Online commerce, the main distribution channel for counterfeit products, according to a study

The new study by the European Union Intellectual Property Office (EUIPO) and the Organization for Economic Cooperation and Development (OECD) “Misuse of electronic commerce to trade counterfeit products” confirms that online commerce encourages trade in counterfeit goods and is becoming in the main facilitator of its distribution. The study analyzes data from customs seizures of products at the external borders of the European Union (EU) and analyzes how counterfeit products end up in the hands of consumers.

E-commerce has grown rapidly in recent years, a trend that accelerated during the COVID-19 pandemic. Most of the online commerce in the world is carried out from business to business, with 82% of the total value; the remaining 18% (2019) corresponds to business-to-consumer trade.

As with other tools in the modern economy, online sales are increasingly used for the distribution of fakes. According to data on counterfeit product retentions, 56% of customs seizures at EU borders are related to e-commerce.

The study also shows that the value of withholdings related to counterfeit products sold online is much lower than that of products that do not come from e-commerce but are shipped in containers by various modes of transport (road, rail, air and sea). Seizures from online sales represent only 14% of the total value of holds, compared to 86% of holds related to products shipped by container. However, some of these containerized products are destined for distribution centers in the EU, from which they are in turn sent to consumers who have purchased them online, which could indicate that the real role of e-commerce in commerce counterfeiting is considerably more important.

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The modes of transport and the countries of origin of the counterfeits are also analyzed. Thus, parcel services dominate all customs seizures at EU borders. Regarding the origin of products traded online, China ranks first, with more than 75% of seizures of counterfeit products, followed by Hong Kong, with 5.7%, Turkey, with 5.6% and Singapore, with 3.3%. China is also a dominant source country when it comes to the value of counterfeit products purchased online, with a 68% share.

The use of e-commerce varies depending on the type of counterfeit products. Perfumery and cosmetics articles (75.3%), pharmaceutical products (71.9%) and sunglasses (71.3%) are the products with the highest percentage of withholdings related to online shopping.

Impact of the COVID-19 pandemic

The trend toward e-commerce accelerated with the COVID-19 pandemic. In 2020, while global retail sales declined In most countries, online sales worldwide increased more than 20% compared to 2019.

Law enforcement authorities have reported that, in addition to increasing opportunities for the spread of counterfeits, there has been a huge shift towards cybercrime, with criminals taking advantage of people who work from home and have less infrastructure. safe to commit various types of electronic fraud. Frauds include outright scams in which the consumer pays for a product but never receives anything, attempts at identity theft, identity theft or investment fraud in cryptocurrencies, among others.

During the pandemic, e-commerce has become the main channel for illicit medical products, including counterfeit and substandard ones, such as test kits and other products related to the pandemic.

Christian Archambeau, Executive Director of EUIPO, has noted that: ‘Electronic commerce has increased consumer choice and offered businesses new and flexible ways of accessing the market. At the same time, there is abundant evidence that the online environment has also attracted undesirable actors, who contaminate e-commerce distribution channels with counterfeits. EUIPO works closely with a number of e-commerce platforms, rights holders and institutional partners to help combat online infringements of intellectual property rights.

A key trend analyzed in the study is the rise of the small package trade, a means by which companies make direct deliveries to consumers. Only in the five-year period from 2015 to 2019, package traffic increased by more than 70%, reaching 21.3 billion items worldwide in 2019. Small packages sent by post are also an attractive distribution channel for illicit trade networks. These small shipments reduce potential losses from seizures. While the counterfeit trade by container ships clearly dominates in terms of value, the small package route is growing and is the largest in terms of the number of seizures.

In the eu, counterfeiters are increasingly targeting consumers in the online environment. If you look at customs seizures related to e-commerce, more than 90% of them are sent to the EU in small packages.

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