FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI

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FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI
FRAUDULENT
ADVERTISING ONLINE
    EMERGING RISKS AND
       CONSUMER FRAUD

           T R AC I T. O R G
FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI
ABOUT TRACIT
  The Transnational Alliance to Combat Illicit Trade (TRACIT) is an independent,
  private sector initiative to drive change to mitigate the economic and social
damages of illicit trade by strengthening government enforcement mechanisms
 and mobilizing businesses across industry sectors most impacted by illicit trade.

                               ABOUT AAFA
    The American Apparel & Footwear Association (AAFA) is the national trade
association representing apparel, footwear and other sewn products companies,
and their suppliers, which compete in the global market. Representing more than
 1,000 world famous name brands, AAFA is the trusted public policy and political
 voice of the apparel and footwear industry, its management and shareholders,
        its nearly four million U.S. workers, and its contribution of more than
             $400 billion in annual U.S. retail sales. www.aafaglobal.org

                    FOR MORE INFORMATION
  This report is available online in PDF format, along with an Executive Summary
        and ancillary documentation. Visit www.tracit.org/publications.html

                                     MEDIA
        All media enquires should be directed to Cindy Braddon, Head of
         Communications and Public Policy, cindy.braddon@TRACIT.org

                              SOCIAL MEDIA
                              Twitter: @TRACIT_org
                 LinkedIn: www.linkedin.com/company/tracitorg

                        ACKNOWLEDGMENTS
     We express our appreciation to Toe Su Aung and Sam Irving of Elipe, Ltd.,
   for their diligent research and insightful guidance (www.elipe-global.com).
    We also appreciate the contributions of the many corporations who have
    identifed and shared examples of fraudulent advertising of their products.

     The objective of this report is to help rid the Internet of widespread fraud in
     advertising. The first step in this process is to shed light on the prevalence of
fraudulent advertising appearing on shopping and social media platforms. Better
    educated consumers are in a better position to defend themselves against
   fraud. Whenever fraudulent advertisements are found, we suggest in the first
 instance that these are reported to the relevant platform on which they appear,
       and where appropriate to law enforcement or government regulators.
FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI
EXECUTIVE SUMMARY

What’s the fuss about fraudulent                      websites also show a disregard for data privacy
advertising?                                          and expose consumers to credit card fraud,
                                                      identify theft, and other cybercrimes. Even more
Fraudulent advertising is rapidly emerging as a
                                                      alarming is evidence that a coordinated criminal
new risk to consumers shopping online, where
                                                      network (or networks) are often behind the
millions of consumers are exposed to thousands
                                                      adverts.
of fraudulent advertisements taking them to
thousands of illegitimate e-commerce websites         What needs to be done?
that defraud and/or sell counterfeit products and
                                                      Advertising has long been regulated by
deceitful services.
                                                      governments to ensure that messages are truthful
In keeping pace with consumer trends—and to           and do not mislead reasonable consumers about
stay one step ahead of controls—illicit traders now   aspects of a product or service. In some countries,
post fraudulent adverts that divert unsuspecting      there is also consideration of fairness, which
consumers to websites featuring counterfeits,         focuses on whether an advert causes substantial
fake services, and other fraud. Of concern is that    consumer injury.1
the adverts are all over social media networks
                                                      However, similar controls are not sufficiently
like Facebook and Instagram, or other popular
                                                      applied to advertising on the Internet. While
websites like YouTube or Google, where people
                                                      there are several new initiatives to address certain
are not expecting fraud.
                                                      aspects of online advertising, more controls on
This report shows that more than 70 major             fraudulent advertising appearing on legitimate
international brands were targeted by fraudulent      websites including social media are needed.
adverts on Instagram and Facebook since 2017,
                                                      Solutions could be driven by government
some of which received up to a quarter of a
                                                      leadership, through the application of offline
million views before they were detected. And just
                                                      advertising standards to today’s online
like legal adverts that seem to magically know
                                                      marketplaces. Such steps could ensure multi-
what you are looking for, even before you started
                                                      factor verification systems or other mechanisms
searching for it, fraudulent adverts are also often
                                                      to support a “trusted” user program are applied
hyper-targeted at consumers based on specific
                                                      to the act of fraudulent online advertising.
interests, location, demographics or browsing
history.                                              Leadership could also be taken by the major
                                                      Internet platforms that are currently enabling
In addition to advertising fake and substandard
                                                      the fraudulent practices. Notably Facebook
products, there is a growing trend of deceptive
                                                      and Instagram are not implementing sufficient
advertising for fraudulent commercial and
                                                      verification of an advertiser’s identity as they
financial services, where names and images
                                                      enter a commercial advertising relationship with
of popular personalities are used without
                                                      these platforms.
authorization.
                                                      Hand in hand with fraudulent advertising is the
For consumers, their exposure to counterfeit
                                                      persisting presence of rogue websites specifically
goods and fraudulent services presents direct and
                                                      built to sell counterfeit or other illicit products.
indirect health and safety risks. Most fraudulent

                                     FRAUDULENT ADVERTISING ONLINE: EMERGING RISKS AND CONSUMER FRAUD        1
FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI
In the absence of rogue destination websites,       Similar verifications should be required for
        fraudulent adverts would have nowhere to            online advertisers, including the disclosure
        redirect consumers. For these reasons, efforts      of certain verified information regarding
        taken concurrently with domain name registrars      sellers, such as identity, principal place of
        and Internet Service Providers can improve          business, contact information, verified bank
        the prevention, blocking and removal of these       account information, government-issued photo
        infringing sites and, consequently, reduce the      identification, and a business tax identification
        effectiveness of the fraudulent advertising         number.
        schemes. Notably, the converse is also true that
                                                            The objective of this report is to help rid the
        these websites would gain little to no traffic
                                                            Internet of widespread fraud in advertising.
        without advertising to divert consumers to them.
                                                            Consumers should have a safe and secure
        Clearly, a holistic, across-the-board, approach
                                                            shopping experience like that available offline.
        is needed to address the misuse of Internet
                                                            This means defending against the sale of
        platforms for illicit trade.
                                                            fraudulent products consumers may find on their
        Is there a reasonable solution?                     own as well as defending against the fraudulent
                                                            advertising that lures consumers to illegal
        The lack of sufficient policies and procedures
                                                            websites.
        to verify an advertising intermediary’s true
        identity and conduct the necessary vetting and
        due diligence during the onboarding process2 is a
        system weakness across multiple Internet-based
        social media and shopping platforms.
        Therefore, requiring these intermediaries to
        provide sufficient and accurate information is a
        solution of the highest priority, especially when
        considering that those abusing the platforms
        will not be sufficiently deterred unless they can
        be identified and punished. A parallel example
        is the priority included in the January 2020 U.S.
        Department of Homeland Security (DHS) Report
        on Combating Trafficking in Counterfeit and
        Pirated Goods to significantly enhance vetting
        of third-party sellers by encouraging platforms
        to put in place a uniform and articulable vetting
        regime.

