The countdown to the 51st Super Bowl has begun, with the Atlanta Falcons taking on the red-hot-favorite New England Patriots in New Orleans this Sunday. But sadly, despite warnings from the authorities, the issue of counterfeit tickets and merchandise is once again hitting the headlines; last season saw thousands of fake tickets and counterfeit jerseys seized in and around the Levi’s Stadium in Santa Clara, and once again the limited supply and the unlimited demand has fueled the counterfeiters’ thirst for huge profits.

Despite claims that ticket resale could only happen through one authorized channel, there are dozens of websites selling tickets. One of the most popular secondary-market websites has hundreds of tickets on offer, ranging from $2,250 to an eye-watering $100,000. You do get access to a tailgate party with that, but even so, the mark-up compared to the face value is simply obscene. So, faced with having to pay such huge amounts through ‘legitimate’ suppliers, many fans are driven underground to buy seemingly much more affordable tickets from individuals instead. And that’s where the danger of counterfeited tickets resides.

Last year, the FBI announced that as part of Operation Team Player, it had seized more than $39m worth of fake goods – including tickets – and secured 35 convictions. Although the technology used in ticket production has increased significantly in recent years, with the inclusion of watermarks and holograms, top-of-the-range printers today can easily produce incredibly realistic fakes. With fans desperate to get a seat in the NRG Stadium on Sunday, many will be duped by tickets that look like the real thing, but as soon as they try to enter the stadium, they’ll find out the hard way that the tickets are completely worthless.

It doesn’t seem to matter what major event it is, in which country or what time of the year, counterfeit tickets are a major issue for the clubs involved, the authorities and the law enforcement agencies. Despite the warnings about only buying from genuine sources, the limited supply will always mean that counterfeiters can benefit. Counterfeiters play on this demand, creating authentic-looking online businesses, investing in social media and SEO tactics to drive web traffic just like an authentic brand holder would. It’s now far too easy for anyone to buy authentication through social media ‘likes’ or ‘follows’, as well as domain names that appear at first glance to look the part. With tickets for the Super Bowl only released recently, fraudsters have had the opportunity to grab as much cash as they can before disappearing off into the sunset with fans’ hard-earned cash and their dreams of watching one of the world’s biggest sporting events.

One different approach taken by the promotors of the hit Broadway show, Hamilton, for its transfer to London later this year is to go back to basics to try and counter the issue of ticket scalping and counterfeiting. Tickets went on sale online last month to people who had a pre-general-sale code and, unsurprisingly, within minutes they were appearing on the secondary ticketing websites for hugely inflated prices. However, tickets will not be sent electronically, available through apps or even posted to those who have bought them. Instead, all ticket holders will have to be there in person on the night of the performance with a unique code, the payment card used in the transaction and relevant ID. They will then be allowed into the venue and given a ticket stub.

But it’s not just counterfeit tickets the authorities will be on the look-out for in the next few days. The Super Bowl leads to an annual surge in the purchase of team merchandise, as fans rush to wear their colors. Every year, the federal agencies use the days in the run-up to the game to underline the risks of buying counterfeits online, and the work they’re doing to try and eradicate a growing menace for brand holders and consumers alike. In 2014, the joint task force of Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), and the NFL’s own internal team announced the results of Operation Team Player: more than 200,000 items of fake sports memorabilia and other counterfeit goods seized, together worth more than $21.6m. The value of the operation was a little less in 2015, at $19.5m, but the number of items seized had risen to over 325,000. In 2016, Operation Team Player netted a record $39m, as mentioned earlier.

In 2012, the major professional sports leagues in the United States lost over $13 billion in revenue due to sales of counterfeit shirts and merchandise, including a whopping $3 billion alone from the 32 teams in the National Football League (NFL). Undoubtedly, that number has grown significantly in the past few years, as has the total value of the counterfeit economy, which, according to the Proactive report The Risks of the Online Counterfeit Economy, is now estimated at over $1.7 trillion. Some top-end ‘authentic elite’ team shirts, which should retail for $250, could be found online with an 80% discount.  

