- by Haydn Simpson, Head of Brand Protection -
The Covid-19 pandemic has created many challenges for businesses and further lucrative markets for counterfeiters. Criminals focused on counterfeit and fraud have quickly adapted to exploit the opportunities arising from the pandemic and their activities threaten the survival of many legitimate businesses. As we begin to emerge from the shadow of Covid-19, with many companies facing financial challenges and reorganisation from the top down, what can we learn and how can we adapt?
Even though brand protection budgets and activities may be under strain, it’s clear that it is now vitally important for companies to review their IP protection position. A robust brand protection strategy is required to fight the increasing challenges from counterfeiters offering inferior versions of products, which will damage business reputation and steal sales.
Here are some of the challenges Covid-19 has caused and why Brand Owners need to be aware of them.
Lockdown showed that counterfeits are highly adaptable in terms of shifting product focus to suit demand. New Covid-19 specific markets flourished because of increased demand, such as fake medicines, testing kits and face masks, which offered lucrative opportunities for counterfeiters are becoming even more adept at adapting to consumer demand.
One example is the huge increase in demand for sports equipment during lockdown, as consumers all look to keep fit at home. Counterfeiters no longer just target big brands, they also offer fake versions of equipment from mid-sized companies and often in niche sports markets.
Counterfeiters are in business to make money. As their focus turns away from the ‘usual’ products, they’ll move into new product ranges and likely target companies who haven’t previously been affected by fakes.
Covid-19 has massively accelerated the growth of e-commerce. Total online spending in May reached $82.5 billion, up 77% year-on-year, according to a recent Adobe report. It’s estimated that, with normal levels of growth, it would have taken 4 to 6 years to get to this level.
People are buying more essentials online as well as products desirable during lockdown, such as medicine, home electronics, sports goods and baby care products. It’s likely that these changes in consumer habits will remain after the pandemic and that will only serve to facilitate the route to market for counterfeiters.
Counterfeiters can easily establish a legitimate looking website claiming to sell discounted versions of leading brands that are actually fakes. A small investment in online advertising and the offer of a range of payment options give the impression of a legitimate website and make it very hard for buyers to differentiate authorised dealers from counterfeit sellers. The rise of social selling (selling via social media) is likely to also increase the number of sellers offering fake products.
The economic impacts of Covid-19 are likely to make people more receptive to buying counterfeit goods. A recession may increase demand for cheaper everyday items, which could lead to counterfeiters offering fake, or low quality, alternatives. This may also lead to counterfeiters expanding their offering with further product lines and infringing the IP rights of companies previously unaffected by counterfeiting.
There is also the danger that, despite recent educational campaigns warning of the dangers and links to organised crime, the upcoming pressure on household incomes will result in an increased social tolerance for counterfeit goods.
Many police and customs enforcement officers have been re-deployed during the pandemic. Resources have been re-directed to other tasks, such as enforcing lockdown and border controls, while many officers have been forced to work remotely. This has significantly reduced verification checks on goods arriving in the EU and aided the influx of fake goods into the EU.
Enforcement officers are unable to perform raids on locations storing counterfeit goods due to lockdown restrictions and reports from Spain show there is a lack of warehouse space to store seized goods. This means that planned raids can not take place and counterfeit goods can flood into the country unhindered.
Anecdotal evidence has shown that some companies are reducing their IP and brand protection work as the economic effects of the pandemic hit. However, companies should now be reviewing their brand protection strategy to systematically combat key areas of infringement, including counterfeiting. Left alone, counterfeiters will become brand owners’ biggest competitors (in some cases they already are) and brands will need every competitive edge they can get to thrive in the post Covid-19 world.