As the holiday season approaches and the shopping frenzy intensifies, consumers are warned to remain vigilant against the growing threat of counterfeit products. These counterfeits are becoming increasingly difficult to detect — and potentially dangerous.
The world’s largest online retailer is using artificial intelligence and machine learning to root out sellers trying to peddle counterfeits on its platform.
Three years ago, Amazon created an in-house counterfeiting crime unit comprised of former federal prosecutors, law enforcement and data scientists based around the world to hunt down counterfeit sellers.
The company says it closely monitors suspicious behavior online to protect customers.
“What’s critical is that our teams of data scientists and automated tools are in control [the] data day by day,” said Kebharu Smith, a former federal prosecutor and now its director Amazon’s Counterfeit Crimes Unit.
Smith says Amazon uses AI tools to scan over 8 billion listings from sellers every day. Machine learning and data collection allows them to check logos and trademarks to compare them with those provided by brands. It allows them to flag products that may be fake.
This is important because in some cases, people don’t even know that what they are buying online is fake.
A recent survey from Michigan State University found that nearly seven in 10 people said they were tricked into buying counterfeit products online at least once in the past year.
“Personally it scared me because I didn’t realize that 100% of all the fake bags we sampled all had lead and cadmium color on the surface,” said Entrupy CEO Vidyuth Srinivasan. More than a decade ago, Srinivasan founded his company to help businesses spot counterfeits. His team has created a database of images of authentic and counterfeit luxury items that uses machine learning to identify counterfeits in real time.
As a teenager growing up in India, Srinivasan remembers the first time he looked for a pair of trendy sneakers.
“I went and bought a pair of shoes, and they were Nikes. They were really nice,” he said. “I still remember them so well, but I had to go to the gray market, basically the place where they sold the fakes.”
He didn’t think much of the damage from buying fake shoes at the time, but years later, in the middle of a motorcycle trip, he says his brakes failed and the battery died. It turned out that the parts on his bike were fake and could have cost him his life.
“That gave me this emotional inertia to say, ‘I’ve been cheated, I’ve been betrayed.’ What I don’t want to happen is for people to feel the same way,” Srinivasan said.
Today, Srinivasan’s company, Entrupy, uses its growing database to compare in-store photos of a product with images at its bank, allowing consumers and retailers to spot counterfeits on-demand with a mobile device. The company specializes in shopping for luxury accessories and athletic shoes and conducts brand audits for TikTok Shop and Goodwill Industries.
“We created a huge dataset of genuine products and counterfeit products. We taught the computers how to detect these small differences, roughly between 2,000 and 4,000 different features in each image,” he said.
The changing counterfeit market
Ashly Sands, an intellectual property attorney and head of litigation and anti-counterfeiting at the law firm Epstein Drangel LLP, emphasized the seriousness of the issue during a recent visit to Canal Street in Manhattan, known for its bootleg market.
“When I started, I guess about 12 years ago, we did this all the time. We did monthly raids with our customers,” he said.
Last month US Homeland Security Investigations and the NYPD announced the seizure of more than $1 billion worth of counterfeit luxury goods here. It was the largest bust of its kind in US history.
Sands spent much of her time working with major fashion retailers to combat counterfeits being sold on the streets and alleys. But she says her work has turned into an explosion of knockoffs sold direct to consumers online and through e-commerce platforms.
“It’s huge. If you can get a real version of something, an authentic version of something, there’s a 99 percent chance you’re going to get a knockoff,” Sands said.
It’s a thriving industry, considered the world’s largest illegal trade, with $2 trillion worth of counterfeit products sold to consumers annually, according to the National Crime Prevention Council.
US Customs and Border Protection warns that online shopping has turned the counterfeit trade into fertile ground for criminals pushing potentially dangerous knockoffs.
Counterfeit electronics, for example, contribute to more than 70 deaths and 350,000 serious injuries in the United States annually, the National Crime Prevention Council reports, shedding light on the grim consequences of buying counterfeit goods.
Risk of imitations
After a fire killed two brothers at a Queens home in April, the New York Fire Department discovered a charred electric scooter and a home charger with a fake safety certification label. Investigators suspect the fire was caused by another charger that may have had the same type of counterfeit sticker.
“We have hundreds of reports of homes burning down based on these types of counterfeit electronics,” said Salvatore Ingrassia, Port Manager for JFK Airport.
The agency displayed a sample of the counterfeit products seized inside the international mail facility at JFK Airport – from fake handbags, sneakers, watches and jewelry to electronics and cosmetics.
“We get advanced intelligence about mail coming into the U.S. and through our expertise, through our targeting systems, through our risk analysis, through our partnerships, through our intelligence. We can use that to target packages based on previous seizures,” said Troy Miller, senior acting commissioner for U.S. Customs and Border Protection.
Miller pointed out the dangers of counterfeit pharmaceuticals, including those containing deadly substances such as fentanyl.
Last month, San Diego Area Border Patrol agents seized nearly $3.7 million worth of fentanyl pills during a traffic stop on Interstate 15. In 2022, the U.S. Drug Enforcement Administration seized nearly 60 million counterfeit fentanyl pills .
“When you’re talking about pharmaceuticals that are counterfeit, you don’t know where they’re coming from,” Miller said. “You don’t know what the chemicals are in these pharmaceuticals. I think more and more you’re seeing people taking pharmaceuticals that are loaded with things like fentanyl. These are costing American lives every day.”
CBP officers are responsible for targeting and seizing imports of counterfeit and pirated products, but have found challenges keeping up with the growing counterfeit trade that allows consumers to buy online and in smaller packages.
“[People are ordering] a billion packages a year,” Miller said. “That’s up from 685 million the year before.”
The challenge of fighting counterfeiters
Kim Gianopoulos, director of the international affairs and trade group at the U.S. Government Accountability Office, authored two reports that highlighted the challenges CBP faces in combating the influx of counterfeit items through e-commerce platforms.
“We found that CBP worked with the private sector and issued a report a couple of years ago outlining some of the things they could do with the private sector to make strides in that area,” Gianopoulos said. “Unfortunately, what we learned was that they haven’t actually brought them to Congress yet, that they haven’t implemented those recommendations with the help of Congress. So many of the challenges that existed a few years ago still exist today.”
One of these reports concluded that the agency’s procedures “are not adapted to combat counterfeit products in small packages.”
“The sheer number of small packages coming in has been a big, big challenge for them. It’s almost 2 million packages a day,” Gianopoulos said.
“There’s not a day that goes by that I don’t come to work and think that we can do a better job than what we’re doing,” Miller said. “Let’s look at the things we’re doing to improve it.”
To address these challenges, CBP is adopting new technologies, including X-ray machines that use artificial intelligence and machine learning to target smaller packages. The new technology will allow the company to collect and analyze the characteristics of authentic products and use that data to process and target counterfeits at far greater speed and volume than humans could ever do on their own.
“We all have a little bit of that, right? Customs and Border Protection, certainly on the front lines, has to enforce our laws, rules and regulations,” Miller said. “The consumer needs to do a little better job of verifying what they’re ordering. But when you talk about retailers and you talk about shopping, drop-shipping, everybody needs to be able to do a little bit more to make sure that what’s being sold to those sites are, in fact, legitimate.
Vidyuth Srinivasan says fighting counterfeits using AI technology has great potential. However, he acknowledges that trafficking is unlikely to stop completely.
“Do I think ultimately, can we solve the problem? No,” Srinivasan said. “But can we try our damn thing? Absolutely, yes.”
Correction: This story has been updated to attribute a quote to Salvatore Ingrassia, Port Manager for JFK Airport.