The pandemic of counterfeits

Consumers are increasingly concerned about buying fakes

How aware are you of the size of the issue of counterfeits in the fashion industry? Do you know the scale of the risk consumers are currently exposed to? This article provides a brief summary of the latest and most relevant data concerning the counterfeit problem.

Key highlights

• 3 in 10 product authentications are identified as fake
• 8 in 10 of fakes are sold online
• 1 in 2 customers believed they were buying the genuine product

Certilogo provides authentication and connected product services to over 80 of the most loved fashion and luxury brands worldwide. Consumers connect with products, protected with Certilogo’s ‘Secure by Design™’ product authentication, every 4 seconds, from more than 180 countries worldwide. This puts Certilogo in a privileged position to observe and understand trends as consumers connect with products to certify their authenticity and access content and services.

Our data, gathered from many millions of yearly connections, reveals that consumers are ever-increasingly at risk of purchasing counterfeit products. In 2015, less than one in ten products authenticated by Certilogo were identified as fake. By the end of 2022, this figure had climbed to 3 in 10 products being identified as fake. Despite a brief slowdown during the Covid pandemic, the observed incidence of counterfeits on the market has grown an incredible 275% between 2015 and 2022*.

* Certilogo Data. A. Percentage of ‘fake responses’ delivered in respect to the total from 2015 to 31/8/2022.

A key factor in this ‘pandemic’ of fakes has been the explosive growth of e-commerce, which has enabled counterfeiters to fool the consumer by building authentic-looking websites and marketplaces from which to distribute their illicit products. Consumers are nearly 5 times as likely to buy a fake online than from a high street store. In 2015, online purchases accounted for 66% of fakes that were intercepted by Certilogo. By 2022 83% of all fakes intercepted were encountered online**.

** Certilogo Data. B. Distribution of ‘fake responses delivered per distribution channel  from 2015 to 31/8/2022.

While it is true that some consumers willingly and knowingly purchase fakes as a cheaper and more affordable way to give the appearance of wearing their favorite brands, there are an equal number of consumers who are unwitting victims of fraud. One in every two fake products identified by Certilogo was purchased by a consumer that believed they were buying a genuine item***.

***Source: Certilogo data, 2022. Based on the percentage of survey respondents who, after the authentication of a counterfeit product, answered "No" to the question "Did you expect this product to be fake?".

The issue is only set to worsen. According to ThreadUp, the online resale market is predicted to reach $350 billion, doubling in value over the next five years. Without adequate product authentication by brands and marketplaces, counterfeiters will be presented with a new market that is ripe for them to exploit.

Counterfeiters are already exploiting the introduction of Digital IDs and Digital Product Passports as symbols of trust and transparency. They capitalise on the consumer’s expectation to access digital journeys from connected products, by applying fake digital IDs which point to a brand’s own website or a simulated authentication service. Consumers have not yet acquired the experience to be able to distinguish these fake digital experiences from their genuine counterparts, which is leading to a new era of hyper-convincing fakes.

Up until now, brands could ignore the issue of counterfeits, despite the damage that it may have caused them, their consumers, or the planet, in doing so. However, ever more aware of the risks they are exposed to, consumers expect brands to protect them from fraud. According to a recent Certilogo survey, 85% of consumers consider product authentication to be an important or very important product feature. While new regulations, including The Unfair Commercial Practices Directive from the EU, and The INFORM Consumers Act and The SHOP Safe Act in the US will place responsibility on the producer to protect consumers from fraud. Consumer, market and regulatory pressure will mean that brands will no longer be able to turn a blind eye to the issue of counterfeits, but will be required to demonstrate that they are serious about tackling the issue.

To learn more about how to provide your products with ‘Secure by Design’ product authentication, and discover how it can be used to unlock value throughout your organisation, read our latest white paper “Connected Products: why authentication is a hygiene factor” or contact us to arrange a consultation or a demo.