70 major international brands have been targeted by fraudulent advertisements on social platforms

70 major international brands have been targeted by fraudulent advertisements on social platforms

US business groups are urging social networking platforms to do more to prevent fraudulent advertising and counterfeits, after research found 70 major international brands have been targeted in the past three years.

Apparel and footwear brands, including Adidas, Calvin Klein, Dr. Martens, Geox, Gymshark, New Balance, Nike, Patagonia, TommyHilfiger and The North Face are among those that have been the victim of scams on Instagram and Facebook, YouTube and Google since 2017 – some of which receive up to a quarter of a million views before they are detected.

The frauds are exposed in a new report from the Transnational Alliance to Combat Illicit Trade (TRACIT), in collaboration with the American Apparel & Footwear Association (AAFA).

"It's alarming that people are exposed to fraudulent advertisements for counterfeits while they're thumbing through their social media accounts," says TRACIT director general Jeffrey Hardy. 

"The ads are so professional that they easily deceive consumers into thinking they're getting a great deal. Instead, they're being diverted to a rogue website that was built specifically to sell and distribute counterfeits – and they're just not expecting that."

The report investigates and points out that internet-based platforms for social networking and shopping from home have inherent systemic weaknesses that are exploited by criminals to sell any variety of counterfeit or illegal product with little risk of apprehension. 

The lack of sufficient policies and procedures to verify an advertiser's true identity and limited vetting during the onboarding process are identified as the main vulnerabilities that enable fraudulent advertising online. 

"Consumers risk having their payment details stolen, not receiving goods, or buying poor quality or even dangerous products," Hardy adds. "Counterfeiters are notoriously linked to serious organised crime, spending their profits on illicit drugs, money laundering and corruption, depriving governments, businesses and societies of hundreds of billions of dollars in taxes, sales and jobs."

TRACIT and AAFA advocate for governments and social platforms to work with brands and law enforcement to do more to protect consumers. The report includes recommendations for websites and social media platforms to gather and verify information on who is utilising their advertising services, which would improve their ability to proactively identify bad actors and repeat infringers from previously removed accounts. 

The report also calls for a more rigorous review of an advertisement prior to publication, both algorithmically but also manually where high risk has been flagged.

"As social media has become a more integral part of our society, it has also become an avenue for the sale of illicit product. This report shows the current role social media and online advertising has on this trade, and recommendations to protect businesses, consumers, and workers," explains Christina Mitropoulos, manager, brand protection and manufacturing initiatives, AAFA.  

"Preventing the sale of counterfeit products is about much more than lost sales and brand reputation. It is about protecting consumers from unsafe products. It is about protecting American jobs."

"The social networking platforms are some of the most popular and most valuable brands in the world," adds Hardy. "It's absolutely inconsistent with today's standards of corporate social responsibility to expose users to such easy forms of fraud. Chasing fraud once it's loose on the internet is not effective and leaving legitimate companies to clean up the mess is unfair and unreasonable."

Additionally, the report suggests the establishment of an e-business license for advertisers, which would require verification of financial disclosures that can be corroborated by third parties (such as bank statements), and physical location information that can be supported by government records or trusted third parties. 

Such a system could be accompanied by a central registry ideally, managed by a highly secure, disinterested party to maintain the licenses.

"Licenses are required for virtually every aspect of commercial activity in the physical world, so why not for online advertising?" asks Hardy. "Advertising has long been regulated by governments to ensure that messages are truthful and do not mislead reasonable consumers and I think it's the responsibility of today's legislators to make sure these standards apply to our lives online."

Click on the following link to read the report 'Fraudulent Advertising Online: Emerging Risks And Consumer Fraud.'