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 Technology and Procurement blog: “Future Watch”. Our Future Watch posts will focus on the most current areas of the tech industry and explore associated legal challenges and potential future developments.
In this first Future Watch article, we look at the world of social media influencers and counterfeit products, and how the UK is potentially looking to address this issue.
UK intellectual property laws provide rights holders with important protections, which encourage creativity and stimulate the market economy. However, changing attitudes towards counterfeits, the growth of the digital economy and the continued influence of social media have resulted in ever-increasing violations of these rights, potentially leading to direct market harm, a stalled development and harm to public welfare. . More recently, influencers have come under scrutiny for facilitating the trade in counterfeit products.
Late last year, the UK Intellectual Property Office (UKIPO) published a report on the results of a pilot study it commissioned to investigate the impact of influencers on the consumption of counterfeit products. . The research was conducted by the University of Portsmouth and involved an anonymous online survey of 1,000 female participants in the UK. The focus on female participants responds to existing data suggesting that influencer marketing of counterfeit products was “very gendered” and dominated by female influencers and consumers.
The study used the following definition of “counterfeit products” to guide participants: “Counterfeits are items that appear identical to a genuine product with or without the official brand/logo, but are not manufactured by the and may be of lower quality, for example. example, a handbag identical in design to a “Chanel” with or without the Chanel logo.
The study also asked participants “if they had purchased counterfeit products in the past year as a result of influencer endorsements.” Some of the key findings are:
- 13.3% of participants said they bought counterfeits deliberately or by mistake following recommendations from influencers.
- 17% of participants knowingly purchased a counterfeit.
- 70% of those who knowingly bought a counterfeit are between 16 and 33 years old.
- 20% of knowledgeable buyers are repeat buyers.
- Fashion, accessories, jewelry 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 purchases:
- Susceptibility to influence from other trusted people
- Reduced likelihood of perceiving the risks associated with buying counterfeits
- A higher appetite for risk
- Construction of rationalizations that justify purchasing behavior
Conclusions and recommendations of the study
The report concludes that influencers have a profound impact on the purchase intentions of some consumers and that influencers tap into the low-risk perceptions and high-risk appetites of predominantly younger consumers by neutralizing any residual concerns they might have regarding product quality and safety.
The report’s recommendations include, but are not limited to, the following:
- Introduce policies to reduce demand for counterfeit products
- Adopt an educational approach (considering the above four factors that influence the prospect of buying counterfeit products) with a particular focus on young consumers regarding the health and safety risks of counterfeit products
- Engage the influencer marketing industry to spread deterrent and constructive narratives to consumers, given the position of trust they occupy
- Have regulators, as a priority, engage with online marketplaces and social media platforms to highlight the problem and work together to develop countermeasures
Current influencer requirements
This is not the first time the UK has sought to resolve issues with influencers. Previous efforts by the UK Competition and Markets Authority requiring influencers to report and be transparent about any payments or compensation they receive in exchange for endorsements are well documented and arguably have not been particularly successful. .
Although the UKIPO report sets out some interesting recommendations, it is not yet clear whether these will be implemented by the UK government, or whether the policy recommendations and influencer engagement would in fact put a significant dent in the complicit activities of influencers, especially as the trade in counterfeit products is worth billions.
In the meantime, taking a more proactive approach via civil and criminal lawsuits may prove more effective in deterring complicit influencers. For example, while knowingly buying counterfeit goods for personal use is not a crime in the UK, offering or exposing counterfeit goods for sale with the intent to make a profit is a criminal offense under of the Trade Marks Act 1994 and is liable to imprisonment for up to 10 years. In addition, influencers may also be subject to civil action if the harm caused to a consumer (as a result of mistakenly buying and using counterfeit products) is attributable to the endorsement of that product by influencers.
When it comes to companies that give influencers their access to consumers, online marketplace and social media platforms are required to follow certain rules related to tackling illegal content online; the majority of them are currently volunteers, although this has slowly changed. 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 post on the EU Digital Services Act.
Trainee lawyer Chidi Ogbuagu contributed to this post.