2   TRACIT.ORG
FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI
HOW BIG IS THE PROBLEM?

Fraudulent advertising is everywhere
online
Fraudulent advertising has emerged as the latest
online threat to consumers. In keeping pace with
consumer trends—and to stay one step ahead of
controls—illicit traders now post fraudulent ads
that divert unsuspecting consumers to websites
featuring counterfeits, fake services, and other
fraud. Alarmingly, the adverts are all over social
media platforms like Facebook and Instagram, or
other popular websites like YouTube or Google,
where people are not expecting fraud.

• Since May 2017, more than 70 consumer
  and apparel companies confirmed to have
  been targeted by fraudulent and infringing
  sponsored adverts on Instagram and
  Facebook. The actual number is likely to
  be significantly higher, as these advertisers
  target brands indiscriminately across multiple
  sectors. Given a common modus operandi,
  it appears there may also be a coordinated
  criminal network or networks behind the
  adverts, using hacked Facebook or bot-
  generated profiles together with stolen               profit through easy-to-find videos touting
  credit card data to post adverts that mislead         overpriced face masks and bogus vaccines,
  consumers and direct them to e-commerce               costing consumers more than $5 million.4
  websites that defraud and/or sell counterfeit
  products.                                          • An advert on Facebook told a gloomy story of
                                                       a Los Angeles family that died from COVID-19
• Fraudsters have used Google’s video platform         as a trick to divert customers to a website
  YouTube to exploit the popularity of certain         selling protective face masks. Turns out the
  popular video games to create videos that            story is not true; the family is alive and well
  trick consumers to download risky apps or            and the face masks for sale are unapproved.5
  purchase bogus services. In worst cases, users
  are being tricked out of significant sums of       • In April 2019, an advert for fake Tommy
  money. One scam automatically charged                Hilfiger apparel was identified on LinkedIn.
  a subscription fee of $99.99. Within days,           The advert was directing people to the rogue
  it generated over 118,000 views.3 Also on            website www.tommy-top.com, that was
  YouTube, scammers are using COVID-19 to              identical to other fraudulent and counterfeit
                                                       websites identified via Instagram adverts.

                                     FRAUDULENT ADVERTISING ONLINE: EMERGING RISKS AND CONSUMER FRAUD    3
FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI
Fake adverts are intended to deceive                  This means that counterfeiters have figured
                                                              out precisely how to hide their activities from
        Just like legal adverts that seem to magically
                                                              investigation by brands and possibly even the
        know everyone’s online shopping wish list,
                                                              platforms themselves. Consequently, it can
        fraudulent adverts are also often hyper-targeted
                                                              be extremely difficult to determine the actual
        at consumers based on specific interests, location,
                                                              destination website where potentially deceived
        demographics or browsing history.
                                                              consumers end up. And even if an originating
        Moreover, tactics used by counterfeiters              fraudulent advert itself may be reported and
        to confuse shoppers on Amazon or other                removed from the platform, the website it once
        e-Commerce platforms are similarly being used         directed to will continue to operate and probably
        by criminals posting fraudulent advertisements.       be used again in another advert. Moreover, some
        These deceptive tactics include the use of            scammers use an innocuous website address
        well-known trademarks, unauthorized images            when configuring an advert (such as a legitimate
        protected by copyright and fake offers to create      website from a department store) only to swap
        extremely professional looking fake adverts           to a counterfeit website as soon as the advert has
        that would be indistinguishable from legitimate       been approved and gone live.
        adverts—except the hyperlinks divert consumers
                                                              By conducting reverse IP address investigations
        to criminal websites selling counterfeit items or
                                                              on these websites, it was also discovered that
        fraudulent services.
                                                              it was possible to find multiple other rogue
        For example, there was a significant spike in the     websites selling counterfeit of many well-known
        number of fraudulent adverts posted by generic        brands. For example, the website http://oite.
        new accounts (e.g. “Fashion jacket store” and         poitemall.com was identified from a Facebook
        “Backpack discount”) in the two-week run-up           advertisement targeting Japanese consumers.
        to “Black Friday” in 2019. The adverts and the        The website shares its IP address with 232
        associated rogue websites offered huge unrealistic    other domains/websites, including http://www.
        discounts targeting popular toys, handbags,           denlweshop.com which targeted the luxury brand
        winter jackets and boots, guitars, and fitness        Coach. Similar to the other counterfeit sites
        trackers, as well as many popular fashion clothing    sharing the same IP address, this one likewise
        brands. Underpinning the scam is the consumer         offered “80% off”, displayed false company
        knowledge that discounts from legitimate brands       and address information about the website’s
        may be higher than normal around Black Friday.        operator and included a Russian email address
        Hand in hand with the fraudulent advertising is       (24service@bag-ok.ru) that did not match the
        the deployment of falsely displayed destination       domain name. This suggests there is a larger
        URLs within the adverts, multiple URL redirects,      cybercriminal network utilizing these domains to
        URL cloaking techniques and URL shorteners            exploit consumers across different search engines
        (bit.ly) to deceive consumers and prevent             and social media platforms.
        detection from investigators. These sophisticated
                                                              Product fraud and counterfeiting
        URL redirects will often change the website
        destinations when a user clicks on an advert          Scams can spread like wildfire on social media,
        depending on whether the user is viewing the          the very nature of which encourages us to
        advert on a desktop browser or via the social         share and like posts so that they are seen by as
        network’s own app. In addition, many of these         many people as possible. Millions of consumers
        links are only accessible when viewed within the      are exposed to thousands of fraudulent
        Instagram app (and not on the desktop browser).       advertisements taking them to thousands of

4   TRACIT.ORG
FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI
illegitimate e-commerce websites that defraud         Services fraud
and/or sell counterfeit products and deceitful
                                                      In addition to fraudulent adverts of fake or
services.
                                                      substandard products, there is a growing trend of
Some potential scams may seem innocent at first.      fraudulent advertising of commercial and financial
For example, a simple quiz that ultimately gets       services. Public figures such as UK financial
you to reveal the answers to common banking           journalist Martin Lewis8 and Dutch businessman
security questions. There are also cases where        John de Mol9 have spoken out about how their
scammers pose as your Facebook friends and            names and images have been used without
reach out, claiming they are in urgent need of        authorization in adverts to promote fraudulent
money.                                                services and fake products. Both have taken legal
                                                      measures to compel action against these scams.
This report is underpinned by data collected
on more than 70 consumer and apparel brands           Martin Lewis initially sued Facebook for
confirmed to have been targeted by fraudulent         defamation after a year in which over 1,000 scam
and infringing sponsored adverts on Instagram         adverts abusing his name or image had appeared
and Facebook since 2017 (Figure 1).7 The actual       on the platform, likely seen by millions of people
number is likely to be significantly higher, as       in the UK. In response, Facebook acknowledged
these advertisers target brands indiscriminately      the scale of the problem, its impact on real people,
across multiple sectors. Furthermore, the adverts     and agreed to commit to making a difference both
are optimized to attract attention and can receive    on its own platform and across the wider sector.
large numbers of views even if only active for a
                                                      Dutch billionaire John de Mol filed a lawsuit
short period of time. It has been observed that
                                                      against Facebook for allowing fake adverts on
some of these adverts have received over 240,000
                                                      its platform, which used his name and image to
views within just a couple of days. Given the size,
                                                      perpetrate Bitcoin-related fraud. Lawyers for De
scope and number of brands affected, the scale of
                                                      Mol said that consumers had been swindled out
the deception and fraud occurring on social media
                                                      of €1.7 million ($1.9 million) by the fraudulent
platforms cannot be underestimated.

