Online counterfeiting is skyrocketing – 70% of consumers have bought counterfeit goods through e-commerce.

Nearly seven in 10 people were deceived into buying counterfeit products online at least once in the past year, according to new research from Michigan State University.

The study was led by researchers in MSU’s College of Communication Arts and Sciences: Professor of Advertising Saleem Alhabash, Associate Professor of Advertising Anastasia Kononova, Professor of Retailing Patricia Huddleston, and graduate students Moldir Moldagaliyeva and Heijin Lee.

This research comes on the heels of two major anti-counterfeiting legislative actions:

The U.S. Congress passed the Integrity, Notification and Fairness in Online Retail Marketplaces, or INFORM Consumers Act, in June 2023. The INFORM Consumers Act is designed to increase transparency about third-party product sellers and, in turn, reduce the amount of fake and stolen goods sold online.

The Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce, or SHOP SAFE Act, was reintroduced to Congress in September 2023 after it did not go to a vote in 2020 and 2021. The SHOP SAFE Act incentivizes e-commerce platforms to vet sellers and proposes holding these platforms accountable for counterfeit products sold through third parties.

“Counterfeiting goes beyond a fake designer handbag,” said Alhabash. “Counterfeiters outsmart retailers, they figure out vulnerabilities in the supply chain and interrupt it. This causes retailers to lose money and, depending on the product, can pose a threat to the safety and well-being of consumers.”

Clothes and shoes — the most commonly purchased counterfeit items, according to the survey — might pose minimal threats, but even these products may contain harmful chemicals such as lead. Fake versions of items such as airbags and medication most likely do not meet government-determined safety standards, Alhabash said, and can therefore pose a health risk. That’s why he and his team believe it is important to understand shopper behavior, characteristics and motivations to devise effective strategies for educating consumers about the dangers of buying counterfeits online.

This research is the first U.S.-based global survey to provide the anti-counterfeiting and brand protection community — which includes brand owners, e-commerce platforms and law enforcement — with tools and insights to better communicate to consumers the dangers and risks of purchasing counterfeits.

Social media, e-commerce and third-party sellers

Counterfeit products were most commonly purchased via e-commerce websites (39%) and social media (39%). Of the consumers who bought counterfeits on social media, 68% did so on Facebook.

Following the COVID-19 pandemic and the exponential growth in e-commerce, online retail and social media platforms have become a hotbed for counterfeit products, especially as such platforms permit promotion of products by third-party sellers. Counterfeiters understand how the supply chain works, and they repeatedly use online platforms to promote and sell their products to consumers.

Though brand owners and consumers can report counterfeits sold on e-commerce platforms, these after-the-fact efforts, unfortunately, have not curbed the prevalence of illicit counterfeit sales online.

Kari Kammel, director of MSU’s Center for Anti-Counterfeiting and Product Protection, recently testified in the Senate’s SHOP SAFE Act hearings advocating for a balanced approach to regulating third-party sales on e-commerce platforms.

“A proactive requirement of e-commerce platforms that allows third-party sales and responsibility for ‘constructive knowledge’ of counterfeit sales will help balance the burden between intellectual property rights owners and platforms,” Kammel said.