A kick in the teeth for businesses

The internet may have revolutionised the way we shop but a surge in copycat websites and counterfeit goods is costing businesses billions of pounds. By Natalie Ostroff

November 25, 2010
Real or fake?  Counterfeit clothes and footwear costs businesses £3.5bn a year

Real or fake? Counterfeit clothes and footwear costs businesses £3.5bn a year

While the internet has made it faster for us to shop, it has also given rise to a major concern - the counterfeiting of successful brands. And the problem, which is costing businesses more than £3bn a year, is showing no signs of fading.

The Trading Standards Institute has reported a marked increase in copycat websites selling fake goods over the past year. These bogus sites copy the style of official branded versions, tricking customers into thinking they are buying genuine products by using an almost identical design and similar web address.

Consumer Direct, part of the Office for Fair Trading, noted a near-30 per cent increase in complaints relating to counterfeit items over the past year - more than 2,800 in August 2010 compared to around 1,950 the year before

Handley Brustad, the lead intellectual property (IP) officer at the Trading Standards Institute, says: "Counterfeiters are a major problem; they feed off the real brands and mirror the genuine site to pull you in. Anything that you can sell, you can now copy. As trade has moved from the physical market of the high street to the internet, these problems have just increased and increased."

Shipments of fake goods seized by the UK Border Agency rose sharply last year to the second highest level ever. A total of 3.7m products were stopped from entering the country, up from around 850,000 in 2000. And Trading Standards said that approximately one in nine goods that enter the UK are counterfeit.

Around one in nine goods that enter the UK are fake

A recent BBC Newsbeat investigation, Copycat websites drive up the rise in fake products, exposed the problem among some of the world's leading fashion brands including UGG boots and ghd hair straighteners.

Counterfeit clothing and footwear is costing legitimate retailers £3.5bn a year, according to the trade and enforcement organisation Alliance Against IP Theft.

Susie Winter, director general of the Alliance, says: "Consumers will be horrified to discover where their money is actually going - straight into the pockets of organised criminal gangs.

"Whilst some important steps to tackle this problem are being taken, more resources for trading standards are urgently needed, and markets must be better regulated. Consumers are being ripped off, and local shops and businesses are suffering."

Often, fakes are sold online at a price just below the genuine item to trick customers into thinking that they are getting a bargain rather than an obvious fake. Consumers are then left disappointed when the goods they receive do not measure up to the real thing. During the BBC investigation, one case study noted that hair straighteners arrived fitted with a foreign plug; another said that a pair bought online from what looked like a genuine website never turned up. Neither got their money back.

Mr Brustad acknowledges that "as an industry we must take steps to make sure these sites don't get to exist online. All search engines have a responsibility."

Fashionable boot brand UGG has been making significant efforts to stamp out the problem. Alistair Campbell, the brand manager of UGG UK, says: "We have seen a huge explosion in fake websites deliberately designed to deceive the consumer. It's a growing problem for us.

"Counterfeit goods cause considerable damage to our reputation. We are determined to take action to protect not just our rights but the rights of legitimate retailers and consumers. The internet is difficult to control and it's a constant battle. As soon as we are successful in taking down some counterfeit websites, there are others that pop up and we begin the whole procedure again."

UGG have sent out "take down" letters to more than 3,000 websites in a month - most of which are based in the Far East. However, even with a dedicated team tracking counterfeiters, the company says it is impossible to monitor and remove all imitation sites.

Brands are now working with various internet service providers (ISPs) to close down these sites, in addition to the UK Border Control Agency, which intercepts fakes through customs.

How do you ensure you don't become a victim of online fraud? Be suspicious of deeply discounted prices. Buy online from authorised retailers with well known reputations or from websites which have been personally recommended to you.

Do not assume that if a site appears high up in a Google search, it is genuine. Fraudsters can use Google's advertising space or sponsored links to appear high up and therefore seem most relevant to your search. Check for reviews by other users to see whether anyone else has been stung by the seller before.

Watch out for poor English such as typos and grammar mistakes. It could mean the site is not genuine and was put together by someone abroad looking to make a quick profit.

Always look for websites that have a secure way of paying. Make sure that the web address of the page starts https:// before you enter any personal information or payment details. The 's' stands for 'secure'. There should also be a small padlock that appears in the bottom of your screen which means the site is safe.

Read the terms and conditions carefully, including those relating to getting a refund or disputing a product.

Under Section 75 of the Credit Consumer Act 1974, using a credit card instead of a debit card gives you more protection. It states that the credit card company is equally liable for any defects. Should a problem arise, you can claim from either the trader or credit-card company. In order for this protection to apply, the cost of your goods must come to £100 or more.

Retailers such as UGG and ghd have pages dedicated to anti-counterfeiting.

Natalie Ostroff is a BBC journalist. She produced Newsbeat's "Copycat websites drive up the rise in fake products"

Last updated: 12:29pm, November 25 2010