E-commerce companies' united fight against piracy is stronger than ever

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About a month ago, Nikhil Infant was telling his brother about the Bose Bluetooth-enabled speaker he had ordered after spotting “an awesome deal” on an e-commerce website. Today, the speaker sits in his room gathering dust. “I trusted the seller because he had made allowance for a cash-on-delivery option,” he says. “I got ripped off. The product is a fake.”

Author and politician Shashi Tharoor, too, encountered a fake when, in his words, a “smart, well-dressed man” approached him at Mumbai airport late last year. The man wanted an autograph on Tharoor’s book, An Era of Darkness. What he didn’t realise was that he was holding out a pirated edition of the book, a paperback, for the author to sign. He had bought it on e-commerce behemoth, Amazon.

“How is this piracy? I bought my brother the same book through Amazon,” Tharoor was asked following the revelation of the incident on Twitter. “The only legal edition of the book is in hardback. All paperbacks are pirated and Amazon should not be selling them,” Tharoor replied. 

Stumbling upon counterfeits is not a one-off occurrence and even e-commerce giants such as Amazon and Flipkart are falling prey to merchants pushing fakes. What’s more, they’re realising that the struggle to weed counterfeit products out of their orbits is harder than it is theorised to be.

Those who shop online stand united in the thought that the act is akin to arranging a gift to oneself. It arrives on your doorstep all wrapped up, waiting to be tried and tested. Now imagine a scenario where the shoes you ordered online fit exactly right and are just as lime green as you wanted them to be, only they read “Liver” instead of, say, “Lee Cooper”. Even the cardboard box they came in had proudly announced they were Lee Coopers, recalls B Venkateswara Prasad, a Noida-based customer who received just such a product.

The problem of fake goods finding an online platform is a global one, says Pinakiranjan Mishra, partner and national leader (retail and consumer products), Ernst & Young. “It’s everywhere,” he says.

A recent case involved American lifestyle and footwear brand Skechers, which filed a case against Flipkart and four sellers on the e-portal alleging the sale of counterfeit products in the brand’s name. With the help of court-appointed commissioners, the company raided seven warehouses in Delhi and Ahmedabad and reportedly recovered fakes. Flipkart did not respond to questions on the issue, and Skechers has refused to comment saying that the matter is in court.

In another case, a raid at a warehouse in Meerut yielded a stock of fake sports goods — Cosco and Nivia balls. These were lined up to be sold online on some of India’s most popular e-commerce sites.

Earlier, in 2015, lawyers representing Lacoste, Tommy Hilfiger, Calvin Klein and Levi’s were part of a court-backed raid in Delhi where they confiscated fake apparel from a warehouse reportedly owned by Stylemyway.com. This was around the same time that American headphone maker Skullcandy took Paytm to court for allegedly selling counterfeits, and Luxottica, maker of Ray-Ban sunglasses, got an injunction against ShopClues for allegedly hosting fakes.

“We have tried to give comfort to both the court and the brand by ensuring preemptive measures and quick solutions to prevent recurrence of such cases,” says Ambar Deep, vice-president (products and customer experience), ShopClues. “In a similar High Court matter, the case was favourably disposed of as the brand was satisfied with our collaborative effort in addressing counterfeiting issues and challenges faced by the e-commerce industry.”

Almost everyone in the equation, barring counterfeiters, of course, suffer the fallout of the counterfeit trade growing online. While the shopper is subjected to questionable quality and dubious provenance of the product, brands partnering with online marketplaces often have to brave a hit to their profits. And while customers and brands alike may direct their ire at e-commerce platforms, the impact of piracy is unsettling for them too.

“Brands recognise our intermediary position under the information technology regulations,” says ShopClues’s Deep. E-commerce players maintain that they are just a marketplace, an intermediary, thus dividing opinions on accountability.

“When a counterfeit item is sold online, in practice and principle the world over, the role of the intermediary is reactionary in nature,” says Bharatvir Singh, partner with intellectual property law firm Saikrishna & Associates. As and when a platform is informed about a counterfeit being listed, it is their duty is to take the listing down, he explains.
“E-commerce companies are often found flouting the Intermediaries rules 2011 made under the IT Act, 2000,” says Mumbai-based cyber law advocate Prashant Mali. Counterfeit sellers get away, feels Mali, by exploiting the loopholes in e-commerce platforms where the credentials of a seller aren’t checked.

Even as the enormity that is the counterfeit goods space goes largely untracked, e-commerce companies appear to be tightening their belts. Paytm, for instance, de-listed 85,000 sellers in one fell swoop, in an attempt to weed out dubious merchants last year.

When you buy from a platform, you are relying on the platform’s credibility, says Mishra. Many echo this line of thinking. “I don’t believe e-commerce companies are just a platform. I think they have a role to play in being an intermediary,” says Falguni Nayar, founder and CEO, Nykaa, a beauty and wellness e-portal. “It is the responsibility of e-commerce companies to check what they are selling on their sites.”

