AAFA Details the Costly and Corrosive Impact of Counterfeits Trafficked Across Platforms, Including Shopee and Meta 

AAFA calls for immediate solutions and long-term policy changes to bring reprieve to world-famous brands diverting millions to online and offline enforcement to fight counterfeits.


October 10, 2022 | WASHINGTON, D.C.
 

The American Apparel & Footwear Association called out the growing volume and growing concerns of counterfeits promoted and sold on major e-commerce and social media platforms, urging the U.S. government to implement policy changes and establish pro-active and consistent brand protection solutions in its submission for the 2022 Special 301 Out-of-Cycle Review of Notorious Markets. 
 
In its comments, AAFA nominates Meta and Shopee for listing in this year’s Notorious Markets report. This is the third time that AAFA has called on the Office of the United States Trade Representative (USTR) to list Meta and its associated platforms (Facebook, Instagram, WhatsApp) as a Notorious Market due to the proliferation of fraudulent advertisements and the abundance of counterfeit products available on the platform. AAFA’s comments also raise concerns regarding Alibaba Cloud, Lazada, and Amazon.

The Notorious Markets report is managed by USTR to identify physical and online marketplaces that engage in and facilitate substantial copyright piracy and trademark counterfeiting at the expense of American companies. AAFA has found that the promotion and sale of counterfeits continues to grow exponentially on major e-commerce and social media platforms through the destructive value chain of counterfeits.

“Apparel and footwear brands are spending millions to identify and police malpractices via e-commerce and social media platforms,” said Steve Lamar, president and CEO of the American Apparel & Footwear Association. “Detection processes include waiting days and months for the removal of the illicit products. Every day it takes to remove a counterfeit product, an illicit seller, a fraudulent ad, or a fake website is another day that unsuspecting American consumers are able to be duped into buying unsafe counterfeit products that could bring harm to themselves and their families. Despite increased awareness, the explosion of e-commerce has enabled counterfeiting to grow exponentially and occur on a grander scale, at a significant cost to American Apparel & Footwear Association members, the U.S. economy, the health of U.S. citizens, American jobs, and more. It is well past time for Congress to take action by passing the SHOP SAFE Act and the INFORM Consumers Act to protect American families from un-vetted sellers and counterfeit products. Regardless of where a platform is headquartered, counterfeits promoted and sold on those platforms have a very real impact on Americans so the U.S. government should hold these platforms accountable.” 

In addition to providing USTR with specific nominations, this year’s submission also includes important details on the added cost the fight against counterfeits imposes on American companies. To put this in context: above what is spent on addressing the online problem, one member quoted the legal costs in enforcing against counterfeiters and the value chain of the problem is at least at $2 million per year. Another member — a small business with approximately 18 employees — estimated reallocating at least $50,000 towards brand protection efforts yearly. 

Earlier this year, AAFA released the results of a study conducted with Intertek, a highly respected international total quality assurance provider, to test counterfeit products for a range of hazardous chemicals and heavy metals. The study found that 36.2 percent of the products tested failed to comply with U.S. product safety standards, including dangerous levels of arsenic, cadmium, phthalates, lead, and more that have been shown to cause adverse health outcomes.

AAFA has been a strong supporter of the SHOP SAFE Act and the INFORM Consumers Act. Both bills are bipartisan and bicameral, and outline reasonable steps to keep dangerous products off of e-commerce platforms and to ensure the safety of American families that shop online.

AAFA’s full Notorious Markets submission is available for download here.