Figure 16

  1. Adidas                  21. Dewalt                 41. Moncler                    58. Stone Island
  2. Apple                   22. Dr. Martens            42. Montblanc                  59. Superdry
  3. Arc'teryx               23. Emporio Armani         43. Monsoon and                60. Supreme
  4. Ariat                   24. Fila                       Accessorize                61. The North Face
  5. Balenciaga              25. Fjällräven             44. Muck Boots (Honeywell)     62. Timberland
  6. Berluti                 26. Geox                   45. National Football League   63. Tommy Hilfiger
  7. Bose                    27. Gymshark                   (US NFL)                   64. Tony Bianco
  8. Braun                   28. HP (laptops)           46. National Hockey League     65. Trek (bikes)
  9. Breville                29. Hugo Boss                  (US NHL)                   66. TUMI
  10. Brooks Sports          30. Husqvarna              47. New Balance                67. UEFA Football Club
  11. Calvin Klein           31. JBL                    48. Nike                           jerseys (including
  12. Camper                 32. Keen                   49. Nintendo                       Juventus F.C., Liverpool
  13. Canada Goose           33. Kenzo                  50. Off-White                      F.C., Real Madrid C.F. and
  14. Canon                  34. Kipling                51. Patagonia                      Tottenham Hotspur F.C.)
  15. Carhaart               35. Lacoste                52. PlayStation (Sony)         68. Ugg/Deckers
  16. Cartier                36. Lego                   53. Ralph Lauren               69. Van Cleef
  17. Chanel                 37. Levi's                 54. Ray-Ban                    70. Vans
  18. Clarks (Shoes)         38. Louis Vuitton          55. Salomon                    71. Vasque
  19. Converse               39. Makita                 56. Saucony                    72. Weber
  20. Delonghi               40. Michael Kors           57. SKECHERS                   73. Xbox (Microsoft)

                                    FRAUDULENT ADVERTISING ONLINE: EMERGING RISKS AND CONSUMER FRAUD                    5
FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI
adverts, and that he was only one of several           Although this report is not a quantitative study
        Dutch celebrities targeted. In this case, the          on the size and value of counterfeiting, important
        Amsterdam District Court found that while it may       conclusions on the impact of fraudulent
        not be “technically easy” for a platform to take       advertising can be drawn from current trends.
        measures against these serious advertising scams,      According to a 2017 report by Frontier Economics,
        it is still the platform’s responsibility to protect   the global economic value of counterfeiting (not
        consumers.10                                           including digital piracy) in 2020 is approximately
                                                               $1.8 trillion.11 Online sales now represent between
        Certainly, Facebook’s response to the Lewis case
                                                               14-16 percent of total global retail sales during
        acknowledges at least a degree of responsibility
                                                               the 2019-2020 time frame.12 Consequently, as
        and the Amsterdam Court’s view calls for greater
                                                               a share of global counterfeiting, the value of
        responsibility. However, while many popular
                                                               counterfeits purchased through online outlets
        websites and social media platforms provide
                                                               would equal $252-288 Billion. This estimate
        tools for de-listing fake adverts based on IP
                                                               compares reasonably to the 2018 Global Brand
        infringements, these measures do not address
                                                               Counterfeiting Report, which estimates that
        the root problem. Unfortunately, even after being
                                                               the losses suffered due to online counterfeiting
        reported and removed adverts often reappear
                                                               globally amounted to $323 Billion in 2017.13
        within 24 hours, with slightly different content.
        Fraudulent Ads have even been found appearing          Sometimes the campaigns are fiercely aligned to
        in “Instagram Stories” which only last 24 hours.       global shopping events, where criminal networks
        That makes it impossible for brand owners to           are orchestrating the creation of hundreds of
        keep track of the threats and take effective action.   ad accounts, websites, hosting and payment
        One brand owner reported taking down an                infrastructures in order to maximize their return
        average 30 adverts every day on just one popular       on investment whilst competing against the
        social media site.                                     legitimate brands in the same space. Some of the
                                                               fraudulent adverts for well-known brands can
        Taken together, the question remains whether
                                                               attract a quarter of a million views in a single
        the platforms can and will improve preemptive
                                                               day. In another example, one fraudulent advert
        measures to identify and block fraudulent adverts.
                                                               Instagram for counterfeit goods used a domain
        Economic impact                                        linked to 3,200 other rogue domains, all featuring
        The emerging gateway to illicit sales online is a      ‘high discounts’ for branded items and no contact
        link from a fraudulent advert to a rogue website       information.
        offering illicit products. Collected research          Given that counterfeiting increased by 154 percent
        provides evidence over time indicating there are       over the last decade and that online shopping
        hundreds of thousands of fraudulent adverts            is increasing by 10-20 percent per year, if left
        available, backed by large networks of scam and        unchecked, this problem will continue to grow.14
        rogue websites ready to receive and defraud
        unsuspecting consumers. As highlighted in this
        report, the trend is to increasingly feature the
        realistic, but nonetheless fraudulent, adverts on
        social media platforms that can instantly reach
        millions of unsuspecting online users.

6   TRACIT.ORG
FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI
WHAT ARE THE DANGERS?

1. Consumer risks                                     2. Business and brand owners
Fraudulent adverts give innocent consumers            Today’s increasingly knowledge-based economy is
a false impression of authenticity by using           driven and dependent on continuous innovation.
fake trademarks of popular brands and other           In contrast, IP theft in the form of trademark
infringements such as misrepresented images of        counterfeiting and copyright piracy stifles
genuine products, slogans, and corporate style.       economic growth and job creation by discouraging
They often use words such as “discount”, “100%        innovation, reducing incentives for companies to
genuine”, “Official store”, ”90% off” or other        invest in R&D and inhibiting creative industries
wording designed to attract attention.                from realizing their full potential.
For brands and consumers, the threat posed            Fraud, especially involving the acquisition of
by fraudulent adverts can be severe and their         counterfeits, severely damages the reputation of
exposure to counterfeit goods poses direct and        legitimate brands, as well as taking away potential
indirect health and safety risks.                     customers. Counterfeit goods are generally of poor
                                                      quality, will not last, are not guaranteed, and may
Legal manufacturers abide by regulations
                                                      be dangerous. When consumers are disappointed
and invest heavily in innovation and product
                                                      with the purchasing experience, it diminishes
development, with brands serving as guarantees
                                                      legitimate sales, which has consequences for
of quality and safety. In contrast, counterfeiters
                                                      investment, employment, revenue, and tax
make their money by sidestepping product
                                                      collection. Meanwhile, it also places additional
safety regulations, environmental controls, and
                                                      demands on law enforcement agencies.
labor laws. Consequently, counterfeit goods are
often of sub-standard quality or of unknown           3. Data privacy
and sometimes dubious chemical/material
                                                      Most fraudulent websites show a disregard for
composition.15 Even relatively innocuous goods,
                                                      data privacy of any type, including customer
such as watches, apparel and handbags can pose
                                                      data, security, and financial information. (Figure
health risks for consumers when counterfeiters
                                                      2.) Since these websites rarely use any form
use potentially harmful materials (allergenic and/
                                                      of security, consumers are often also exposed
or toxic).16 Examples include the use of prohibited
                                                      to credit card fraud, identify theft, and other
carcinogenic dyes to color fabrics and children’s
                                                      cybercrimes.20
clothing made from highly flammable fabrics
that burn quickly and intensively.17 Counterfeit      Another risk is linked to scam adverts concerning
cosmetics and personal care products containing       consumer goods. Adverts purporting to be from
dangerous levels of lead, mercury, cyanide and        legitimate fast-moving consumer goods (FMCG)
other carcinogens can cause severe allergic           companies will offer free products, such as
reactions and pose a particular threat to pregnant    toothbrushes, toothpaste, or laundry detergent,
women and their unborn babies.18                      in exchange for completing a survey or otherwise

