Repeat breachers are widespread on e-commerce marketplaces and are responsible for a disproportionately large number of the listings that are removed by platforms after being notified by Incopro. Incopro’s study reveals that up to $78bn in annual losses could be prevented if platforms proactively removed repeat breachers.
In this white paper, we share:
- Data on the proportion of repeat breaches undertaken by the same sellers on online marketplaces and social media platforms
- The current policies targeting repeat breachers currently employed by major e-commerce platforms
- How robust seller verification & a ‘three strikes and out’ policy could reduce counterfeiting, protect consumers, and drive commercial savings
What is a repeat breacher?
“Repeat Breachers” are individual e-commerce users/sellers who have repeatedly used e-commerce marketplaces and social media platforms to offer for sale illicit goods or services that are either counterfeit and/or otherwise infringe trademark or copyright and/or otherwise breach platform policy or consumer protection regulation.
Incopro’s Technology Finds Repeated Breaches
Incopro’s Brand Protection platform Talisman finds brand misuse online, ranging from individual sellers on marketplaces offering fake products through to sophisticated networks using a diverse set of digital channels to deceive and defraud consumers.
For this white paper, Incopro has focused on a sample of the data collated by its technology concerning Breaches by users of key e-commerce marketplaces and social media platforms. This dataset contains over 1.5m listings that were removed by Incopro between November 2019 and November 2020.
Online counterfeiting at a glance
5.4m jobs at risk
Counterfeiting and piracy may reach $4.2 trillion USD by 2022, placing 5.4m legitimate jobs at risk
3.3% of global trade
Trade in fake goods is approx. 3.3% of global trade and rising as of March 2019
$323bn revenue lost
Losses suffered from online counterfeiting amounted to $323bn in 2017
E-Commerce Platforms and Repeat Breachers
- Incopro’s data shows that only 6% of sellers are repeatedly enforced on 3 days or more
- However, these sellers are responsible for over 24% of the listings Incopro has enforced against
Draft legislation in the US and Europe contemplates requiring e-commerce platforms to take steps to both authenticate sellers and to stop bad actors that repeatedly infringe intellectual property.
Our white paper focuses on providing evidence to inform the discussion on proposed legislative changes. The following is an example of what can occur in the absence of a seller verification and a three-strikes rule:
In the course of 2020, a seller used the same e-commerce operation in Latin America to offer consumer goods for sale. In total, Breaches in respect of 9 different consumer brands were found by Incopro’s technology. On each occasion, Incopro’s technology notified the e-commerce operation of the Breach and the seller’s online identification. The e-commerce operation was asked to remove the offer for sale. Over the course of a year, 107 different Breaches were identified. On one day, 27 separate Breaches that each offered a fake or inferior product for sale were reported to the e-commerce operation.
Although this e-commerce operation was notified about the same seller on 27 separate days, this seller was not suspended – the seller was free to continue to use the platform to offer goods that might place consumers at risk.
Current Platform Policies
Platforms can protect both brands and consumers by effectively tackling repeat breachers. However, policies currently adopted by many platforms do not do enough to prevent repeat infringement.
Our findings indicate:
- 23 out of the 34 platforms investigated have a policy against repeat breachers that is readily available to users – the remaining 11 have no relevant policy evident.
- Out of the 23 platforms that have a policy directed at repeat breachers, only 3 have a policy which includes the 3-strike rule. These 3 platforms are based in the APAC region, and three serious offences on separate occasions result in account termination.
- 10 out of 23 platforms with a relevant policy have published definitions of the duration of account suspension. Again, amongst these 10 platforms only 2 have a policy that considers repeat offences sufficient ground for immediate termination.
Similarly, while Facebook and Instagram prefer not to disclose their policies publicly (to avoid gaming by bad actors), we are aware that they pay close attention to the issue of repeat breaches.
New methods for tackling repeat breachers
Robust seller verification
Platforms could require sellers to verify their identity before allowing them to advertise products for sale. This would serve to dissuade some bad actors from using these platforms, while also making enforcement and further action easier if they do go through the verification process.
Additional to robust seller verification, platforms should bring in a simple ‘three-strikes-and-out’ policy to tackle repeat infringement. Below, we have outlined two different thresholds that could be adopted.
3 Strikes and Out Model 1: Threshold = 3 separate days of enforcement
Platforms could adopt a policy where a seller is blocked from advertising further products for sale when a limit of 3 separate days of enforcement is reached.
3 Strikes and Out Model 2: Threshold = 3 enforced listings
Alternatively, platforms could adopt a policy where a seller is blocked from advertising further listings when a limit of 3 enforced listings is reached. In the White Paper, this is modelled by grouping data based on the number of separate listings that have been enforced.
The impact of tackling repeat breachers
Implementing these policies could deliver:
- 11% reduction in the availability of harmful/non-genuine products – under Model 1
- 24% reduction in the availability of harmful/non-genuine products – under Model 2
With losses due to online counterfeiting estimated at over $320bn annually, this could equate to consumer savings of:
- $35bn under Model 1 and
- Up to $78bn under Model 2
And given that 64% of consumers said they would lose trust in a platform after being deceived by a breach (Sapio Research, 2019), there are clear benefits to platforms as well.
Download the white paper
Repeat breachers are a thorn in the side of brand owners. Tackling them would lead to increased enforcement efficiency and provide better protections for both brands and consumers.
Platforms, too, would benefit. With strong seller verification and a “three-strikes” policy, platforms can safeguard consumer trust while also spending less resource on actioning notices targeting repeat breachers.
Download the white paper to learn:
- The key dynamics in the e-commerce market and the shifting regulatory landscape
- The true scale of repeat infringement on e-commerce platforms
- How simple platform policy changes could drive significant impact
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