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© 2016 MarkMonitor Inc. All rights reserved.
How to Identify, Disrupt, and
Dismantle Unauthorized
Product Distribution
Annie Wood Client Service Manager MarkMonitor
Joshua Hopping
Investigative Research Specialist MarkMonitor
Agenda
2
Introductions
How Big is the Problem?
Identifying Networks
Data-driven Decisions
Removing the Threat
Q&A
How Big is the Problem?
The Mafia, Camorra, Triads, and the Yakuza have all been linked to counterfeit/unauthorized goods
Counterfeit provides an easier way to launder money for other illicit activities
It also allows criminals to “diversify their crime” according to Europol
A $250 Billion Dollar Problem
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“Just as the licit market for online sales of goods is increasing, so is the opportunity for the online sale of counterfeit goods by organized crime groups.” – United Nations Office on Drugs & Crime
Source: United Nations Office on Drugs & Crime
The Anonymity of the Internet According to the IACC, the Internet has enabled counterfeiters to remain anonymous
while operating hundreds of sites.
Website operators can use fake information to register sites, making it more difficult to link them.
Ease of entry into the market is less cost prohibitive.
Networks can have several sites “waiting in the wings” if their main site goes down
As the Internet is largely unregulated, networks can quickly grow and prosper
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“What was once a cottage industry has now become a highly sophisticated network of organized crime that has the capacity to threaten the very fabric of national economies, endanger safety and frequently kill. It devalues corporate reputations, hinders investment, funds terrorism, and costs hundreds of thousands of people their livelihood every year.”
– International Chamber of Commerce
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Could it be networked activity?
Lots of product below your wholesale price
Reports from consumers/affiliates of product that is not consistent with your packaging or brand standards
Product in regions you do not currently sell
Multiple seller names or websites using the same imagery or language to describe products
Sites registered to the same individual or company
Identifying Networks
8
Multiple Sellers, One Network
Often, multiple sellers are tied to one network, and you need to go after the network, not each seller.
For example, in the graphic to the right, 43% of all Amazon listings were attributed to one network.
22 Amazon Sellers; 18 different registered companies = one individual running the network.
Counterfeit Multi-Level Marketing (MLM) Networks
9
The counterfeiting network recruits affiliates who then use the network’s website templates to setup e-commerce sites.
This provides a layer of anonymity for the true party behind the network.
In this example to the right, the counterfeiting MLM network offered entrepreneurs 30% commission per sale using their distribution network. Our investigation uncovered the true infringer, and provided exact address and phone number to law enforcement.
Using International Shipping Data
10
Online Marketplace To Streets : Tracking The Flow Of
Suspicious Goods
Company XYZ, Inc. promotes and sells suspect counterfeit Client ABC, Inc.
products on Marketplace 123
Suspicious goods are then shipped to buyers around the world
Buyers distributed suspicious goods to customers
We can use shipping data – for example, Chinese export data for destination countries from known brand infringers. This helps identify geographical areas of concern – or provides intelligence for the possibility of new markets for legitimate goods.
In the example to the right, the Chinese shipping data shows ONE Alibaba seller has exported over $104 million worth of goods via 604 shipments to 60 countries
Shipments from known infringer on Alibaba to different countries
Data-Driven Decisions
Prioritize Your Brand’s Pain Points
12
How quickly do we want a resolution?
Can we make an example of the
network?
What’s the cost of
enforcement?
How much damage is being
done?
What damage is being done? (Loss of sales revenue, consumer safety, brand image)
What’s the cost of enforcement?
Do you want (or not want) publicity? (PR issues)
How quickly do you want a resolution?
What Comes Next?
13
Conduct a targeted and systematic
enforcement campaign
Perform a deeper
investigation
Review international shipping data
Once the infringing network has been identified, what’s next?
Enforcement that is systematic and targeted, placing higher priority on the largest platforms.
Deeper investigation which can be used by follow-up with law enforcement or litigation purposes
Investigation of international shipping patterns, with an effort to shut down demand and ensure partner compliance.
Removing the Threat
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15 | Confidential
Enforcing the Law
MarkMonitor works with law enforcement to shut down counterfeit networks.
In the example to the right, these individuals operated a counterfeit software network that operated 35 proxy-owned websites. MarkMonitor provided the brand owner with details about their lifestyle which included expensive real estate and high priced bottles of alcohol.
Identifying the Real Infringers
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16 | Confidential
Street view picture of Registrant #2 house: Picture courtesy of Google Maps
Often, counterfeiters commit identity theft and register their domains using stolen identities.
MarkMonitor researches registrants through various channels including social media, to ensure clients go after the real criminals, and not those whose identity was stolen.
The example to the right shows 3 innocent people whose identities were stolen and used to register domains that sold counterfeit goods.
Summary
Listen to consumer and affiliate reports for hints at unauthorized product
Investigate, investigate!
Weigh the costs and benefits of the different types of enforcement
Tell your enforcement story to get buy in across internal and/or external stakeholders
Key Points
18
“Consumers from all over the world are using the Internet to purchase every day items, and criminals are taking advantage of this trend.” – INTERPOL’s Director of Organized and Emerging Crime, Roraima Andriani.
Source: INTERPOL
Q&A
Thank You!
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