                                     FRAUDULENT ADVERTISING ONLINE: EMERGING RISKS AND CONSUMER FRAUD       7
FRAUDULENT ADVERTISING ONLINE - EMERGING RISKS AND CONSUMER FRAUD - IP LAW GALLI
Figure 2 19                                                                 • In some examples, the
                                                                                      adverts actually directed
                                                                                      users to these retailers’
                                                                                      websites, possibly
                                                                                      indicating that they were
                                                                                      initially configured to
                                                                                      appear legitimate in order
                                                                                      to pass Facebook’s ad
                                                                                      review stage – and then
                                                                                      once approved they were
                                                                                      edited to direct consumers
                                                                                      to the fraudulent
                                                                                      websites.
                                                                                    • The adverts use a series
                                                                                        of URL redirects and
                                                                                        utilize Facebook’s own
        inputting personal data. The data gathered                                      website analytics visitor
        through these means may then be used to further            and tracking tool, Facebook Pixel, to analyze
        defraud the consumer through other phishing                the success of the adverts and improve the
        and cold-calling scams.                                    reach of new adverts in the next fraudulent
        4. Organized crime                                         campaign.

        As noted by EUROPOL, “Trading in counterfeit            • The ad destination URLs sometimes did not
        products is a relatively low risk activity, involving     direct to an active website, but the destination
        minimal penalties whilst providing high profits,          URL would have a .cn, .tw or .pw extension.
        and will increasingly attract [organized crime            In many cases, the websites are created using
        groups] previously involved in other crime                Chinese registrant details; however, these
        areas.”21 The fraudulent and infringing adverts           appear to be false or incomplete.
        discovered on Facebook often share similar
        characteristics, suggesting that organized crime
        groups or organized illicit networks are operating
        these fraudulent ad campaigns.
        Further evidence of a sophisticated, coordinated
        criminal approach is found in the common
        application of the deceptive/misleading
        technological features and techniques. For
        example, fraudulent advertisements provide a
        visible URL of well-known online retailers (e.g.,
        amazon.de, jdsports.co.uk and Zalando.co.uk) that
        also use Instagram to advertise. In some cases,
        the scams use the official URLs of the brands
        being counterfeited only to redirect consumers to
        a fraudulent website that mirrors the official one.

8   TRACIT.ORG
WHAT ARE THE CAUSES?

The root cause of the problem is that most social      on a popular social media site.22 They reported
media platforms and e-Commerce websites accept         3,834 views, 73 clicks and 19 forwards all within
advertising without proper controls over the           24 hours and for the small price of £ 15. (Figure
source of the advertiser. In addition, weaknesses      3.)
in the system that enable advanced technologies
                                                       It appears that social media platforms,
to generate and place the adverts are also a big
                                                       notably Facebook and Instagram, are not
part of the problem. There is also little protection
                                                       implementing sufficient substantive verification
from repeat offenders and the fraudulent adverts
                                                       of an advertiser’s identity as they enter into a
would have no purpose if it were not for larger
                                                       commercial advertising relationship with such
failures which allow fraudulent, infringing and
                                                       platforms; often as little as a credit card and an
otherwise rogue websites and domains to exist.
                                                       email address is enough to create an advertising
1. Limited verification                                account, both of which could be stolen from other
                                                       unwitting customers. This is placing consumers
Without robust due diligence checks that verify
                                                       at significant risk by exposing them to adverts by
the identity of who is advertising on the platform,
                                                       unknown parties intending the sale of counterfeit
fraudulent advertisers are free to exploit the
                                                       goods or other fraudulent practices. By adopting
system with little risk of exposure and virtually no
                                                       best practices in “know your business customer”
risk of punishment or penalty.
                                                       checks, platforms can mitigate against this risk.
The placement of a fraudulent advert can be done
in just a couple hours at very little cost. In fact    2. System weaknesses
a UK-based consumer interest journal recently          Research has shown that a fundamental gateway
demonstrated the ease of posting a fake scam ad        to fraudulent advertising is the creation of an
                                                                            illegitimate hosting page. In
Figure 3                                                                    order to be able to advertise
                                                                            on Instagram or Facebook, a
                                                                            Facebook account and page is
                                                                            required. However, there are
                                                                            no apparent controls on such
                                                                            accounts, such as account
                                                                            history, relevance to the
                                                                            advert, or level of activity.

