How clustering technology helps catch large-scale counterfeit networks

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Clustering, or distribution networks, is one of the most critical pieces in the counterfeiting landscape today. Two years ago, during the 2016 European Football Championships, Incopro research uncovered 47 different domains, 17 social media accounts and 14 email addresses linked to the distribution networks of counterfeit football jerseys.

What is clustering?

Clustering is the technique of connecting seemingly unconnected counterfeit infringers to one another and creating a network to demonstrate the size and scale of the problem. This helps uncover large-scale infringers and their business models, operating both online and offline, allowing enforcement at scale and quickly ending illegal operations.

Our recent re-evaluation of the cluster monitored during Euro 2016 showed that it is still active, utilising a similar business model with the use of distribution and promotion channels. The network contained domains, email addresses, social media accounts and even offline information such as real-life identities.

The evolution of the cluster

Whilst the business model remained the same, the e-shops they use to sell the shirts had changed. Many that we had previously identified had been closed down and re-opened under slightly varied URLs, containing the same contact information.

These closures suggest that there has been a battle against the network, but that the nature or the scale of the issue is not understood by those trying to close them down. The counterfeiters have not diversified how they promote or distribute goods or switched their personal accounts and available details, which shows they do not feel threatened by the current enforcement efforts.

This is extremely problematic for those who are trying to shut them down. With the same distribution framework still intact, it is easy for the infringers to continue to promote sales and gain repeat custom. It also allows these sellers to build up a reliable reputation facilitating the further distribution of counterfeits.

The impact of clustering

You are only able to get on top of the problem with a comprehensive understanding of the counterfeiter’s network. If this battle had taken place with clustering and an intelligence led strategy, then it could have been taken out in one fell swoop, ensuring serious setbacks rather than minor inconveniences.

Building clusters allows us to understand how their social media combines with marketplace listings or e-shops to boost sales. When we trace links between all these separate accounts we aim to take out the whole cluster, preventing the ability for replacements to spring up instantaneously.

Replica football shirts are a popular target for counterfeiters. At the start of the World Cup this year, our analysts began monitoring a cluster we first identified during Euro 2016 that was selling replicas shirts and tracked how it has evolved since then, while also identifying new behaviours and methods within their operation. It appears that these infringements were being monitored and enforced by someone, though without the benefit of clustering intelligence that we found.

How do counterfeit networks operate?

This cluster has retained the same business model since 2016, utilising a combination of social media and websites to promote and sell illegal merchandise. However, the operation has evolved as various channels have been closed, and in turn replaced. The individuals at the centre of this cluster are operating out of China but targeting the lucrative European and North American markets.

These individuals use websites as e-shops to complete transactions and funnel customers to them via their social media platforms. We identified six Facebook accounts and thirty-three websites, although very few of them were the same as had been operating in 2016. Throughout the World Cup, our analysts noticed that if a website was closed then the social media platforms simply switched their promotion efforts to another within the network.

This shows the importance of eradicating an entire network at once. If one or two accounts are closed then you are causing an inconvenience to a counterfeiter, not having a real impact by putting an end to their operation. This is the problem with fighting counterfeiters without an intelligence led strategy – you shut down individual accounts ad-hoc and are unable to understand the full scale of the issue.

Tackling large-scale networks

Taking an intelligence led approach to fighting large-scale counterfeiting networks is the only truly effective way to shut down these operations. By connecting all elements within the network, you are able to enforce strategically at scale, rather than using a ‘whack-a-mole’ approach. This addresses the source of the issue and brings long-lasting results.

Right now, the best approach to tackle counterfeit networks is to adopt a multi-pronged enforcement approach. Brands typically combine enforcement against the source with a concerted effort to monitor and enforce against the key online platforms that enable purchasers to buy and receive counterfeits through the post.

In using social media to market and sell goods, counterfeiters often leave behind a trail of information that can be used to identify and connect clusters of criminals. For example, when advertising on Instagram, the seller will often link to a domain or ask to be contacted via Whatsapp and reveal a phone number. Using this information, it is possible to uncover and remove networks of infringers.

But the key question is whether the platforms themselves can and should be required to do more. At present, brands have been required to follow in the footsteps of music and film businesses by adopting a monitoring and enforcement approach. It may be however that recent case law can enable a new path.

Site blocking is becoming common practice in jurisdictions, but by looking at third party actors such as search engines it may be possible to go much further in the effort to disrupt counterfeiters’ online activity. There is potential to require Google to act at scale and to remove counterfeit operations from their index. And the buck may not stop with search engines. Social media platforms can also do more and it’s likely that as technology improves, these platforms could themselves implement filtering to assist rights owners.

Recent court decisions suggest that the door is open for rights owners if they wish to push further to secure enhanced and scalable remedies.

Simon Baggs, CEO & Co-Founder, Incopro
Image Credit: Sergey Nivens / Shutterstock