Football jerseys are not like Gucci handbags or Hermes scarves. They are not luxury items; they are lifestyle items. Yet, they are often priced as luxuries. Some brands will say the shirts are priced so high as a direct result of the problem of counterfeiting. Is that fair? This is a Catch 22 situation – the more a manufacturer invests in the production process to try and defeat the counterfeiters, the higher the retail price is set, which will drive more people to buy an inferior but lower cost counterfeit.

“Counterfeiting is not a game”, said ICE Director Saldaña at the Operation Team Player press conference in Phoenix days before the 2015 Super Bowl. “It is most certainly not a victimless crime either. Whether it’s the child in Southeast Asia working in deplorable conditions, or local stores going out of business, intellectual property theft is a very real crime with very real victims. No good comes from counterfeiting American products regardless of whether they are all-star jerseys, airbags, or aspirin.”

The global pharmaceutical industry has a long history with the problem of counterfeit drugs. Well known products such as Viagra, baldness and wrinkles cures, painkillers, and even diet pills were the primary targets for those wanting to make large profits selling drugs that are often either ineffective, or are life-threatening poisons. The multi-billion-dollar sector is still fighting against this continuously growing threat, with counterfeiters now also targeting treatments for cancer, malaria, HIV and AIDS, costing pharma companies billions of dollars as well as putting the health of patients in danger. With the increasing advancement of technology, it has become even easier not only to manufacture drugs in makeshift labs, but also to sell and distribute to an ever-increasing volume of customers looking for cheaper alternatives to the high-price medicines they desperately need.  

One such example that has been widely reported in the US press over the past few years is the distribution of counterfeit prescription drugs (for example, Oxycodone and Xanax) containing an extremely powerful synthetic opioid – fentanyl. Fentanyl is from 25 to 50 times stronger than heroin[1] so, even if a drug containing a small amount of the opioid is abused (approximately 2 milligrams, or more[2]), the consequences can be life threatening. In cases where the drug has not killed instantly, users have suffered seizures, swelling of the brain and organ failure[3].

In a report published by the DEA in July 2016[4], during late 2013 and 2014 alone there were over 700 reported deaths that were related to fentanyl, and this number is believed to be underestimated, due to anomalies in various state techniques in reporting causes of death, as well as the attribution of deaths to heroin. This number is rapidly increasing; for example, the Massachusetts Department of Public Health reported in May 2016 that, for its state alone, of the 1,319 opioid-related deaths during 2015, 754 of them tested positive for fentanyl, where a toxicology screen was available.

But counterfeit pharmaceuticals containing lethal doses of substances is not the only threat to the industry. There have been several cases reported globally of prescription drugs containing either a small percentage of the active ingredient required to treat an illness, or no active ingredient at all. This has led to the symptoms in patients with illnesses such as malaria unexpectedly worsening, and often causing death, before doctors can identify that the root of the cause was an ineffective counterfeit drug[5]. Even health supplements are a target; authorities in New York investigated some of the top-selling herbal supplements at four retail giants – GNC, Target, Walgreen and Wal-Mart – and found that 80% of the supplements sold did not contain the medicinal ingredients listed on the label. Cease-and-desist letters were sent to the retailers in response to this investigation[6].

The Medicines and Healthcare products Regulatory Agency (MHRA) – the body that regulates medicines in the UK – has recently reported a spike in the number of seizures of abortion pills being bought online in the UK from unauthorized sources; a pill that could cause complexities, or even death, if not administered by a doctor under supervision. In 2013, just five pills were seized, but in 2016 that number had escalated to 375[7].

In a recent report published by NetNames[8], it has been found that the pharmaceutical industry is the worst-affected sector, by any metric, for counterfeit goods. Up to a third of the potential market – an estimated $200bn – is claimed to be made up of counterfeit goods, with an implicated death rate of up to one million people each year. Online pharmaceutical companies were found to be one of the main drivers behind the growth in counterfeit prescription drugs, and in 2013 almost 14,000 websites hosted by illegal online pharmacies were identified and shut down[9]. In a 2015 report published by the European Union, Europol, and the Office for Harmonisation in the Internal Market[10], an illicit online pharmaceutical company that was investigated by US authorities was said to have earned $55m in two years, confirming the scale by which counterfeiters can profit off concerns relating to the wellbeing of others.

