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.
Demographics, attitudes and behaviors
According to the study, consumers who bought counterfeit goods were more likely to be male, younger, religious, frequent online shoppers and from lower-income households.
Although consumers said they were motivated to purchase counterfeit products because they were sold at a bargain price, the level of enjoyment of counterfeit shopping was the strongest predictor of counterfeit purchase behaviors.
“Consumers are not just motivated by saving money, they are seeking pleasurable and enriched shopping experiences,” Huddleston said. “Taking the fun out of counterfeit shopping and buying can be an effective strategy to reduce prevalence of this behavior.”
Attitudes and social norms also positively contributed to counterfeit purchase behaviors. Consumers were more likely to have bought counterfeit goods in the past and have intentions to do it in the future if they had positive attitudes toward counterfeit purchasing and believed their close friends and family, as well as peers in their town, country or on the internet, both accepted and engaged in this behavior.
“Our data show that approaches vary widely by consumers’ demographic and psychographic characteristics, past behaviors and future purchase intentions,” said Kononova. “When communicating with consumers about the dangers of counterfeiting, one size does not fit all.”
Devising strategies to educate consumers
Consumers’ risk perception also plays a role in whether or not they purchase counterfeit products.
The higher consumers’ awareness of the severity of counterfeit risks, the less likely they are to purchase counterfeits. The more vulnerable consumers feel and the more confident they feel about protecting themselves against the risks of counterfeits while shopping online, the more likely they are to purchase counterfeits.
“Although frequent buyers are aware of counterfeit risks and feel highly vulnerable to these risks, they possess high levels of confidence that they can recognize counterfeits and avoid buying them online. This presents a potential challenge in enhancing frequent buyers’ protective behaviors against counterfeit risks,” said Alhabash. “The survey findings suggest that improving consumers’ confidence in their ability to protect themselves while shopping online and clearly communicating how to report fakes could curb counterfeit purchasing behaviors."