                                     FRAUDULENT ADVERTISING ONLINE: EMERGING RISKS AND CONSUMER FRAUD       9
What has been observed in the accounts posting          to prevent or take down such infringing sites.
         the fraudulent adverts is that they are often (i)       However, the converse is also true that these
         compromised (hacked) Facebook profiles/pages            websites would gain little to no traffic without
         or (ii) a newly created bot-generated Facebook          advertising that diverts consumers to them. While
         “Community” page.                                       some consumers may discover these fraudulent
                                                                 websites through organic search results, a
         • Many of the fraudulent sponsored ads are              significant number will be diverted to them by the
           from compromised Facebook accounts of                 fraudulent adverts.
           businesses or small organizations that have
           been “hacked” and have no connection to the           Efforts to clean up fraud online, must go hand
           advert that is being sponsored. For instance, a       in hand, so that social media platforms are kept
           fraudulent advert for a (fake) Tommy Hilfiger         aware of any websites being taken down which
           shirt, might be artificially sponsored by some        are linked to an advertising account on their
           completely unrelated Facebook host, such as           platforms, so that they might check for other
           “Business Insurances”, “Medisch Pedicure”             potentially infringing websites connected to the
           or “Georgian College Benefit Concert”. With           same account; where an advert is successfully
           multiple high-profile personal data breaches          taken down, the platform should also notify the
           in recent years, millions of email and                relevant ISP and registrar so that they can take
           password records have been exposed thus               appropriate action against the registrant.
           making compromised Facebook profiles and
                                                                 4. Little protection from repeat
           pages by cyber criminals more likely.
                                                                    infringers
         • A bot-generated account is a sophisticated            It is not difficult to repeat a fraudulent advert,
           operation, where a computer sets up a                 even after being reported. This is partly because
           Facebook account or page which is then                some adverts may avoid using IP-infringing
           used to post the fraudulent adverts. These            brand names and keywords and partly because
           pages often contain unrelated, little or no           adverts often reappear in slightly different
           information and no content. They are typically        forms after being delisted—even after hundreds
           generated within a 6-month window of                  of similar adverts have been reported. The fact
           the advert going live, which gives the bot-           that so many international brands have been
           generated pages a “legitimate” Facebook               targeted by fraudulent adverts using the same
           “footprint”, which may be strengthened by             modus operandi over a three year period suggest
           bot-generated “likes” that build up a history         social media platforms must take more robust
           on the platform.                                      measures on stopping recidivist activities relating
                                                                 to advertising or seek assistance from law
         3. No controls on destination websites                  enforcement.
         When Instagram or Facebook users click on
         fraudulent sponsored adverts, an in-app browser         5. Deceptive practices
         typically directs them to an external website           A fraudulent advert typically appearing on
         operating a web shop. These are typically rogue         Instagram or Facebook targeting a well-known
         websites designed specifically to sell counterfeit or   brand can be of very high design quality,
         fraudulent products.                                    showcasing the most popular product’s images
                                                                 (typically taken from the original brand’s
         For these reasons, domain name registrars and
                                                                 website). They feature very high discounts,
         Internet Service Providers have been encouraged

10   TRACIT.ORG
usually 50% and above, and bogus logos for              April 2018, another fraudulent advert appeared,
payment (e.g., Visa, Mastercard, Paypal) to entice      displaying to consumers the website address Love.
consumers into a quick purchase. Domain name            sjut1i.cn, but was actually directing consumers
typically uses generic TLDs or ccTLDs (.top,            to the destination website www.vote2018.site.
.VIP, .tw, .pw, .online, .store, .club). Websites are   The website www.vote2018.site was identical to
not typically SSL secured (https); however, this        both www.saletommy.com and www.clotheshe.
appears to be changing.                                 com websites shown above. It is of note that when
                                                        registering domain names with a .cn extension,
Figure 4                                                registrants are required to verify their personal or
                                                        business identity.
       Examples of deceptive marketing                  6. Online advertising supply chain
              “100% authentic”
                                                        Given the repeated similarities of fraudulent
       “Free & fast delivery available”
                                                        adverts identified throughout this report, it is
            “Official store online”                     evident that there is a systemic problem with the
        “No reason refund in 7 days”                    online advertising supply chain. In particular, the
              “Secure payment”                          current absence of any substantive verification
            ‘Factory direct price”                      of an advertiser’s commercial and/or personal
           “Satisfied or refunded”                      identity and the review process for submitted ads
        “Summer sales – only 3 day”                     themselves appears to be insufficient in tackling
                                                        the scale of the deception and fraud occurring on
                “Black Friday”
                                                        social media platforms.
           “Stock Clearance Sale”
        “Warehouse Clearance Sale”                      This is a problem that has been identified by
                                                        many brand owners, operating in various
               “90% discount”
                                                        sectors, and with numerous websites. It therefore
                                                        requires a concerted, industry-wide solution. At
                                                        present, brand owners are carrying the bulk of
In October 2017, an advert was identified with          responsibility by taking down fraudulent websites
Facebook’s Commerce & Ads IP Tool, which                and the adverts that link to them. But this is not
used images of counterfeit products. The URL            going to solve the problem, as it is too big and
displayed to consumers was “ebay.com” and the           fast-moving.
advertisement was sponsored by a “Community”            While it is appreciated that there is a need for
page that appeared to be compromised with no            a degree of anonymity for social media users
affiliation or connection to the subject brand. The     in many situations, when use of a platform
actual destination was www.saletommy.com, a             changes from personal use (social interaction and
fraudulent website, which made unauthorized use         connection) to a commercial use (advertising of
of Tommy Hilfiger copyright protected imagery           goods/services), there should be enhanced checks
and logos. The website did not have a “contact          and transparency for potential customers into the
us” page or contact form, or any information to         identity of those commercial actors.
identify the entity responsible for its operation.
On 10 November 2017, an advert by a Facebook            Platforms need to confirm that any data provided
page called XZ Fancy Bread was identified with          to an advertiser is complete, correct and not bot-
over 18,000 “Likes”. This ad directed users to the      generated and enhanced verification needs to be
website www.clotheshe.com which was identical           made of the external websites that adverts direct
to www.saletommy.com. Six months later, on 18           to in order to achieve this.

                                      FRAUDULENT ADVERTISING ONLINE: EMERGING RISKS AND CONSUMER FRAUD         11
WHAT IS BEING DONE?

         Despite its prevalence and harm, very little is         who do not have skills to police fraudulent
         being done to rid the Internet of fraudulent            adverts. It will also be essential that the program
         advertisements. Nonetheless, very little is             move swiftly. As presented the program will give
         being done to rid the Internet of fraudulent            feedback or provide approval within three to five
         advertisements. In particular, the current absence      business days, using a combination of human and
         of any substantive verification of an advertiser’s      tech reviews. Currently, Google policy is to make
         commercial and/or personal identity along with          every effort to ensure that adverts which may
         a weak review process for submitted adverts             violate their policies do not run prior to review,
         are major vulnerabilities illicit traders exploit       but that some may run on Google before the
         to deceive and defraud consumers online and             Google Ads Specialists check them.24
         particularly on social media platforms.
                                                                 With regard to its popular YouTube
         In response to mounting evidence—such as that           platform, Google has ad policies that address
         contained in this report—along with pressure            misrepresentation and misleading content,
         from brand owners and consumer groups and               copyright infringement, and trademark
         complaints from social media users, the platforms       infringement. However, IP owners report
         have recently promised improvements.                    that enforcement largely falls to them and the
                                                                 ability to monitor for such activity is limited
         For example, Google has announced that it will
                                                                 by deceptive techniques employed by the
         require advertisers to verify their identity to
                                                                 infringers. Consequently, Google must consider
         prevent them from misrepresenting themselves.23
                                                                 taking proactive actions against fraudulent ad
         Key elements of the program (as indicated) will
                                                                 campaigns.25
         be the requirement of personal legal information
         (like a W9 or IRS document showing the                  In the case of Facebook, in the aftermath of a
         organization’s name, address and employer               fraudulent Facebook ad for a company selling face
         identification number). There will also be a 30-        masks, which claimed all but one member of a
         day verification process, after which Google said       Los Angeles family died from COVID-19, Facebook
         it will suspend the account and the advertiser’s        pulled all versions of the advert. Furthermore,
         ability to serve ads until verification is provided.    the company says in order to crack down on
         Google also stated that advertising agencies will       businesses taking advantage of fear during the
         need to complete verification on behalf of each of      coronavirus pandemic, it has banned all ads
         their advertiser clients. And where businesses like     having to do with hand sanitizer, face masks,
         pharmacies already must go through certification        wipes, and COVID-19 tests.26
         processes, they will still need to take the new,
                                                                 In some countries, Facebook also requires proof
         additional verification steps.
                                                                 of identification for any user wishing to post
         While the elements of this program are in the           advertisements relating to politics, elections, or
         right direction, it will be important to evaluate its   social issues.27 This is not, however, a global policy,
         effectiveness to ensure that Google puts in place       nor does it extend to forms fraudulent advertising
         pre-emptive measures to block fraudulent adverts,       delineated in this report. (Figure 5.)
         such that burdens are not placed on consumers

