Facebook, Instagram are hotspots for fake Louis Vuitton, Gucci and Chanel

NEW YORK/MILAN, Feb 9 (Reuters) – Facebook owner Meta Platforms (FB.O) is working to stop counterfeiters from selling fake luxury goods from Gucci to Chanel through its social media apps, according to reports. searches and interviews, as the company thunders into e-commerce.

Its platforms have become hotspots for infringers who exploit their range of social and private messaging tools to reach users, according to interviews with academics, industry groups and counterfeit investigators, who compared attempts police service brands like Facebook, Instagram and WhatsApp. like a game of “whack-a-mole”.

“Facebook and Instagram are the main marketplaces where counterfeit products are sold to members of the public. It was eBay 10 years ago and Amazon five years ago,” said Benedict Hamilton, chief executive of Kroll, a private investigation hired. by brands harmed by counterfeiting and smuggling.

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Research, led by social media analytics firm Ghost Data and shared exclusively with Reutersshowed counterfeiters peddling imitations of luxury brands such as Gucci, Louis Vuitton (LVMH.PA), Fendi, Prada (1913.F) and Chanel.

It identified more than 26,000 active infringer accounts operating on Facebook in a study from June to October 2021, the first time its counterfeiting research focused on Meta’s flagship app, and it found more than 20,000 active infringer accounts on Instagram, up from its tally. the previous year, but down from the peak in 2019 when they identified around 56,000 accounts. Around 65% of accounts found in 2021 were based in China, followed by 14% in Russia and 7.5% in Turkey.

Ghost Data is an Italian analytics company founded by cybersecurity expert Andrea Stroppa, who is also a data analytics consultant for the World Economic Forum. The company has a proven track record in exposing the use of social media by counterfeiters, Islamic State supporters, and for digital propaganda.

A keyword search by Reuters identified dozens of Instagram accounts and Facebook posts that appeared to promote counterfeit products, which Meta removed for breaking its rules after Reuters reported them.

Online commerce is a key priority for Meta, which has pushed new shopping features that could help boost its revenue as it faces pressures such as ad tracking and user growth, and has signaled a strong stance against counterfeiters. Instagram said luxury brands like Dior, Balenciaga and Versace have adopted shopping features on its app and some like Oscar De La Renta and Balmain are using in-app checkout.

But users who leverage its platforms to sell counterfeit goods present a lingering problem for the company, which is also under scrutiny from lawmakers and regulators over moderation of its content.

“The sale of counterfeits and fraud is a problem that has always persisted with new technologies,” a spokesperson for the Meta company said in a statement. “We are improving every day to stop these sales and crack down on fraudsters,” the person added.

‘PLAY CATCH-UP’

Most shoppers know they’re not getting the real deal when they pay $100 for a handbag that sells for over $5,000. But the damage includes brand sales and reputation, potential safety issues from unregulated products and links between counterfeiting and organized criminal activity, experts said.

Meta has joined e-commerce sites and online marketplaces to fight against the sale of counterfeit products. But unlike public listings on dedicated shopping sites like eBay (EBAY.O) and Amazon.com, social platforms also offer multiple channels for offenders to post in closed spaces, send private messages and use content on the way. disappearance like Instagram Stories, experts said.

“They create many unique opportunities for counterfeiters to hide,” said Lara Miller, vice president of corporate strategy at the International AntiCounterfeiting Coalition. “We’re all playing catch-up.”

Counterfeiters have taken advantage of features such as WhatsApp product catalogs, which are unencrypted and available through the app’s “business profile” option, to show off their wares, according to the Ghost Data report.

Ghost Data’s Stroppa said he’s seen a growing trend of entire counterfeit transactions happening on the company’s platforms, rather than connecting to external sites.

Some high-end brands remain wary of the ability of a wide range of major online platforms, from e-commerce sites to social apps, to deal with counterfeiters.

In 2020, Chanel, Lacoste and Gant quit a European Commission initiative to increase cooperation between brands and sites including eBay, Alibaba and Facebook’s Marketplace to fight counterfeiting, saying it was not effective.

Chanel’s chief financial officer, Philippe Blondiaux, said in an interview last year that Chanel, which only sells cosmetics and perfumes online, did not believe Facebook or Instagram were “the right environment to sell fashion items. luxury”, adding that the brand wanted a “very protected”. and intimate for its customers.

The Organization for Economic Co-operation and Development, which estimated that the global trade in counterfeit goods reached $464 billion in 2019, said an e-commerce boom in 2020-21 led to massive growth in the supply of counterfeit goods online. Academics said fraud had increased during the COVID-19 pandemic, while legislation in the United States and European Union remained unable to combat it.

Chanel, Gucci and Prada said their fight against counterfeiters led to hundreds of thousands of social media posts being deleted last year, but did not comment specifically on Meta’s services. Vuitton and Fendi owner LVMH, which in a filing said it spent $33 million to fight counterfeiting in 2020, declined to comment. Read more

According to a lawsuit Meta filed against Gucci last year, the platform has struggled since 2015 to shut down a woman in Moscow accused of selling counterfeit products on its services through a network of more than 150 accounts. Read more

FIGHT AGAINST COUNTERFEITS

Meta having more user purchase data could help with ad targeting, filling the information void left after Apple (AAPL.O) began letting owners of its devices block companies from accessing information users.

Meta’s legal directors told Reuters that cracking down on infringers was essential as its business plans ramped up. “As commerce has become a strategic priority for the company and we have created new shopping experiences, we have recognized that we want to ensure that these experiences are safe and reliable for brands and for users”, said the director and partner of Meta. said intellectual property general counsel Mark Fiore last summer.

Meta, which claims to have 3.59 billion monthly active users on its apps, in October launched an updated tool for brands to find and report counterfeits in posts, ads or business features, and claims that it typically responds to complaints for such violations within 24 hours.

In one recent report, the company said it removed 1.2 million infringing Facebook content, including accounts, reported to it from January to June 2021 and around half a million on Instagram. The company said that during this period, it also proactively removed 283 million pieces of content from Facebook that violated counterfeiting or copyright infringement rules and about 3 million from Instagram, before they were are reported by the brands, or before they are put online.

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Reporting by Elizabeth Culliford in New York and Silvia Aloisi in Milan; Editing by Kenneth Li, Vanessa O’Connell and Lisa Shumaker

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