“Fake and counterfeit products are a blemish on the business of an e-commerce player,” says brand expert Harish Bijoor. “Discovery of fakes leads to a total distrust of the e-commerce brand in question. As it is, physical retailers show a tendency to spread the word that online is a medium that sells fakes. Discoveries such as the ones alleged stoke the fire even more,” he adds.

Aware that such incidents can tarnish their reputation and compromise their credibility, e-portals are getting watchful. “Customer-awareness programmes, tamper-proof packaging and taking legal action against a seller found to be offering fake products are some of the ways we maintain quality guidelines,” says a Flipkart spokesperson.

The pressure to adhere to guidelines is trickling down to merchants. “Why is Flipkart so strict?” asks a merchant on an online discussion platform for sellers. “It has really tightened regulations. Background checks and letter of authentication have become especially important for Flipkart in the last three years,” says a representative of the All India Online Vendors Association.

Causalities in any war have innocent victims. Joining e-shoppers in harm’s way are also a few sellers, like the one who was blacklisted on Amazon after a customer expressed doubts about the product’s authenticity. “This is my letter from the brand; I am a certified distributor of the product,” says the merchant, hoping he’ll be allowed back on the platform.

Many believe that partnering with brands and hosting only authorised dealers is the way to crack down on piracy. “But as long as the product is genuine, anyone can legally sell it,” says Singh. And, if only authorised sellers are allowed on e-commerce platforms, they wouldn’t have access to the whole gamut of product choices that draw customers to such platforms, chips in the representative from the All India Online Vendors Association.

As many echo, what is happening in e-commerce is only a reflection of what happens in the brick-and-mortar world. “Online retail is still a relatively small proportion of the offline retail sector and often becomes a talking point regarding the issues as the content is readily available to the public online,” says Deep of ShopClues.

There are primarily two types of products that are counterfeited. “One that has a high brand recall and the other that offers a high margin,” says Mishra. From sports goods and apparel to phone chargers, there’s a lot that falls in these two segments. Adds Nayar of Nykaa, “Cosmetics are a big market for counterfeit products, that’s why we ensure that almost all of our sourcing is done from the brands themselves.”

For shoppers, the lure of convenience and competitive pricing is hard to resist. But it might not be wise to buy absolutely everything online. Shail Devi learnt this the hard way. When she opened a new bottle of omega-3 fish oil she had ordered off Amazon, she knew there was “something different” right away. “The bottle was much easier to open than the ones I had been buying from the distributor,” she recalls. She discontinued it when she began to feel dizzy. “I went back to the distributor for a new bottle. This one was fine.”

Amazon refunded the money immediately, but the bottle is still sitting on her shelf as a reminder of what not to shop for online. In such cases, a customer can also find redressal by approaching a consumer-friendly forum.

In late 2017, for instance, the Consumer Education and Research Centre, Ahmedabad, took up the issue of a customer receiving a pack containing two fake Lakme Eyeconic Kajal pencils. 

Seven out of 340 customers who had bought the product from that particular seller on Amazon complained and received a refund. After the case was made public online via a Change.org petition requesting e-portals to clamp down on fake products, Amazon and Hindustan United Lever (which owns Lakme) reportedly worked together to provide all 340 customers with replacements.

“These are knee-jerk actions, anecdotal even,” says Bijoor. “The big issue is that there are just too many intermediary suppliers. E-commerce offers big volume opportunities. When it comes to such big volumes, the intentions of the best suppliers could change from good to bad,” he says.

Mali is of the view that to stop piracy, customs and shipping companies too have the onus of checking what’s entering India. “IPR (intellectual property rights) units of the police should carry out frequent raids and arrests,” he says.

Brands and e-commerce platforms are already working together on blacklisting bad apples and assisting search and seizure raids. Purging the nuisance of counterfeit goods remains a challenge in the physical world, too. Greater accountability and customer support might just be the answer.

  • Too much of a good thing may be bad: be wary when the discount seems unusually high
  • Except for cases in which the product is by nature non-returnable, look for exchange or return policy 
  • Take a second look at the brand's logo and packaging. Look for guarantees and warranties offered by brands themselves, or an assurance by the e-commerce platform itself
  • Take the time to check seller ratings and review feedback on the item. Generally, the more the better
  • Even knives and ice-cube trays could be counterfeit, but be especially careful while shopping for high-end apparel, footwear, cosmetics such as fragrances, hair care products, books, sports goods and sports merchandise as well as accessories like watches, and electronics like phones, audio equipment and chargers 
  • In case you receive a knock-off, find the time to post proper feedback — even if you have got your refund. Your feedback will help a fellow shopper

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