Counterfeiting as Organized Crime

Counterfeiting activities are increasingly carried out by organized crime groups. They concentrate on a single product category, produce higher quality counterfeits and control the entire marketing process. The value chain also includes illegal laboratories and well-trained professionals who can even synthesize medicines. As a result, the supply of specialized counterfeit goods continues to increase.

Many of these groups work transnationally and are active across borders. IP crime is rarely the only or dominant category. As a rule, counterfeiters are also involved in other criminal activities that support counterfeiting offences, such as document fraud, money laundering or tax fraud.

To make it more difficult to trace money, organized counterfeiters use established money laundering methods, such as rapid transactions between different bank accounts. Or they transfer money from online payment accounts to prepaid cards because law enforcement agencies and banks cannot recognize money on prepaid cards. Also, in many states, funds on these cards cannot be seized.

In international online counterfeiting, a common approach is to re-register previously used legitimate domain names. Domain names previously used by commercial companies, embassies or politicians are systematically re-registered to act as e-shops for the sale of counterfeit goods. This reuse of legitimate websites ensures consistent Internet traffic.

Another approach is to register a number of seller accounts on online marketplaces and operate them only for a certain period of time. The accounts are then deleted and new accounts are opened. Research has shown that several online payment accounts were linked to a single bank account in China. 

Combating online counterfeiting in the digital space is often like fighting windmills. Our experience is that international counterfeiting networks can only be effectively combated by eliminating the source, which is the manufacturer, in the analog world. This requires sham transactions by undercover investigators, notarized sample purchases and legal proceedings. 


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