In order to trade prescription drugs (as well as other substances) online with an extra element on anonymity, drug traders are moving into the ‘Dark Web’. One of the most popular marketplaces is AlphaBay, where a plethora of illegal products and services are available to purchase in exchange for BitCoins as well as other cryptocurrencies. However, marketplaces specializing in the illegal trade of potentially counterfeit pharmaceutical drugs are also in operation, such as ‘Valhalla’ and ‘24 Hours Premier Pharmacy Company’. Again, the drugs sold on these marketplaces are not regulated, and their use has been known to have severe consequences. A comment left by a buyer on AlphaBay who had purchased five 80mg Oxycodone pills wrote “these are WAY stronger than a regular Oxy. My girlfriend did a quater and had to have Narcan administered. A whole one of these thingswould kill an opiate naieve person. Be very careful” [sic][11].

But why are criminals turning to pharmaceuticals? The answer is simple: low risk and high reward. The penalties for trading in illegitimate pharmaceuticals are relatively weak when compared to narcotics. Criminals can make a lot of money by falsifying drugs that are in high demand and short supply, or are so exorbitantly expensive that consumers are forced to risk trying cheaper alternatives. Taking fentanyl as an example, the DEA reports that “Traffickers can typically purchase a kilogram of fentanyl powder for a few thousand dollars from a Chinese supplier, transform it into hundreds of thousands of pills, and sell the counterfeit pills for millions of dollars in profit.”

There are various measures now in place to help identify and monitor counterfeits. For example, the FDA developed a handheld device called the CD-3[12], which emits ultraviolet and infrared light onto the pills and packaging to determine if they are genuine. At $1,000 per device, this is a rather inexpensive solution, and is effective. With packaging also being susceptible to being counterfeited, the latest technologies in secure packaging provide another method through which companies are fighting the problem within the supply chain. From obvious counterfeiting deterrents such as holograms and security seals, to invisible markers and RFID tags, these countermeasures can be integrated into technologies such as electronic devices and database systems to enable manufacturers, distributors and government agencies to track and monitor the supply chain.

Since counterfeits can result in treatment failure or even death, it is essential for pharmaceutical companies to take immediate action to protect their brand assets from irreparable damage. In instances where products are being sold misleadingly and/or at heavily discounted rates to entice users to buy ineffective or potentially poisonous drugs, it might be appropriate for pharmaceutical brand owners to employ an online brand-protection solution including elements of: monitoring for, and analysis of, offers of sale (perhaps in addition to test purchases) to identify non-legitimate products; enforcement against infringing listings or websites; and online investigations to identify links between key players in the distribution chain.

In a deal brokered by the UK government, search engines are pledging to make it hard for British Internet users to find pirated films and music and illegally streamed sport. This comes after Google and Bing agreed to sign up to a voluntary code of practice that will ensure offending websites are demoted in their search results. But is this enough to really make an impact on the growing issue of digital piracy?

Whilst the volume of search traffic for illegal content continues to rise, the real conduit for piracy is social media – and social media isn’t included in this code of conduct. Thousands of websites offer Tor streams to illegal content, and whilst the removal of their search rankings will affect their revenue streams when it comes to pirated films and music, the ‘here and now’ nature of sporting events being shown illegally is a completely different matter, as the current situation within the English football industry shows.

The television rights for the English Premier League were sold to Sky and BT in 2012 for a massive £3bn ($4.5bn). Three years later, it was announced that Sky and BT Sport had paid a record £5.1bn ($7.7bn) for live Premier League TV rights for three seasons from 2016-17 – a 70% increase on the previous deal. In addition, another £3bn will be secured for the sale of overseas rights. The business model adopted by the UK broadcasters will see them recoup this investment in one way – subscriptions to their product. The association with the richest football league in the world will drive people to buy a subscription package, and millions of sofa fans will spend their weekends watching up to five live Premier League games.

Unfortunately, the dark cloud on the horizon is the ease with which non-subscribers can access the live games that are transmitted. These streams are either from the ‘grey’ market – overseas TV channels that are legitimately showing the games but are intercepted by UK satellite receiving equipment – or from the ‘black’ market, whereby the game is distributed via online channels such as links on Twitter and Facebook. These active streams and the links to them are virtually impossible for content/rights holders to enforce as social media networks will not work in real time when it comes to enforcing their shutdown.

