourced or shipped from, etc. are online. The challenge is to discover that information; then retailers can determine whether they are doing business with a legitimate merchant, or one peddling phony goods.

There are many subtle criteria that can indicate an illegitimate business. Does the seller have a verifiable street address? What about a web site/social media presence? How long have they been in business? Do reviews appear organic or made up? Are their goods sold for market price, or at a significant discount? Does the seller have authorization from the rights holder to sell the products?

There are 1,000 signs that could indicate that a merchant is illegitimate. Companies must develop systems that check the most relevant criteria, parsing transactions, merchant sites, and the internet to determine the nature of their partners. In this way, sites can ensure that they – and their customers– don't fall prey to the flood of online phonies.

(Tal Bitton is Director of Research and Services at EverCompliant, a pioneer in transaction laundering detection and prevention, founded to combat the new age of money laundering in the digital era.)