Scammers Target Small-Business Websites With Fake Sales and Counterfeit Goods

The growth of e-commerce has been a boon to small businesses, opening a global channel for their products to just about anyone with a computer or smartphone. The downside, though, is that their web presence makes them vulnerable to bad actors looking to steal from entrepreneurs in a variety of ways–including counterfeiting their entire online presence and payment interfaces.

Along with unsuspecting individual consumers, small businesses have become a favorite target of online criminals using several well-practiced scams. Those usually come as swindlers passing themselves off as employees of companies seeking payment for goods or services to business clients that were never ordered and are never delivered. Now the Wall Street Journal reports that imposture is being taken to a level that’s long been a headache for larger businesses, as criminals not only reproduce the websites of small businesses marketing their own merchandise, but also selling cheap counterfeits in place of the original products.

The upshot, the paper says, is honest entrepreneurs losing sales to frauds, and then being blamed by infuriated consumers receiving lousy knockoffs of the original items–without ever realizing a third-party scammer was behind it all.

How do the online crooks manage it? First off, they identify small companies selling products likely to be generating a respectable volume of sales–but not large enough for the owners to be investing big bucks in cyber protection. Then they copy all the website content and other online images, videos, and text to create duplicates of marketing and sales sites and marketplace pages, the Journal said. 

Once they do that, fraudsters work with search engines–sometimes paying to get higher results rankings than the legitimate sites do–to drive prospective buyers looking for the original products to the fake pages. The result is a proliferation of websites and marketplace links that look like the originals, but whose operators send cheap counterfeits to paying customers.

Call it the larcenous downside to the worldwide web providing anyone in business–including criminals–a global reach that only the biggest marketers on the planet could previously afford.

“We used to think you’d be targeted because you have a brand everywhere,” Alastair Gray, director of anticounterfeiting for the brand-owner organization International Trademark Association, told the Journal. “It now seems with the ease at which these criminals can replicate websites, they can cut and paste everything.” 

The development is a twist on the existing swindle of shady online merchants promising steep discounts for luxury items. What’s sent instead are cheap knockoffs bearing some resemblance to the expensive genuine articles–estimates suggest global counterfeit goods sales cost brands nearly $1.7 trillion this year. 

But victims cited in the Journal‘s report aren’t promising Gucci loafers or Vuitton bags at 70 percent off. Instead they sell $25 merino socks, sets of porcelain water cups for bees for $20 to $200, and creative hummingbird feeders fetching between $50 and $60. It may sound down-home compared with luxury goods piracy, but it hurts as bad when scaled to small company finances.

“Our entire business plan revolved around online sales,” said Jim Carter, who started his Ideam company in 2020 making and marketing helix-shaped hummingbird feeders. “We had no idea we would be targeted, let alone targeted in such a mass way. We assumed that this is a very small niche product.” 

Carter told the paper his Denver business sold $54,000 worth of bird feeders the week before ads for the fake versions went up on Amazon and elsewhere. Those orders fell to just $537 once swindled consumers began posting negative reviews, and complaining about “a piece of junk from China” they’d received.  

Carter said he’d spent about $100,000 battling the counterfeiters, who had already cost him an estimated $400,000 in sales.

Jen Rose, founder of the Dallas-based Bee Cups company, said her legal expenses fighting fraudsters who copied her website totaled $27,000 in April alone. Because the criminals have used online translation and other services to convert Rose’s stolen texts and videos into other languages, she says they were “translated into Dutch and Swedish and being put out overseas” by swindlers who sent crude copies of her watering cups from China to customers. 

Ironically, the Journal notes, the broadened exposure the counterfeiters have generated with their pirated marketing materials has had a knock-on effect of Increasing traffic back to Rose’s original products–resulting in a 30 percent rise in sales.

“The fact that all of my videos were mass-produced by fake companies made me so much more visible,” said Rose, who’s determined to fight the violation of her marketing material and product copyrights, but can only do so much as new copies of her site crop up. “I can’t pay my lawyers to go after every single site. It feels like I’ve hit the viral mode for the scam products.”

What can other small businesses similarly vulnerable to counterfeiters do to protect themselves? Not a great deal in preventive terms, apart from investing whatever they can afford to have techies safeguard marketing and sales websites from being copied.

From there, wariness will help limit any damage once trouble starts.

Keep watch of your product pages on social media for any posts from followers airing concern or unhappiness with cheap versions of goods. Also, do regular web searches for your products–as well as any legitimate rival businesses–for any sign of counterfeiters moving in.

When evidence of fakers does arise, appeal immediately to Google’s small business division for help. If the fakes appear on Amazon, contact the company’s Counterfeit Crimes Unit, which last year won cases helping swindled entrepreneurs receive millions of dollars in compensation from losses to knockoff crooks.