Gibson Dunn - The Fashion Law and Business Report

:

Gibson Dunn - The Fashion Law and Business Report > Posts > A Consumer's Guide to Combatting Counterfeiting
9.24.13
A Consumer's Guide to Combatting Counterfeiting

It has been just days since Apple introduced its newest iPhone, and there are already reports that counterfeit versions have hit the marketplace.  Counterfeiters do not, as a rule, make it easy for consumers to tell real products from the fake ones.  The stereotype of the man in a dark alley holding open a trench-coat glistening with the shine of fake watches is outmoded, if it was ever accurate.  Indeed, unless you buy direct from a manufacturer or a trusted source, it can be impossible to tell if a product offered online or through a mobile device is real or fake until well after the purchase is made.  As a result, it can be important for consumers to understand how they can best avoid counterfeits, what options may be available when they find they have been duped, and what types of consequences are under discussion to try and stem the demand for counterfeits.

Is it a fake?

The most important thing to remember in telling a real product from a fake one is simple common sense: If a deal is too good to be true, it may not be.   

  • Do your research.  Many brands whose products are often the target of counterfeiters do what they can to educate consumers to tell authentic products from counterfeits.  For example, the website of Coach, Inc. specifically informs consumers which are the only websites authorized to sell legitimate Coach products. 
  • Consider quality.  Knock-offs are often made with materials of much lower quality than the “real thing.”  If you can actually hold a product in your hands, it is often possible to spot a counterfeit by inferior materials and construction.  If you are buying a high-quality leather good, it should be soft and supple (and not smell like plastic).  If you are buying something with diamonds, breathe on the stones – if they fog up, they aren’t the real thing.
  • Be aware of branding.  Counterfeiters attempt to rip off products popularized through successful brand development efforts.  Pay attention to the trappings of the product – is the logo accurate, the brand name spelled correctly?  Does the product bear a hologram logo or certification mark that you would expect to see on it?  Is the packaging of the quality that you’d expect from the company which purportedly sells it?  These and other telling details can tip you off to the fact that the item is a fake.
  • Evaluate the purchasing context.  Is a luxury product being sold “under the radar,” or on the street?  Most manufacturers keep a tight rein on the distribution of their products.  Purchasing from an established retailer, or an authorized distributor, is a good way to ensure that what’s being advertised is actually what’s being sold. 
  • Online shopping.  If a website does not look professional, it is likely not a good source for the product.  One indication of whether the site will provide authentic goods is the presence (or absence) of reliable contact information.  Sellers of authentic products will make it easy for consumers to contact them with questions or concerns about a product.  Counterfeiters, in contrast, often make it difficult to contact them and, in many cases, supply false contact information.  But beware, counterfeiters often mock up the trappings of a legitimate website, such as displaying an SSL security certificate that the website did not earn, or falsely claiming to accept orders by credit cards that have no relationship with the website.

So, you bought a fake – what now?

What should you do if you realize that you’ve unknowingly bought a fake? 

A number of consumer protection agencies and organizations provide useful resources in assisting consumers in protecting themselves against counterfeits.  The non-profit ConsumerReports.org offers a few helpful hints on what you can do if you have found yourself in such a position, including some advice that isn’t necessarily intuitive:

  • Know your rights and demand satisfaction – No matter what the seller’s return policy may be, you are within your rights to demand a refund or a legitimate version of the item.
  • Use your credit card to purchase items.  Many credit card companies have policies to address this problem.  Notify your card issuer and request a charge-back.
  • Contact the authorities.  In every state, law enforcement and/or consumer protection officials have authority to address violations of state statutes on unfair trade practices; If you have been the victim of major fraud, you can and should turn to local law enforcement.
  • Don’t resell the fake – Doing so could expose you to the same sorts of penalties as those to which the original vendor is exposed.
  • File a lawsuit.  Under appropriate circumstances, filing a lawsuit may lead a victim to the recovery of a full refund for the purchase price and potentially even attorney’s fees and treble damages on the injury suffered.

Similarly, the Authentics Foundation is an international non-profit that shares tips about how to make “safe, smart, and authentic purchases.”

In addition, a number of private companies and non-profit groups have developed tools to help consumers prevent, report, and address the problem of counterfeit goods.  For example, eBay provides that items that bear a company’s official brand name or logo can be listed for sale on the company’s popular ecommerce site only so long as they were lawfully made by, for, or with the consent of that company.  The company encourages site users to report listings that do not comply with this policy, and provides a link at the bottom of each listing whereby purchasers can report suspicious items.  eBay also provides a Buyer Protection Policy and takes other steps to protect its customers.

Many manufacturers also work together on an industry-wide basis through trade groups like the Federation of the Swiss Watch Industry, which allows consumers to report the purchase of fake Swiss watches, and  the International Anti-Counterfeiting Coalition, a Washington, D.C.-based non-profit which seeks to raise awareness about the dangers of counterfeiting goods and how to address it. 

The Better Business Bureau, similarly, provides a forum where consumers can complain about various problems with businesses (including the sale of counterfeit goods) and a business review database where potential purchasers can research many of the businesses they may be considering.  And consumers who have bought counterfeit goods through the Internet or after being contacted by a telemarketer can file a complaint through Fraud.org, a project of the National Consumers League, which collects consumer complaints and shares them with law enforcement authorities. 

A company called UFaker has even created a website and a mobile application that makes it easy for consumers who spot what they believe to be a fake to snap a photo of the suspected counterfeit and upload it and a description of the vendor’s location to a central database.  This database is privately owned and run by companies with an interest in preventing the sale of counterfeit goods.  UFaker even promises consumers rewards for participating.

Law enforcement agencies, moreover, collect and report information on sales of counterfeits.  For example, the National Intellectual Property Rights Coordination Center encouragers consumers to report a suspected violation of intellectual property rights, and the FBI has partnered with the National White Collar Crime Center to create the Internet Crime Complaint Center, which accepts complaints from victims of IP crimes.  Similarly, U.S. Customs and Border Protection provides an online procedure that allows individuals to report illegal import and export activity, to make it easier to catch counterfeits before they enter United States territory, and the U.S. Commerce Department has established both a toll-free “Stop Fakes Hotline” (866-999-4285) and website (www.stopfakes.gov) to allow consumers report the sale of counterfeit goods.

Proposals to minimize demand for counterfeits

Finally, some U.S. jurisdictions are exploring new laws, based on those now in effect in some other countries, to criminalize the purchase of counterfeit goods.  For example, a New York City Council member recently proposed a bill that would punish customers of counterfeit goods with up to a year in prison and a $1,000 fine.  Although that bill has not been approved by the City Council, it is a strong indication that local governments continue to take the problem of counterfeiting seriously. 

Lora  MacDonald, a law student at the University of Michigan Law School, contributed to this post.

 ‭(Hidden)‬ Blog Tools


© Copyright 2018 Gibson, Dunn & Crutcher LLP.
Attorney Advertising. Prior results do not guarantee a similar outcome. All information provided on this site is for informational purposes only, does not constitute legal advice, is not confidential, and does not create an attorney-client relationship. Statements and content posted to this site do not represent the opinion of Gibson Dunn & Crutcher LLP ("Gibson Dunn"). Gibson Dunn makes no representations as to the accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors or omissions therein, nor for any losses, injuries, or damages arising from its display or use.