Manipulating perceived risk to deter and disrupt counterfeiters

Abstract

Purpose

The purpose of this paper is to highlight the benefits of alternative, business‐based approaches to tackling the trade in counterfeit goods.

Design/methodology/approach

The findings in the paper are based on over six years of personal experience in the brand protection business, on top of over 20 years operational experience dealing with organized crime topics. The conclusions are also based on assessments drawing on a large body of intelligence on the operations, business practices, and vulnerabilities of counterfeiters and the relative impact of anti‐counterfeiting programs.

Findings

A careful understanding of the trade in counterfeits reveals a number of vulnerabilities in the business model that can be exploited to disrupt or deter the counterfeiters. In particular, sales brokers often see the smallest profit margins, survive hand to mouth, and put themselves at risk by directly touting sales of counterfeits to persons they do not know over the internet and in face‐to‐face meetings. They offer a natural entry point to the business for both intelligence collection and targeted seizures and influence campaigns. These campaigns can and should exploit both the lack of means to mitigate counter‐party risk and the natural distrust seen among participants in criminal businesses. Raising the perception of costs and risks only slightly can prompt counterfeiters to move away from certain brands and industries, sometimes permanently. A means to measure the effectiveness of such influence campaigns for a company is possible using a metric that takes into account the impact of disruption and targeted seizures leading to an estimate of recovered potential sales.

Originality/value

The approach detailed in the paper is unique and has not been successfully pursued and fully exploited by any firm or organization charged with tackling the trade in counterfeits.

Citation

Reynolds, D. (2011), "Manipulating perceived risk to deter and disrupt counterfeiters", Journal of Financial Crime, Vol. 18 No. 1, pp. 105-118. https://doi.org/10.1108/13590791111098834