These illegal streams effectively deprive the existing rights holders, Sky and BT Sport, of a valuable revenue stream, so they need to find ways to stop individuals damaging their product and brand. After all, watching a match online, which is being illegally transmitted, will still carry the Sky Sports branding, and viewers will associate poor product quality with the brand and not the illegal stream.

We tend to think that illegal streaming is a problem associated with films or TV shows. NetNames estimates that more than 23% of Internet bandwidth is used for streaming illegal content, with this digital piracy costing the global economy more than $75bn a year. We may think we’re doing no harm by watching an illegal download, a pirated DVD or a streamed football game, but we are.

Sky’s billion-pound investment is based on an ROI model that includes increasing the number of subscribers and revenue per viewer. If this doesn’t happen, there will potentially be no new TV deal in three years’ time. And no TV deal means no global superstars gracing our pitches. Without the superstars, commercial partnerships will decline as global brands find alternative markets and icons for their millions. Just like the hyper-inflation of the players’ wages has driven up the value of the product (in this case the TV rights deal), consumers who are priced out devalue the product by accessing illegal content.

A landmark ruling in the UK High Court two years ago closed the loophole on the grey-market issue of capturing overseas coverage and showing it in public. In 2012, the case of pub landlord Karen Murphy was heard in the European Court of Justice and it was ruled that as long as the satellite equipment complied with UK broadcast laws then it was not unlawful to show overseas streams of English Premier League football. However, on 30th January, the High Court ruled that pubs, bars and other public places that showed these streams were infringing the rights of the English Premier League. Furthermore, the High Court ruling offers a stark warning to those who transgress: “Any supplier offering satellite systems that allow you to make unauthorised broadcasts of Premier League football is risking legal action being taken against them.”

Sky TV and BT Sports have also stepped up their manual enforcement of infringements by visiting more than 7,000 pubs, bars and clubs per season to ensure the equipment and the streams are legal. An individual who is enjoying a Sunday afternoon pint whilst watching a game in a pub may not realize that they’re supporting digital piracy, but they potentially are.

An establishment that’s using one of these illegal streams is breaking UK copyright law. The High Court ruling has now clarified the murky position created by the European Court of Justice, and although this may affect the profits of pubs and bars across the land, it will ultimately ensure that digital piracy is reduced in the UK.

The problem a brand has is how to identify the source of the infringements. Removing links to websites that are hosting illegally streamed material requires the co-ordination of the rights holder, the social media platform that has allowed users to share the links, and the website where the content is being streamed from. Quite a task for something happening live. Sporting events aren’t like the latest blockbuster movies – their interest reduces as soon as the event is over. Being able to monitor social media for infringing content is possible; having the enforcement team is the harder part. The role that the broadcast rights holder plays is also key – it must do everything it can to protect its investment.

The new code will certainly go some way to help rights holders in the traditional entertainment media, but in the sports world, it’s essential that social media networks are also encouraged to join forces with Google and Microsoft in being part of a solution to a growing issue rather than being part of the problem.

It’s often said the best things come in the smallest packages. Take a luxury watch, for example: it comes in the tiniest box and, with its many mechanical pieces and fine craftsmanship, is likely to carry a high price tag. There are, however, some watches that do not come in any packaging whatsoever, and certainly do not embody the work of some of Switzerland’s best-known watchmaking brands.

The online trade in counterfeit watches is larger than many of us realize. It is estimated that 15–30% of people searching for watches online are looking for counterfeits [1], and you don’t have to look very hard to find a site selling such products. A simple Google search will return a range of e-commerce sites selling watches from a variety of luxury brands, including Rolex, Breitling and many others. Online marketplaces have for some time now been one of the outlets that counterfeiters have used to distribute their stock, and Alibaba recently made a bold move by proceeding with legal action against two sellers whom it claimed were selling fake Swarovski watches on its B2C site Taobao. After providing details to the Shenzhen Luohu District police, this culminated in a raid that led to the confiscation of 125 fake Swarovski watches worth almost 2 million yuan [2]. The online hotspots for the trade in counterfeits goes far beyond rogue e-commerce sites and online marketplaces, however. Social media platforms such as Facebook contain various groups where shoppers can find replica watches from any brand they desire. From there, buyers can message sellers by SMS or WhatsApp to arrange a transaction.