12   TRACIT.ORG
Figure 5                                                                 card details, scammers may
                                                                         attempt to use multiple
                                                                         different stolen cards before
                                                                         finding one which allows
                                                                         a payment transaction.
                                                                         This behavior should be an
                                                                         immediate red flag to any
                                                                         website or platform which
                                                                         hosts advertising to manually
                                                                         review the legitimacy of the
                                                                         advert and advertiser profile.
                                                                         In addition to these voluntary
                                                                         efforts by platforms to put in
                                                                         place more effective “know-
                                                                         your-business-customer”
                                                                         measures, there are some
                                                                         useful programs that could
                                                                         be applied to better defend
                                                                         platforms against fraudulent
                                                                         advertising. These programs
                                                                         draw on experience from
                                                                         programs that address the
                                                                         placement of “good” adverts
                                                                         on “bad” websites, where
                                                                         a legitimate company pays
While some progress is being made, platforms,
                                                     advertising revenues to operators of rogue sites.
notably Facebook and Instagram, are not
implementing sufficient verification of an           Two examples are:
advertiser’s identify when they enter a commercial
                                                     • TAG (the Trustworthy Accountability Group)
advertising relationship with such platforms.
                                                       has a “Certified Against Fraud” certification
At the minimum, all platforms should                   program, by which actors in the advertising
be implementing measures at least                      supply chain can show they are taking action
equal to the system Google is putting                  against fraudulent, invalid ad traffic. The
in place.                                              primary focus of this programs is to tackle
                                                       issues such as “click-fraud”, where automated
It should be incumbent on websites and social
                                                       computer programs mimic legitimate web
media platforms that offer and host advertising to
                                                       users to generate pay-per-click on an advert.
make simple checks such as these before accepting
                                                       Measures that could be applied to fraudulent
advertising. Doing so could be done manually
                                                       advertising include Payment ID system to
or, with appropriate software, automatically.
                                                       ensure payments track where payments
Further to this, proactive checks should be made
                                                       are going, lists identifying of common IP
into the behavior of the advertisers at the point
                                                       addresses from which it is unlikely to expect
of registering ads; for example, since many of
                                                       legitimate ad traffic, disclosure requirements
these adverts are registered using stolen credit

                                   FRAUDULENT ADVERTISING ONLINE: EMERGING RISKS AND CONSUMER FRAUD       13
for publishers to show how much traffic is      However, the problem with fraudulent advertising
            from paid sources, and a public record of       is that the advertisements are of such professional
            authorized digital sellers.                     quality that they easily deceive consumers, and
                                                            when they are directed to a site from an advert
         • The EU MOU on Online Advertising and
                                                            on well-known and familiar website or app, they
           Intellectual Property Rights aims to minimize
                                                            are more likely to regard the destination site as
           the placement of legitimate adverts by IP
                                                            legitimate and trustworthy than if they had found
           owners or other advertisers on websites
                                                            it via a search engine or accidentally. This places
           which sell counterfeit goods or provide access
                                                            extra responsibility on sites that host and provide
           to pirated content. While the MOU is non-
                                                            optimization for advertising and/or receive
           binding, it suggests that signatories involved
                                                            payment for doing so.
           in both the buying and selling of ad space
           adopt IPR policies and use (or require the use
           of) tools to prevent their advertising being
           placed on IPR infringing sites.28 This MOU
           could be extended to include measures to
           defend platforms from fraudulent advertising.
         Generally, consumers are becoming more aware
         and experienced at avoiding rogue websites
         that sell counterfeits and other fraudulent,
         substandard, or unsafe products. EUROPOL, for
         example, promotes Red Flags to help consumers
         detect fraudulent websites.

14   TRACIT.ORG
CONCLUSIONS

Given the findings of this report, there is a          Facebook, Shopify, and PayPal profit from
systemic problem with the online advertising           fraudulent ads, and make it very complicated
supply chain and an urgent need to improve             to lodge complaints or get refunds. The group
controls over it. For starters, governments must       offers to help people learn how to research a
begin the process of establishing guidelines and       site and make sure that it is legit before buying
standards. Several examples already exist and          products online.30
could be modified or expanded to include the
                                                    • Facebook (ProtectOthers) Ad Scams group
challenge of eliminating fraudulent advertising:
                                                      was created to alert people of the vast amount
• In the UK, new powers have been given to            of scam ads that Facebook is allowing to
  the communication watchdog Ofcom to force           circulate. The group encourages people to
  social media firms to act over harmful content,     report fraudulent ads and warn others by
  including violence, terrorism, cyber-bullying       sharing the advert’s link to their page.31
  and child abuse. Ofcom will have the power        In the meantime, however, it is imperative that
  to make tech firms responsible for protecting     the websites and platforms which are making
  people from such content, including ensuring      revenue from the provision of advertising services
  that the content is removed quickly and to        to criminal networks take action to identify and
  minimizing the risks of it appearing at all.      block them – for good. By immediately adopting
• Germany introduced the NetzDG Law in 2018,        best practices in “know your business customer”
  which states that social media platforms with     checks, platforms can mitigate against the risks
  more than two million registered German           right away. This problem is already at least five
  users have to review and remove illegal           years in the making, so it is imperative to address
  content within 24 hours of being posted or        the root causes that enable such profitable
  face fines of up to €50 million.                  opportunities.

