Article

Report shows rise in retail brand abuse online

Unauthorized use of trademarked brands hits consumers and retailers where it hurts.

June 6, 2010

By Missy Baxter

Amidst the chaos of largest oil spill in U.S. history, British Petroleum officials are facing a steady flow of public relations nightmares, including a mysterious Twitter account, operating under the name BPGlobalPR with a modified BP logo, which is spewing sarcastic tweets such as: “What a gorgeous day! The ocean is filled with the most beautiful rainbows!”

The hoax account, which has amassed more than 100,000 followers and raised more than $10,000 for a Gulf charity by hawking “BP Cares” T-shirts, is gaining media attention as the latest poster child for “brandjacking,” a form of online brand abuse hitting retailers increasingly hard.

Although the BP parody seems to simply be venting steam and selling shirts for charity, brandjacking and other forms of online brand abuse can quickly damage a retailer’s reputation, revenue and consumer trust. Online brand abuse can also open doors for online thieves to monetize web traffic, spread malicious software or steal information such as credit card account numbers and passwords.

Giants like BP aren’t the only ones getting clobbered by clever cyber culprits. Illegal use of trademarked brands hits consumers and retailers where it hurts.  Shoppers can wind up with fake, inferior products, no merchandise at all, computer viruses, credit card fraud or identity theft.  And in the end, they’re likely to have negative memories associated with the brand’s name.

On the other hand, retailers victimized by brand abuse can lose millions in potential revenue to fraudsters selling counterfeit goods. Abused brands can also suffer a decline in consumer trust, negatively impacting future earnings. As a result, retailers receive a double whammy.

Big names, big problems

In what appears to be one of the costliest examples of online brand abuse, Polo Ralph Lauren and VF Corp.’s The North Face filed a federal lawsuit in March, 2010, attempting to reign in a counterfeit ring allegedly selling as much as $780,000 a month in fake merchandise through more than 6,000 domain names including polo4sale.com and outletnorthface.com, according to Women’s Wear Daily.

Not only were the counterfeiters “cybersquatting” by using domain names that mimic trademarked brands, but the sites allegedly contained copyrighted images of branded merchandise to create a sense of authenticity with customers.

Similar cases of brandjacking, cybersquatting and other forms of brand abuse against retailers increased significantly last year, according to a report by MarkMonitor, a firm that works with trademark holders around the globe to protect brands online.

MarkMonitor’s Brandjacking Index: 2009, which tracks abuse of the top 30 global brands by searching billions of Web pages, found that brand abuse increased last year almost 15 percent in the apparel and consumer packaged goods industries, and 25 percent with luxury brands.

“If you have a well known brand, you’re a target,” said Te Smith, vice president of communications for MarkMonitor.

Smith said brand abuse is appearing in a growing number of venues such as search engines, e-commerce, auction sites, blogs, microblogs and social media accounts, and that scammers are increasingly using sophisticated search engine optimization (SEO) techniques, such as creating networks of links to their cybersquatting pages, to maximize search results and lure unwary consumers to bogus sites.

For example, a recent surge of online gift card scams that leverage high-profile brands such as Best Buy, IKEA, Walmart and Whole Foods has popped up on sites such as Facebook and eBay.

ComputerWorld.com reported that many of the current gift card scams utilize “fake” Facebook accounts with trademarked logos, links to legitimate brand websites and bogus “friend” comments to enhance the façade. Although the current gift card scams are reportedly linked to affiliate marketing sites that collect data and generate Web traffic for advertisers, previous card scams have been tied to identity theft and malicious software.

To tweet, retreat or sue?

To fight back against brand abuse, retailers can monitor their web presence through internal measures or by partnering with vendors that provide brand protection services. If brand abuse occurs, retailers can often rely on rules governing social media sites and Internet domains to fight back. They can also leverage legitimate social media accounts, websites and other methods of communication to convey official messages and warnings to consumers. If all else fails, retailers can retaliate through the legal system.

In response to the gift card scams mentioned above, retailers used Facebook’s process for filing complaints against intellectual property or copyright infringement to remove the fake accounts and tapped into social media tools to warm the public. Whole Foods, for example, posted this statement on its corporate Facebook page and sent this official tweet.

Experts say that’s a good approach. In a recent article on Forbes.com, web strategist Jeremiah Owyang shared this advice: “Create a crises response plan: Incidents move faster in social media. Develop scenario planning. For instance, how would your company react if some of its products turned up in an unflattering YouTube video on a Friday evening before a three-day weekend?”

The federal Anti-Cybersquatting Consumer Protection Act (ACPA) also protects retailers and consumers from fraudsters seeking to profit from websites with domain names that are identical, confusingly similar, or dilutive of a trademark, even if it is not a registered trademark.

Retailers rallied to support the law before Congress in 1999 when it was approved. Nokia, for instance, submitted this statement to the U.S. Senate: "We are exceedingly concerned with the numerous cases in recent years of companies — from Nike to Nokia — being coerced to 'purchase' their names or trademarks from other parties who have registered those domain names for one or another purpose, often simple opportunism (i.e. in anticipation of future payment from the lawful trademark owner or in hopes of gaining profit from traffic to the registered site.)"

Through the ACPA, retailers can file claims for damages of up to $100,000 per domain name, but suing in federal court is costly. Another option is to pursue an administrative resolution through the Internet Corp. for Assigned Names and Numbers (ICANN), the international nonprofit group that oversees Internet addresses, under  ICANN’s Uniform Domain Name Dispute Resolution Policy.

Despite those measures, some brandjack attacks spread virally, creating years of brand abuse. Case in point: A racy video titled “Speed Dressing” that mimicked a 2008 JC Penney’s advertising campaign and "Every Day Matters" slogan. Although the original video was removed from YouTube in 2008, at least one version of the unauthorized "ad" is still posted on the popular video site.  As if that’s not enough overexposure, other versions of the video, often with JC Penney’s name in the search description, float around cyberspace with a seemingly unlimited shelf life.

Internet Brand Abuse Risks for Retailers

• Brandjacking – To hijack a brand to deceive or divert attention; often used in abusive or fraudulent activities devised for gain at the expense of the goodwill, brand equity and customer trust of actual brand owners.
• Cybersquatting – The practice of abusing trademarks within the domain name system.
• Domain Kiting – The process whereby domains are registered and dropped within the five-day ICANN grace period, and then registered again for another five days, which allows the registrant to gain the benefit of ownership without ever paying for the domain.
• eCommerce Content – Websites containing a specified brand that appears in visible text, hidden text, meta tags or title in conjunction with other site content that indicates online sales are being transacted on the site.
• False Association – The practice of using a specified brand or trademark in web content to imply a relationship with a company or brand where none exists.
• PPC (Pay-Per-Click) Scams – Occur when a brand is used without permission, within a paid search scenario to drive web traffic to a competitive or illicit site.
• SEO Manipulation – The use of brands, slogans or trademarks located in visible text, hidden text, meta tags and title in order to manipulate search engine rankings so that the brandjacker’s site can gain a more favorable search engine placement.
• Traffic Diversion – Hijacking a brand to drive web traffic to a competitive or illicit site to generate revenue at the expense of the rightful brand owner.