As the holiday season approaches and the shopping frenzy intensifies, consumers are being warned to stay vigilant against the rising menace of counterfeit products. These imitations are becoming increasingly difficult to identify — and potentially dangerous.

The world's largest online retailer has been using artificial intelligence and machine learning to root out sellers trying to peddle counterfeits on its platform.

Three years ago, Amazon created an in-house counterfeit crime unit made up of former federal prosecutors, law enforcement and data scientists based around the world to go after counterfeit sellers.

The company says it's closely tracking suspicious behavior online to protect customers.

"What's critical is that our teams of data scientists and our automated tools are checking [the] data day in and day out," said Kebharu Smith, a former federal prosecutor and now director of Amazon's counterfeit crimes unit.

Smith says Amazon is using AI tools to scan over 8 billion listings from sellers each day. Machine learning and data collection allows them to screen logos and trademarks to compare them with what's provided by the brands. It allows them to flag products that may be counterfeit.

Online Counterfeit Products: A Growing Concern

In today's digital age, the prevalence of counterfeit products being sold online is a major issue. Many consumers are unaware that they are purchasing fake items, which can have serious consequences.

A recent study conducted by Michigan State University revealed that nearly 70% of people have been deceived into buying counterfeit products online within the past year. This alarming statistic highlights the need for increased awareness and vigilance when making online purchases.

Vidyuth Srinivasan, CEO of Entrupy, a company dedicated to identifying counterfeit items, expressed his personal concern regarding the issue. He emphasized that all the fake handbags his company sampled contained harmful substances like lead and cadmium paint. This revelation serves as a wake-up call to the potential dangers associated with counterfeit goods.

Reflecting on his own experience, Srinivasan recalled his teenage years in India when he purchased a pair of fashionable sneakers. However, he unknowingly bought a counterfeit version from the gray market. This personal encounter with counterfeit products further fueled his determination to combat this problem.

Years ago, he didn't give much thought to the consequences of purchasing counterfeit shoes. However, during a solo motorcycle trip, he experienced a brake failure and a dead battery. It was later discovered that the parts in his motorcycle were counterfeit, posing a potential threat to his life.

Feeling cheated and betrayed, he was determined to prevent others from going through the same ordeal. Today, his company, Entrupy, has developed a solution. By utilizing a vast database, Entrupy compares in-store photos of items with its own image bank. This allows consumers and retailers to instantly identify counterfeit products using a handheld device. The company specializes in luxury accessories and sneakers, providing brand checking services for TikTok Shop and Goodwill Industries.

"We have created an extensive data set of both authentic and counterfeit products. We have trained our computers to detect even the smallest differences, analyzing between 2,000 and 4,000 unique characteristics in every image," he explained.

The Evolving Counterfeit Market

Ashly Sands, an intellectual property attorney and head of litigation and anti-counterfeiting at Epstein Drangel LLP, recently highlighted the seriousness of the issue during a visit to Canal Street in Manhattan, a notorious hub for counterfeit goods.

"When I first started my career about 12 years ago, we frequently conducted raids with our clients," she recalled.

Counterfeit Goods Seizure and the Growing Online Trade

Last month, a joint operation between U.S. Homeland Security Investigations and the NYPD resulted in the seizure of over $1 billion worth of counterfeit luxury goods in the United States. This historic bust marked the largest ever of its kind in the country.

Previously, law enforcement agencies focused on cracking down on counterfeits sold on the streets and in back alleys, collaborating with major fashion retailers. However, the landscape has shifted dramatically, with a surge in counterfeits being sold directly to consumers online and through e-commerce platforms.

According to expert Karen Sands, the scale of this illicit trade is massive. She states, "If you can get a real version of something, an authentic version of something, there is a 99% chance that you can get a counterfeit."

This booming industry is considered the largest illicit trade globally, with an estimated $2 trillion worth of counterfeit products sold to consumers annually, as reported by the National Crime Prevention Council.

U.S. Customs and Border Protection has issued a warning about the dangers of online shopping, as it has transformed the counterfeit trade into a breeding ground for criminals who peddle potentially hazardous fakes.

The Dangers of Counterfeit Goods

Following a tragic incident in April where two siblings lost their lives in a house fire in Queens, the New York Fire Department made a disturbing discovery. They found a charred electric scooter and charger in the home, both of which had fake safety certification labels. Investigators suspect that the fire may have been caused by another charger with a counterfeit sticker.

In an effort to raise awareness about the dangers of counterfeit goods, the agency showcased a collection of seized counterfeit items at JFK Airport's international mail facility. The display included fake handbags, sneakers, watches, jewelry, electronics, and cosmetics.

Troy Miller, a senior official performing the duties of the commissioner for U.S. Customs and Border Protection, explained how they use advanced information and intelligence to target packages based on past seizures. This helps them identify and intercept counterfeit goods before they enter the country.

Miller also highlighted the risks associated with counterfeit pharmaceuticals, particularly those that are laced with dangerous substances like fentanyl.

Recent seizures by the San Diego Sector Border Patrol and the U.S. Drug Enforcement Administration serve as a reminder of the scale of the problem. In a vehicle stop on Interstate 15, Border Patrol agents confiscated nearly $3.7 million worth of fentanyl pills. In 2022, the DEA seized approximately 60 million fake pills containing fentanyl.

"When you're talking about pharmaceuticals that are counterfeit, you don't know where they're coming from," said a spokesperson. "You don't know what the chemicals are in those pharmaceuticals. I think more and more you're seeing folks taking pharmaceuticals that are laced with things like fentanyl. Those are costing American lives every single day."

Customs and Border Protection (CBP) officers face a daunting task in targeting and seizing imports of counterfeit and pirated goods. The growing counterfeit trade has made it challenging for them to keep up, especially with the rise of online purchases and smaller packages.

"[People are ordering] a billion packages a year," said the spokesperson. "That's up from 685 million the year before."

The battle against counterfeiters

"We all own a little bit of this, right? Customs and Border Protection, certainly at the front line, needs to enforce our laws, rules and regulations," Miller said. "The consumer needs to do a little bit better job of verifying what they're ordering. But when you're talking about the retailers and you're talking about the marketplaces, express consignment, everybody needs to be able to do a little bit more to ensure what's being sold on those sites are, in fact, legitimate. 

Vidyuth Srinivasan says combatting counterfeits using AI technology has great potential. But he acknowledges that it's unlikely to stop the trafficking completely. 

"I think ultimately, can we solve the problem? No," said Srinivasan. "But can we try our damnedest? Absolutely, yes."