The combination of these different channels helps facilitate a global trade in fake watches, with the estimated number of global seizures in 2016 totaling 1 million units [3]. Of course, many of the most heavily counterfeited watch brands carry hefty price tags, which translates into the global value of replica watches being substantial – in 2015, a single seizure by US authorities of 11,165 counterfeit units totaled an MSRP value of $2,791,250 [4]. In both the United States and European Union, watches and jewelry are now among the most commonly identified counterfeit products at national borders, as highlighted in the following graph from The Economist [5] :

Not surprisingly, China remains the global epicenter for seizures in fake watches – although Turkey, Dubai and Russia are also significant hotspots, with unit seizures totaling 130,000, 70,000 and 9,000 respectively in these three countries [6] .

More recently, it’s not just traditional watches that have been targeted by counterfeiters. Following the growth of smart watches such as the Apple Watch and the Samsung Galaxy Gear, these have also made their way onto the counterfeiters’ radar. With smart watches, the replication goes beyond just the tangible materials of the watch, and imitates the device’s operating system and user experience too.

Buying a fake watch carries more risks than just the failure to keep accurate time; they can pose a risk to our health and safety as well. The materials used in counterfeit watches can potentially be dangerous due to the inclusion of harmful materials that can be allergenic and sometimes even toxic [7] .

As the brands of luxury watchmakers continue to grow, unfortunately so does the volume of counterfeit product manufactured and distributed. The business in counterfeit watches has remained persistent over many years, and with new opportunities to sell replica products regularly arising, it doesn’t look like the market for fake watches is going to stop ticking anytime soon.

[1] https://www.forbes.com/sites/arieladams/2013/05/30/the-truth-about-replica-watches/#5870ab489c28

[2] http://fortune.com/2017/01/04/alibaba-sues-counterfeiters-fake-swarovski-tabao/

[3] http://www.swissinfo.ch/eng/not-swiss-made_a-million-fake-swiss-watches-seized-/42794206

[4] https://www.cbp.gov/newsroom/local-media-release/cbp-officers-miami-seaport-seize-counterfeit-watches-worth-27-million

[5] http://www.economist.com/news/business/21660111-makers-expensive-bags-clothes-and-watches-are-fighting-fakery-courts-battle

[6] http://www.swissinfo.ch/eng/not-swiss-made_a-million-fake-swiss-watches-seized-/42794206

[7] http://www.fhs.swiss/eng/buy_counterfeit.html

Brand reputation is under constant threat in the digital world

The Internet has changed the scope of threats to brands and revenue.

The web enables previously unthinkable reach, targeting, and economies of scale—and scammers have noticed. Online brand abuse – from fraud to counterfeiting – is more widespread, sophisticated, and lucrative than ever.

Despite these growing threats, many brands remain unaware of the scope of online brand abuse. Fewer still have honestly addressed the scale of impact these losses pose to their businesses.

As the Web has evolved, the threats have multiplied

Five Reasons through which we helped Bakblade to protect their brand and revenue against counterfeiting. 1-ADVANCED DETECTION AND ANALYSIS TECHNOLOGY Our anti-counterfeiting & anti-piracy technology detects, analyzes and acts against possible infringements across the broadest range of digital channels. 2-EFFICIENT ENFORCEMENT OF BRAND INFRINGEMENTS We give you the ability to efficiently remove infringing products from marketplaces worldwide. 3-EXECUTIVE DASHBOARD AND IN-DEPTH REPORTING Our visual dashboards and in-depth reporting provide valuable insight into your anti-counterfeiting efforts. 4-WORLD-CLASS SERVICE We advise the most sophisticated clients around the globe on their anti-counterfeiting strategy. 5-DEEP INDUSTRY EXPERTISE AND RELATIONSHIP Our wealth of expertise and global industry partnerships works on your behalf everyday.

Our brand protection team has observed that top high-end brands counterfeit products are increasing rapidly. Counterfeiters are using multiple new accounts to sell fake products having low price and offering at just 500 USD. They are giving guarantee for 100% authenticity and selling from US, EU Canada locations. Trying to deceive the buyers who are loyal towards the brands.  Such trend is seen of High-end brand such as Louis Vuitton, Channel, Dior, Gucci, Hermes etc.