Following the success of the previous blog post “A Brief Overview of the Metaverse and the Legal Challenges It Will Present,” we are introducing a new feature for the Tech & Sourcing blog: “Future Watch.” Our Future Watch posts will focus on the most topical areas of the technology industry and will explore the associated legal challenges and potential future developments.
In this first Future Watch post, we examine the world of social media influencers and counterfeit goods, and how the United Kingdom is potentially looking to address this issue.
The United Kingdom’s intellectual property laws provide to rights owners important protections, which encourage creativity and drives the free market economy. However, changing attitudes around counterfeits, the growth of the digital economy, and the continued influence of social media have culminated in ever-increasing violations of such rights, potentially resulting in direct harm to the market, stalled development, and the undermining of public welfare. More recently, influencers have come under scrutiny for facilitating trade in counterfeit products.
Late last year, the UK Intellectual Property Office (UKIPO) published a report on the outcome of a pilot study it commissioned to investigate the impact that influencers have on the consumption of counterfeit products. The research was carried out by the University of Portsmouth and involved an anonymous online survey of 1,000 female participants in the United Kingdom. The focus on female participants is in response to existing data suggesting that influencer marketing of counterfeit products was “highly gendered” and dominated by female influencers and female consumers.
The study used the following definition of “counterfeit products” to guide participants: “Counterfeits are items that look identical to a genuine product with or without the official branding/logo, but are not made by the brand and may be of lower quality, for example, a handbag of identical design to a “Chanel” with or without the Chanel logo.”
The study also asked participants “whether they had purchased counterfeit products in the prior year as a result of Influencer endorsements.” Some of the key findings include the following:
- 13.3% of the participants reported that they had purchased counterfeits either deliberately or by mistake following influencer endorsements.
- 17% of participants have knowingly purchased a counterfeit.
- 70% of those who have knowingly purchased a counterfeit are between the ages 16 to 33.
- 20% of knowing buyers are habitual buyers.
- Fashion, accessories, jewellery, and beauty products are the most popular counterfeit product categories.
The study identified the following four factors among participants, which, when combined, “are a noxious mix” that increases the prospects of counterfeit purchasing:
- Susceptibility to the influence of trusted others
- Reduced likelihood of perceiving the risks associated with buying counterfeits
- A higher risk appetite
- Construction of rationalizations which justify the purchasing behaviour
Conclusions and Recommendation from the Study
The report concludes that influencers have a profound impact on the purchasing intentions of some consumers and that influencers exploit the low-risk perceptions and high-risk appetite of mainly younger consumers by neutralizing any residual concerns they may have about quality and safety of the products.
The report’s recommendations include, but are not limited to, the following:
- Introducing policies which aim to reduce the demand for counterfeit products
- Adopting an educational approach (taking into account the above four factors which influence the prospect of buying counterfeit products) with a particular focus on younger consumers in relation to the health and safety risks of counterfeit products
- Engaging the influencer marketing industry to propagate deterrent and constructive narratives to consumers, given the position of trust they occupy
- Having regulators, as a high priority, engage with online marketplace and social media platforms to highlight the problem and work together to develop countermeasures
Current Influencer Requirements
This is not the first time that the United Kingdom has looked to address issues with influencers. Previous efforts by the UK Competition and Markets Authority requiring influencers to declare and be transparent about payments or remuneration they receive in return for endorsements are well documented and arguably have not been particularly successful.
While the UKIPO’s report sets out some interesting recommendations, it is not yet clear whether these will be acted upon by the UK government, or whether policy recommendations and engagement of influencers would actually put a meaningful dent on complicit activities by influencers, particularly as trade in counterfeit products is worth billions.
In the meantime, adopting a more proactive approach via civil and criminal prosecutions may prove more successful in deterring complicit influencers. For example, while knowingly purchasing counterfeit products for personal use is not a crime in the United Kingdom, offering or exposing for sale counterfeit products with the intention of making a gain is a criminal offense under the Trade Marks Act 1994, and is punishable by up to 10 years imprisonment. Additionally, influencers may also be subject to civil proceedings if harm caused to a consumer (as a result of mistakenly purchasing and using counterfeit products) is attributable to the influencers’ endorsement of that product.
With respect to the businesses that give influencer’s their access to consumers, online marketplace and social media platforms are required to adhere to certain rules in relation to tackling illegal content online; the majority of these are currently voluntary, although this has been slowly changing. The UK government’s Online Safety Bill and the EU’s Digital Services Act are expected to introduce a range of obligations on online marketplaces and social media platforms, including the removal of illegal content. Morgan Lewis previously posted about the EU’s Digital Services Act.
Trainee solicitor Chidi Ogbuagu contributed to this post.