• Australia passed the Sharing of Abhorrent         Consumers are entitled to an online browsing
  Violent Material Act in April 2019, introducing   and shopping experience that is safe and secure
  criminal penalties for social media companies,    from fraud. Online platforms connecting people
  possible jail sentences for tech executives for   and those that profit on commerce over their
  up to three years and financial penalties worth   sites should be responsible, comply with the law
  up to 10% of a company's global turnover.29       and recognize the ethical/moral responsibility to
                                                    assure consumers a safe and trusted environment.
Some groups have been formed on Facebook to         This paper suggests that the fraudulent online
help raise consumer awareness about fraudulent      advertising can be considerably reduced by the
adverts:                                            following measures:
• Facebook Ad Scambusters! was created to
                                                    1. Enhanced “Know Your Business
  raise awareness of the many fraudulent ads
                                                       Customer” protocols
  on Facebook. The group states that many of
  these ads look legitimate and have professional   It is imperative that websites and social media
  videos, images etc. It also explains that         platforms know who they are working with when

                                    FRAUDULENT ADVERTISING ONLINE: EMERGING RISKS AND CONSUMER FRAUD       15
accepting paid advertising. By gathering and            advertising, all adverts published on a site or
         verifying an appropriate amount of data on who          platform should be reviewed for infringing
         is utilizing their advertising services, they will be   content, both algorithmically and where high
         better able to                                          risk has been flagged, manually. In addition, the
                                                                 external sites to which such adverts link should
         • assess risk levels and proactively identify bad       also be reviewed to determine their legality and
           actors                                                authenticity.
         • avoid recidivist infringing activity from
           previously removed accounts
                                                                 3. Effective reactive measures against
                                                                    fraudulent advertisers
         • provide data on infringers to affected
                                                                 To act as an effective deterrent to illegal
           consumers, rights holders, and law
                                                                 advertising activities, sites and platforms must
           enforcement
                                                                 establish strong, effective, and enforced measures
         Data collected could include individual/business        against advertisers who have been found to
         name and street address (proven with recognized         infringe their terms of service. This should go
         ID), phone number, email, and a proof of business       beyond termination of the advertising agreement
         registration.                                           and include removal of the infringer’s account
         For example, Facebook (and Instagram) could             and blocking the advertiser from the website or
         make it mandatory to participate in two-factor          platform.
         authentication for any profile or page. For             For its part, Facebook is aware of the issue and
         online shopping, and in particular sponsored            recently pointed to its anti-counterfeiting tools
         advertising, transparency and being able to             and efforts. In a recent post, Facebook recognized
         definitively attribute an advertiser is essential       that the issue of fake goods is especially top-of-
         for consumer trust and safety. This means being         mind for advertisers in the lead up to the holiday
         able to have confidence that whoever is selling         season, and pledged that the company has “strict
         a particular product or service can be identified,      policies against counterfeit goods and other kinds
         contacted, and held to account if things go wrong.      of IP violations.”33 To prove that point, it revealed
         Being proactive and socially responsible to ensure      that in the first half of 2019, it removed 359,000
         market integrity and that shoppers are safe             pieces of content on Instagram in response to
         should be standard to companies worth billions.32       39,200 counterfeit reports submitted by brand
         Ultimately, when jointly targeted by sustained          owners. Furthermore, it claimed to be investing
         criminal activity, there should be a determined         in machine learning and artificial intelligence “to
         willingness to work together and hold those             help block or reduce the distribution of potentially
         ultimately responsible to account, and make             counterfeit content on both Facebook and
         it as difficult as possible for counterfeiters to       Instagram.”34
         continue to operate and infiltrate genuine buyer
                                                                 4. Ensure consumers and rights holders
         experiences.
                                                                    can report and share information
         2. Rigorous review of advertisement                        about fraudulent advertisers
            prior to publication                                 Until such time that advertising on websites
         To ensure that their terms of service are being         and social media platforms have a robust
         adhered to, and that no innocent consumers              system to prevent bad actors, there needs to be
         are being defrauded by fraudulent, scam                 avenues for consumers and rights holders to

16   TRACIT.ORG
share information that can be used to dismantle
criminal networks currently operating on
their platforms. Currently, while adverts can
be reported and removed, platforms appear
unreceptive to receiving trends and data-sharing
initiatives that could assist them in blocking bad
actors accessing advertising.

5. Establish requirements for an
   e-business license for advertisers
Such a license would require verification of (i)
financial disclosures that can be corroborated
by third parties (e.g., bank statements), and
(ii) physical location information that can be
supported by government records or trusted third
parties.35 Such a system could be accompanied
by a central registry ideally, managed by a highly
secure, disinterested party or industry group to
maintain the licenses.36

                                    FRAUDULENT ADVERTISING ONLINE: EMERGING RISKS AND CONSUMER FRAUD   17
NOTES

         1
          Azcuenaga, M. L. (1997). The Role of Advertising and             which would tackle these adverts. In De Mol’s case on the
         Advertising Regulation in the Free Market. Washington,            other hand, Amsterdam district court ruled that Facebook
         DC: Federal Trade Commission. Available at: https://www.          must pay 10,000 euros each time fraudulent ads using the
         ftc.gov/public-statements/1997/04/role-advertising-and-           image of John de Mol appear, up to a maximum of 1 million
         advertising-regulation-free-market                                euros. Sources: Klaassen, N. (2019, November 11). De Mol
                                                                           wint van Facebook: bitcoin-vonnis zet platform voor het
         2
          US Department of Homeland Security. (2019). Combating
                                                                           blok. AD. Available at: https://www.ad.nl/tech/de-mol-
         Trafficking in Counterfeit and Pirated Goods, https://www.
                                                                           wint-van-facebook-bitcoin-vonnis-zet-platform-voor-het-
         dhs.gov/sites/default/files/publications/20_0124_plcy_
                                                                           blok~a72ebabb/ ; Proper, E. (2019, November 11). Facebook
         counterfeit-pirated-goods-report_01.pdf, p24
                                                                           Ordered to Ban Scam Ads Using Big Brother Founder.
         3
           Lince, T. (2020). Kasper VPN scam: YouTube urged to             Bloomberg. Available at: https://www.bloomberg.com/
         combat fraudulent ads featuring third-party brands. World         news/articles/2019-11-11/facebook-ordered-to-ban-scam-
         Trademark Review, 23 January 2020. Retreieved from:               ads-using-big-brother-founder
         https://www.worldtrademarkreview.com/kasper-vpn-scam-             11
                                                                             International Chamber of Commerce. (2016) Available
         youtube-urged-combat-fraudulent-ads-featuring-third-
                                                                           at: https://iccwbo.org/media-wall/news-speeches/global-
         party-brands
                                                                           impacts-counterfeiting-piracy-reach-us4-2-trillion-2022/
          Leskin, P. (2020, April 2). Scammers and grifters are
         ­4
                                                                           12
                                                                              Statista. (2020). E-commerce share of total global retail
         hawking face masks and fake coronavirus vaccines on
                                                                           sales from 2015 to 2023. n.p.: Statista. Available at: https://
         YouTube as the platform fails to moderate its content
                                                                           www.statista.com/statistics/534123/e-commerce-share-of-
         yet again. Business Insider. Available at: https://
                                                                           retail-sales-worldwide/
         www.businessinsider.com/youtube-videos-ads-face-
         masks-coronavirus-vaccines-misinformation-content-                 Global Brand Counterfeiting Report 2018-2020. See
                                                                           13

