by Martin Veitch

Dodgy fashions, dodgier drugs: the cost of brandjacking

Jan 20, 2010
IT Leadership

One of the more minor changes occasioned by the internet is the way that we are bombarded with brand names. Once exclusive marques sold through narrow networks of resellers are now commonplace to the point of ubiquity and fat margins have been ripped out by the might flattening effect of the web. Worse for the brands, the internet is also a happy hunting ground for dodgy characters purveying counterfeit goods and playing confidence tricks; in the language of the dark trade, it’s a demi-monde of scams, knock-offs and snides out there.

For a company that has invested in allure, mystery and air of exclusivity, it’s enough to make you swallow your £200 bottle of perfume or turn your £50,000 necklace into a noose, but help is at hand. I recently had lunch with Charlie Abrahams of MarkMonitor, a specialist in protecting brands, who told me that a major problem is in what he calls ‘brandjacking’, the nefarious activity of riding on the coat-tails of a well-known company in order to shift product.

It’s tough enough dealing with the wafer-thin margins that are the result of being widely distributed on the web but with brandjacking the goods are often counterfeit and substandard. And of course it’s not just the brands that are hurting. Buyers are often left with shoddy goods and, while there is an element of ‘caveat emptor, stupid’ if you order a ‘Ralph Lauren’ shirt for a fiver and the polo player appears to be riding a donkey, there is a serious side to the problem. And in the case of pharmaceuticals, the issue is one of outright danger to health.

According to Abrahams, scammers are increasingly aiming their arrows at the supply chain to shift greater volumes of drugs, for example to illicit pharmacies.

“People buy these slimming drugs or H1N1 treatments and just look at the price rather than checking whether the product is genuine,” he says.

The numbers reeled off by MarkMonitor are eye popping and growing, prompted by the rise of e-commerce. Listings for pharmaceuticals online grew 67 per cent between 2007 and 2009, for example and a snapshot of six drug brands saw almost 20,000 cases of cybersquatting. Phishing attacks are also at a high and social networks will, logically, broaden opportunities for the bad guys.

A recent MarkMonitor survey found that 17 per cent of paid search ads for popular consumer products led to sites that seemed to be offering counterfeits, judging by the price markdowns. (Clue: if it’s 90 per cent off, it’s not the real McCoy.) If you’re after a designer handbag the likelihood of being taken to a suspect site from a search ad is about even money.

Firms like MarkMonitor can help CIOs and CISOs deal with this pain but it’s likely to be a persistent niggle for as long as people want to buy branded goods. And that, of course, means forever.