Home PublicationsCommentary Event Recap: Using Data Partnerships to Fight Counterfeiting in E-Commerce

Event Recap: Using Data Partnerships to Fight Counterfeiting in E-Commerce

by Sujai Shivakumar

The Center for Data Innovation hosted an online seminar on the emerging public-private data partnership to thwart counterfeits from online marketplaces—websites that aggregate products from multiple third-party sellers. Participating in this discussion were senior representatives from Amazon, Walmart, the U.S. Chamber of Commerce, and the National Intellectual Property Rights Protection Center (IPR Center) of the U.S. Department of Homeland Security. The panelists discussed the growth in counterfeits, driven by criminal enterprises that exploit e-commerce, and the role of proactive collaboration among stakeholders in industry and government to thwart this scourge. 

The growing problem of counterfeit and fraud 

Nicholas Waldmann, vice president for trust and safety and compliance at Walmart, noted that as more customers shop online, fraudsters and counterfeiters have also moved in to exploit this trend. According to William Ross of the IPR Center, the vast majority of counterfeits that enter the United States—some 86 percent—come from China. Smuggling counterfeit goods is just one part of the illicit activities of criminal organizations, he added, with criminal organizations also going after consumers’ financial information. “We’ve had over $18 million in transactions that we’ve disrupted, meaning we kept the criminals from getting the consumers money. In some cases, we were able to recover and restore the victims of these crimes.” 

Mary Beth Westmoreland, vice president of brand protection at Amazon, noted that counterfeiters are typically part of larger criminal operations that act in groups. “They are constantly changing and shifting, and they are finding new ways of exploiting gaps and working around some of the most effective and complex protection programs that all of our online marketplaces have in place.” These criminal organizations operate across multiple platforms: they falsify names and contact information to hide their identity; they manufacture fraudulent invoices or infringing packaging; they open and close accounts to evade detection efforts; and they even use social media to drive customer traffic to their listings by using hidden keywords. 

Kasie Brill, vice president of brand protection and strategic initiatives at the U.S. Chamber of Commerce, added that American businesses have been closely following the evolution of fraudulent schemes, particularly as it relates to personal protective equipment and other COVID-19 vaccines and therapeutics during the current pandemic. “From our perspective, there has never been a more crucial time to protect intellectual property so that brands continue to innovate and foster creativity. 

From protective actions to proactive cooperation 

Reflecting on their different operational models, the representatives from Walmart and Amazon described the vetting processes and data analytics they each use to keep counterfeits off their respective sites. They both agreed, moreover, on the need to move from a siloed and protective response to a shared and proactive strategy through cooperation with the IPR Center. 

The IPR Center’s Ross similarly pointed out the need for a more coordinated strategy against an adaptive adversary. Noting that Customs and Border Protection and other law enforcement agencies have stepped up their enforcement efforts, Ross acknowledged that “realistically, we are never going to seize and arrest our way out of the counterfeit and fraud problem.” The key, he said, is to move to a proactive strategy using partnerships. We have 25 agencies who partner with the IPR Center, but we also have a tremendous partnership with the private sector, including ongoing cooperation in exchanging data and information with Amazon, Walmart, and other online sales platforms. 

 Amazon’s Westmoreland concurred that collaboration is the key to thwarting counterfeits. She noted that while Amazon and Walmart are competitors, we share a common goal of preventing counterfeit. The more information that we share, the harder it is for bad actors to hide. We very truly believe that information exchange across stores and payment providers and government entities is the key for all of us to be efficient and effective in our own fraud and counterfeit prevention programs. 

Walmart’s Waldmann added that “thanks to the IPR Center, we are definitely on our way to building a closer partnership that is adapted to the new reality of protecting online shoppingwith more standardized data, a faster way of exchanging information—while maintaining our distinct retail models. 

Resolving data sharing concerns 

Ross noted that the IPR Center’s pilot program has worked with its public and private partners to refine the data needed to identify and preempt counterfeits and fraud. “You have to be sharing the right data. Companies like Amazon and Walmart collect vast amounts of data on their customers, but you must keep in mind that nearly all their customers and their sellers are conducting legitimate transactions. Sharing a lot of that data really is not necessary. The IPR Center convened a series of discussions over the first couple years about what needs to be shared and what cannot be shared. As a result, we have now identified the priority data sets to share, and that is what is happening. Just dumping large sums of data does not really help anybody in the effort; you must know what you are sharing.

Westmoreland added that online marketplaces see the benefit of sharing data, but “we still want to be careful about maintaining the privacy of our consumers and our sellers and our rights owners. And that takes a little bit of thought and effort and work to understand what data we can responsibly share that will be effective at preventing counterfeit. 

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