Facebook, Instagram the new eBay for buying fake LV, Gucci & Chanel

Facebook owner Meta Platforms is struggling to stop counterfeiters from pushing fake luxury goods from Gucci to Chanel across its social media apps, according to research and interviews, as the company barrels into e-commerce.

Its platforms have emerged as hot spots for counterfeit offenders who exploit their range of social and private messaging tools to reach users, according to interviews with academics, industry groups and counterfeit investigators, who likened brands’ attempts at policing services like Facebook, Instagram and WhatsApp as a game of “whack-a-mole.” “Facebook and Instagram are the key marketplaces where counterfeit goods get sold to members of the public. It used to be eBay 10 years ago, and Amazon five years ago,” said Benedict Hamilton, a managing director at Kroll, a private investigation company hired by brands hurt by counterfeiting and smuggling.

Research, led by social media analytics firm Ghost Data and shared exclusively with Reuters, showed counterfeiters hawking imitations of luxury brands including Gucci, Louis Vuitton, Fendi, Prada and Chanel.

It identified more than 26,000 active counterfeiters’ accounts operating on Facebook in a June-October 2021 study, the first time its counterfeit research had focused on Meta’s flagship app, and it found more than 20,000 active counterfeiters’ accounts on Instagram, up from its count the previous year but down from a 2019 peak when they identified about 56,000 accounts. About 65 per cent of the accounts found in 2021 were based in China, followed by 14 per cent in Russia and 7.5 per cent in Turkey.

Ghost Data is an Italian analytics firm founded by cybersecurity expert Andrea Stroppa, who is also a data analyst consultant for the World Economic Forum. The firm has a track record of exposing the use of social media by counterfeiters, Islamic State supporters and for digital propaganda.

A Reuters search of keywords identified dozens of Instagram accounts and Facebook posts that appeared to promote counterfeit goods, which Meta removed for violating its rules after Reuters flagged them.

Online commerce is a key priority for Meta, which has pushed new shopping features that could help grow its revenue as it faces pressures like ads tracking changes and sputtering user growth, and has signalled a hard stance against counterfeiters.

Instagram said luxury brands like Dior, Balenciaga and Versace had adopted shopping features on its app and said some like Oscar De La Renta and Balmain were using in-app checkout. But users exploiting its platforms to sell fake goods present a persistent problem for the company, which also faces scrutiny from lawmakers and regulators about its content moderation.

‘Playing catch-up’

Most buyers know they are not getting the real deal when they pay $100 for a handbag that retails for over $5,000. But harms include hits to brands’ sales and reputation, potential safety issues of unregulated goods, and ties between counterfeiting and organised criminal activity, experts said.
 

Meta has joined e-commerce sites and online marketplaces in grappling with the sale of counterfeit goods. But unlike public listings on sites dedicated to shopping like eBay and Amazon.com, social platforms also provide offenders multiple channels to post in closed spaces, send private messages and use disappearing content like Instagram Stories, experts said.

“They’re creating a lot of unique opportunities for counterfeiters to hide,” said Lara Miller, vice president of corporate strategy at the International AntiCounterfeiting Coalition. “We’re all playing catch-up.” Counterfeiters took advantage of features like WhatsApp product catalogs, which are unencrypted and available through the app’s “business profile” option, to show their wares, the Ghost Data report said.