Big brands fear online counterfeit sharks

23 Jul 2008

Counterfeit sharks probing the internet are seriously undermining the brands and reputation of businesses, netting themselves US$110m in the process.

While the value of the web for promoting a brand has been talked about for some time, the undermining of a brand image is equally potent, according to Ovum.

As Web 2.0 technology spreads, the challenge of protecting a brand will become harder and harder.

Ovum points out that policy-makers have yet to balance the legitimate concerns of organisations with respect for freedom of speech and truthful debate and organisations need to be proactive in protecting their online reputations.

“The fundamental problem is there is no quality control of content on the internet,” said Graham Titterington, principal analyst and information security specialist at Ovum and author of the report.

“The corporate mindset has been slow to adapt to the changing world. New techniques are needed to detect attacks and defend reputations in the online world, even when the remedy requires conventional legal action.”

The internet is now a major channel for the sale of fake branded goods, which in some cases results in danger to the customer. Copyright and trademark infringement are commonplace.

Businesses have also suffered real damage as a result of false allegations spread on the internet. The annual revenue of online counterfeiting fraudsters has been estimated at $110bn, according to research firm MarkMonitor.

Another aspect of online counterfeiting is represented by the misuse of a web domain name. The attacker sets up a website with a similar name to that of a legitimate organisation with the deliberate intention of deceiving visitors. It extends to virtual services offered by fraudsters on the web purporting to be the legitimate organisation. This issue will become more prominent as the web becomes more interactive.

A niche group of service providers has grown up to monitor the internet for these offences and to initiate enforcement action both at the ISP level and in the physical world.

“For example, MarkMonitor is a niche vendor offering services in domain management, online trademark protection, online channel monitoring and anti-phishing. Larger IT vendors also offer protection services, such as IBM’s COBRA alerting service.”

However, according to Ovum, countering bad publicity needs a more subtle approach. Debate has to be matched by a positive involvement in online discussion forums. The wider issues of reputation abuse need to be tackled by a combination of prevention, detection and reaction.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years