‘Tis the Season for Online Counterfeits

The 2020 holiday season is upon us and it should be prime time for shopping, but the pandemic has forced many consumers to tighten their purse strings. Besides trying to avoid crowds to dodge COVID-19, this year’s digital holiday shoppers have to be wary of counterfeit sellers lurking within e-commerce stores.

It’s projected that about one-third of this year’s holiday shoppers are cutting back their gift spending. Two in five shoppers (39 percent) plan to spend less on gifts, specifically. That opens the door for scammers to entice money-starved consumers with fake price cuts on products.

Purchasing counterfeit products is both frustrating and dangerous. This year’s Black Friday could drive a surge in purchases from the “gray market.”

To help consumers — and perhaps give e-tailers a heads up about better e-commerce security — the E-Commerce Times discussed holiday shopping issues with a panel of cybersecurity experts. They offered advice on how consumers can avoid buying counterfeit products; and analyses of how fake goods affect the broader retail market.

Black Friday is usually primetime for in-store shopping, but this year will be much different, observed Keith Goldstein, chief operating officer at VerifyMe.

“The uptick in e-commerce purchases along with Americans’ heightened price sensitivities could give a boost to the counterfeit market. As shoppers look for cheaper options online, they may find themselves on unfamiliar websites or purchasing from unauthenticated vendors, tempted by low prices and better deals for seemingly the same product,” he told the E-Commerce Times.

“Unfortunately, this is usually too good to be true,” he warned.

Knockoffs Bad for Good Businesses

New sensitivities about going into public spaces that the ongoing pandemic has sparked is the driving force moving many people to shop online from the safety of their homes. Beyond where they shop, this holiday season will also change how much consumers spend, confirmed Goldstein.

Amid the global pandemic that forced many Americans out of work, research shows that one-third of shoppers plan to spend less overall this holiday season, he detailed. Shoppers looking for deals to save money need to be on the lookout for fake merchandise.

“For the broader retail market, counterfeiting can have a major impact on sales, taking away purchases during a time when most retailers typically see their biggest revenue boost,” he explained.

Additionally, counterfeiting can harm specific brands. With bad actors imitating real products, any negative side effect of using a particular item or the overall poor quality of the product could be attributed to the real brand, even if the product purchased came from a bad seller, explained Goldstein.

No doubts exist that this year’s holiday shopping will be different, creating new opportunities for fraudulent goods to enter our homes. Depending on the markets involved, consumer health can be more at risk.

Counterfeits Harmful to Health

Consider just one industry that is easily affected by counterfeit products — cosmetics. Perfumes and cosmetics account for five percent of the world’s most seized goods. Fake cosmetic brands are known to contain toxic ingredients.

“Counterfeiting has a history of health risks and even causes countless deaths each year through fraudulent products that we ingest or put on our bodies such as nutraceuticals, skincare, cosmetics, fragrances, and other beauty products,” Goldstein noted.

Sometimes these fake products are simply expired and therefore no longer effective. However, oftentimes these counterfeit goods can contain dangerous ingredients like animal excrement, bacteria, carcinogens, wood or industrial alcohol and sub-standard watered-down ingredients, and high levels of aluminum, he added.

If these mass-produced items are tampered with and distributed as real products, it could create a global health threat, warned Goldstein. Therefore, counterfeiting is not just bad for brands and retailers from a business or financial perspective.

“It could also make these companies liable for harm to, or deaths of, customers. This is why it is more important than ever that brands protect their products from the time they are manufactured to when they reach a distribution center or retail floor,” Goldstein cautioned.

Crooks Prey on Emotions

If you think it is the holiday season for you, think of the joy this season will bring to cybercriminals, suggested Tom Pendergast, chief learning officer at MediaPro.

“After all, they get to prey on all manner of human vulnerabilities that come to the fore during the holiday season: guilt, urgency, excitement, and a frenzy for deals,” he told the E-Commerce Times.

Pendergast offered a quick cybersecurity checklist to give digital shoppers a fighting chance this season to stay safer online. His three tips involve common sense regarding shipping, passwords, and fraud protection services.

One, if the shipper fails to announce who they are, you can be sure they are fake. You might consider creating accounts at the major shippers (FedEx, UPS, USPS) so that you control your shipping notifications.

Two, using the same password from site to site is a recipe for turning a single instance of fraud into a major problem. Instead, create a unique password for places you shop regularly and use “guest access” for single-use visits, he suggested.

Three, take advantage of the fraud protection provided by credit card issuers, never enter your banking account information directly, or comply with requests for non-recoverable payments like money transfers, pre-paid gifts cards, or bank-to-bank transfers.

“Debit cards are also protected from fraud, but the process to recover your money may take longer,” said Pendergast.

Buyer Be Aware

Everyone is looking for a discount. Many websites claim to provide these discounts. Think before you get to the digital shopping cart.

When people register for these types of sites, they quite often use the same password and email as they would for many other sites, according to Brandon Hoffman, chief information security officer at Netenrich.

“This means when a person registers on a seemingly normal website, they are giving up all their authentication for many other sites,” he told the E-Commerce Times.

Hoffman’s first piece of advice is to be suspicious of that too-good-be-true deal. But also, use different passwords.

“It is hard to remember every password, so I would recommend a password manager to provide a secure method of storing and remembering those passwords,” he added.

Security teams will likely be on high alert for fraudulent activity, but that may overshadow some other standard areas of focus. That, in turn, can leave a blind spot for less overt tactics against retailers directly.

Avoid potential malvertising links for deals that lead to malware or phishing attempts by offering early access or special deals.

“Users should exercise caution and operate specifically within the websites or apps they are using, as opposed to clicking on banner ads or emails, unless the email has been vetted or verified,” Hoffman advised.

Research First, Click Buy Later

Perhaps Goldstein has the most sage advice for shoppers teetering on the digital danger cliff. The most important thing for consumers to consider when making purchases, especially from online retailers, is to research.

Do that by looking at reviews of the company and their products, he suggested. Remember: where there is smoke, there is fire.

Also, it is important to keep in mind that finding an extremely marked down product on one website is rare. If you cannot find a comparable price anywhere else, it is likely because the product they are selling is old and expired, or simply illegitimate and potentially harmful, he reasoned.

“If possible, buy directly from a brand owner’s website rather than e-commerce shopping sites, which have become dumping grounds for counterfeiters,” urged Goldstein.

Online shoppers should also take the brand evaluation process a step further. Use protections some vendors provide on their e-commerce sites.

For instance, many companies are investing in track-and-trace technologies that are fixed onto products to protect them from counterfeiting. This typically includes invisible, non-replicable codes that can be scanned by warehouse distributors and retail companies to indicate if goods in the supply chain were tampered with.

This technology protects products throughout the retail supply chain. It also can be used via visible QR codes that consumers can easily scan with a smartphone to prove authenticity.

“This technology provides shoppers with transparency into the products they have purchased while also helping with brand reputation and customer loyalty,” said Goldstein.

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Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.