OpSec Security Study Advises Buyer Beware: Counterfeits Lurk Among Online Discounts

Research by OpSec Security, a global brand protection and anti-counterfeiting company, found that on average, online auction sites were discounting popular back-to-school items at approximately twice the rate of discounts offered by authorized online retailers. Deeply discounted pricing for new, back-to-school items is sign that counterfeiters are lurking. End Quote

(1888PressRelease) August 30, 2008 - BOSTON, MA -- Research by OpSec Security, a global brand protection and anti-counterfeiting company, found that on average, online auction sites were discounting popular back-to-school items at approximately twice the rate of discounts offered by authorized online retailers. Deeply discounted pricing for new, back-to-school items is sign that counterfeiters are lurking.

Consumers Search for Back-to-School Discounts Online
In a down economy, consumers are spending less and are looking for the best deals during the back-to-school season. Competition among retailers to attract shoppers during this difficult economic time has led to especially creative promotions and discounting. Determining product authenticity based solely on pricing becomes far more challenging for online shoppers when authorized retailers offer significant discounts. This evens the playing field, making it easier for counterfeiters to sneak into the game unnoticed.

OpSec Study Overview
OpSec monitored the online auctions landscape for new back-to-school items, including laptops, sneakers, jeans and backpacks. All items searched were new, in-season products. The study covered a 30-day timeframe between July and August 2008. Authorized online retailer discounts averaged 33%, while the average discount on auction sites was 58%. The chart below describes average discounts on authorized online retail sites and on auction sites for each of the product groups studied.

How can auction sellers offer these products at such deep discounts?
OpSec has found that global B2B trade boards are often where online auction sellers source inventory. There are hundreds of trade board sites on which global sellers and buyers exchange product in bulk, at deep discounts. During its study, OpSec identified 5,674 companies offering the select back-to-school products searched on one highly trafficked trade board. While trade boards do provide a global platform to sell legitimate products, they have also become a known channel to sell counterfeits. It is not typical for authorized retailers or brand owners to sell through this channel.

With consumers looking to save on back-to-school purchases and retailers competing for fewer consumer dollars, counterfeiters see opportunity. Therefore, during tough economic times, it is even more critical to be aware that counterfeits are moving through online channels.

What does this mean for consumers?
Purchasing fake goods most often results in replacing substandard goods much sooner than expected, a bigger expense in the end. Consumers should research products and discounts and purchase from authorized retailers when possible. When purchasing from auction sites, consumers should review seller feedback and beware of deep discounts.

What does this mean for Retailers and Brand Owners?
Retailers and brand owners should monitor highly trafficked online auctions and other ecommerce platforms to determine whether their products are being offered at deep discounts. If counterfeit product is identified, leverage Right’s Owners programs (i.e. eBay’s VeRO program) to remove listings. Proactively addressing these online issues will allow brand owners and retailers to maintain strategic pricing structures.

Methodology
OpSec Security monitored auction sites and B2B trade boards for popular, back-to-school products over a 30-day period between July and August 2008.

• Nike sneakers and Levi’s jeans were the focus brands for apparel and footwear. Authorized online retailers offered an average discount of 35%, while auction sites offered an average discount of 63%, an additional 28% from retail.

• Apple, HP, and Dell were the focus brands for laptops. Authorized online retailers offered an average discount of 15%, while auction sites offered an average discount of 50%, an additional 35% discount from retail.

• High Sierra and Columbia were the focus brands for backpacks. Authorized online retailers offered an average discount of 50%, while auction sites offered an average discount of 62%, an additional 12% discount from retail.

About OpSec Security, Inc.
OpSec Security, Inc. is a wholly-owned division of OpSec Security Group plc (London AIM: OSG). OpSec is the global leader in providing anti-counterfeiting technologies, services and software to over 200 companies across industry sectors, and more than 50 governments worldwide. OpSec Security is unique in its ability to provide both physical and digital technologies as part of its overall anti-counterfeiting solutions. OpSec’s online brand protection solutions enable global brands to combat unauthorized e-commerce and online brand abuse. For more information, please see www.opsecsecurity.com, or contact Terri Mock, +1-617-226-3075, or tmock ( @ ) opsecsecurity dot com.

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