         moderation-2020-4                                                 https://apnews.com/ef15478fa38649b5ba29b434c8e87c94
         5
           13abc. (2020, April 15). Mother finds fake Facebook ad          14
                                                                              US Department of Homeland Security. (2019). Combating
         claiming her family died from coronavirus. 13abc. https://        Trafficking in Counterfeit and Pirated Goods, https://www.
         www.13abc.com/content/news/Mother-finds-fake-Facebook-            dhs.gov/sites/default/files/publications/20_0124_plcy_
         ad-claiming-her-family-died-from-coronavirus-569652591.           counterfeit-pirated-goods-report_01.pdf
         html                                                              15
                                                                              WIPO. (2017). The Environmentally Safe Disposal and
         6
          Screenshot captures of the identified fraudulent ads and the     Destruction of Intellectual Property Infringing Goods.
         destination websites are available upon request.                  Geneva: WIPO. Retrieved from: http://www.wipo.int/edocs/
                                                                           mdocs/enforcement/en/wipo_ace_12/wipo_ace_12_3_ppt.
         7
          Primary research conducted by TRACIT and AAFA member
                                                                           pdf
         brands, Elipe Limited and unassociated brands (i.e., those
         that supplied examples).                                          16
                                                                             Federation of the Swiss Watch Industry. (2018). Thinking of
                                                                           buying a counterfeit product? Shame! n.p.: Federation of the
         8
          Mason, C. (2019, January 23). Martin Lewis settles lawsuit
                                                                           Swiss Watch Industry. Accessed 16 October 2018. Available
         as Facebook agrees to donate £3m to anti-scam charity
                                                                           at: http://www.fhs.swiss/eng/buy_counterfeit.html
         and launch new scam ads reporting button. Money Savings
         Expert. Available at: https://www.moneysavingexpert.com/          17
                                                                             ITV. (2015, November 4). UK’s first Fake Shop reveals
         news/2019/01/martin-lewis-drops-lawsuit-as-facebook-              danger of counterfeit goods. ITV. Available at: http://www.
         agreed-to-donate-p3m-to-a/                                        itv.com/news/westcountry/2015-11-04/rat-droppings-in-
                                                                           cigarettes-and-urine-in-perfume-fake-shop-reveals-danger-
         9
           Sterling, T. (2019, June 5). Dutch ‘Big Brother’ creator sues
                                                                           of-counterfeit-goods/
         Facebook over fake Bitcoin ads. Reuters. Available at: https://
         www.reuters.com/article/us-facebook-ads-netherlands/              18
                                                                              Greenwood, C. (2015, May 17). Warning on fake make-
         dutch-big-brother-creator-sues-facebook-over-fake-bitcoin-        up tainted by CYANIDE and other dangerous chemicals:
         ads-idUSKCN1T61N5                                                 Counterfeit versions of leading brands are being cooked
                                                                           up by criminals in squalid underground labs. Daily
         10
            In both of these cases, the affected parties took legal
                                                                           Mail. Available at: http://www.dailymail.co.uk/news/
         action against Facebook as the platform they were seeing
                                                                           article-3085665/Warning-fake-make-tainted-cyanide-
         the most adverts on. For Lewis, a settlement was reached
                                                                           dangerous-chemicals-Counterfeit-versions-leading-brands-
         in which Facebook agreed to launch a new scam reporting
                                                                           cooked-criminals-squalid-underground-labs.html
         tool for consumers in the UK and donate £3m to a project

18   TRACIT.ORG
MarkMonitor. (2019). Global Consumer Survey Social
19                                                               27
                                                                    See https://www.facebook.com/business/help/2089495765
media: Insights into consumer shopping behaviour. n.p.:          50051?id=288762101909005
MarkMonitor.                                                     28
                                                                   European Commission. (2018). Memorandum of
20
  Muncaster, P. (2017, September 26). Police: Buying Fake        Understanding on online advertising and IPR. Brussels:
Goods Online Can Lead to ID Theft. Info Security. Avaialble      European Commission. Retrieved from: https://ec.europa.eu/
at: https://www.infosecurity-magazine.com/news/uk-police-        growth/industry/policy/intellectual-property/enforcement/
buying-fake-goods-online/                                        memorandum-of-understanding-online-advertising-ipr_en
21
  SOCTA. (2013). EU serious and organised crime threat           29
                                                                    BBC. (2020, February 12). Regulator Ofcom to have more
assessment (SOCTA 2013). The Hague: European Police              powers over UK social media. BBC. Available at: https://
Office. Available at: https://www.europol.europa.eu/             www.bbc.com/news/technology-51446665
activities-services/main-reports/eu-serious-and-organised-       30
                                                                      See https://www.facebook.com/groups/stopfraudads/
crime-threat-assessment-socta-2013
                                                                 31
                                                                      See https://www.facebook.com/protectothers/
22
  Research by the consumer rights and reviews organisation
which found that with just an email address, name, a few         32
                                                                   Bradford, D. S. (2019, December 6). Facebook Ad Scams
stock images and a credit card, it is possible to have an        Are Hitting Users Hard, What Can We Do? Buzzfeed. https://
advertising account up and potentially defrauding consumers      www.buzzfeed.com/davidsbradford/facebook-ad-scams-are-
within 24 hours: Stanaway, C. (2019, June 27). How our           hitting-users-hard-what-can-cbr58l7wiq?fbclid=IwAR1mRg
fake ‘scam’ ad breezed through Facebook’s approvals              ZntRfZmqQqvhhmV4-9X3rwMnQqqer79bG0hiP3MVOMrxb
process. Which?. Avaialble at: https://www.which.co.uk/          S4jxEnng
news/2019/06/how-our-fake-scam-ad-breezed-through-
facebooks-approvals-process/
                                                                 33
                                                                   Facebook Business. (2019). Good Questions, Real Answers:
                                                                 Protecting Brands Against Counterfeits. Available at: https://
23
  Graham, M. (2020, April 23). Google will make all              www.facebook.com/business/news/good-questions-real-
advertisers prove their identities, so people can see who they   answers-how-facebook-helps-brands-protect-against-
are and which country they’re in. CNBC. Available at: https://   counterfeits/
www.cnbc.com/2020/04/23/google-advertiser-verification-
process-now-required.html                                         Facebook for Business, at https://www.facebook.com/
                                                                 34

                                                                 business/news/good-questions-real-answers-how-facebook-
24
  Google. (n.d.). Google Ads Help: Report an ad.                 helps-brands-protect-against-counterfeits
Accessed from: https://support.google.com/google-ads/
troubleshooter/4578507?hl=en
                                                                 35
                                                                    This recommended by the American Apparel and Footwear
                                                                 Association (AAFA) in response to the US Memorandum on
25
   Lince, T. (2020). Kasper VPN scam: YouTube urged to           Combating Trafficking in Counterfeit and Pirated Goods.
combat fraudulent ads featuring third-party brands. World
Trademark Review, 23 January 2020. Retreieved from:
                                                                 36
                                                                   FINRA's Central Registration Depository could be a model
https://www.worldtrademarkreview.com/kasper-vpn-scam-            for this.
youtube-urged-combat-fraudulent-ads-featuring-third-party-
brands
26
   13abc. (2020, April 15). Mother finds fake Facebook ad
claiming her family died from coronavirus. 13abc. https://
www.13abc.com/content/news/Mother-finds-fake-Facebook-
ad-claiming-her-family-died-from-coronavirus-569652591.
html

                                            FRAUDULENT ADVERTISING ONLINE: EMERGING RISKS AND CONSUMER FRAUD                      19
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