Facebook's Black Market

If you spend any time on Facebook it's likely you have seen an ad for apparel or other products from your favorite brand, many times offering huge discounts off retail. It could be NASCAR, Formula 1, Rolex, Star Wars, even the Red Headed Stranger has fallen victim to this Facebook's counterfeiting problem. The scams play out in different ways and Facebook's ad algorithm is being used to target users with ads for counterfeit products based on what they like. 

The scheme plays out a few different ways but most operate like one being run by a company we will call "Company-X", which was running ads for what appeared to be unlicensed Steve McQueen posters, through a Facebook page called "I Love Cars" the link from the Facebook ad took us to a website which shares an address with Company-X, as well as countless other websites (I found at least six) which are all offering products from major brands or artwork that artists claim, was copied from their original work. After visiting their page I couldn't find any statements about offering officially licensed products and a quick scan of the Steve McQueen licensing site didn't list them as a licensee, they also didn't appear on lists of official licensees of Ferrari, Porsche, or Gulf Oil. I reached out to Greenlight, the licensing company who is in charge of Steve McQueen's brand, and they confirmed that these products were not approved and they had no relationship with Company-X or any of their associated Facebook pages.

Company-X's BBB reviews are riddled with stories of products taking months to ship, orders never arriving, poor quality, and products that don't look like what was advertised. Now, to be fair, they do have some five-star reviews... those reviews just happen to come in waves, all posted just after the company has gotten a 1-star review, which in my opinion is a big red flag for bot reviews.

This also doesn't appear to be new behavior for Company-X, as this story from 2015 points out this issue is nothing new for Facebook or Company-X. I reached out to Texas-based intellectual property attorney Andrea Sager to ask if these limited runs or flash sales somehow exempted retailers from intellectual property laws, she said: “This is a big misconception, and it’s very important for anyone conducting business to understand. States may have individual counterfeit laws. However, it’s important to know that ANYONE selling counterfeit or unlicensed goods are subject to federal intellectual property laws and possibly federal prosecution. It doesn’t matter if you purchased from a wholesaler that purchased from a manufacturer, which would leave you third down the chain. Each entity selling the goods is subject to legal ramifications.”

While a company may have a US-based address, most of the products appear to be produced overseas in bulk after the flash-sale. Not dealing with authorized sellers can have impacts beyond just lost revenue for the brands being knocked off. According to U.S. Immigration and Customs Enforcement Acting Commissioner Mark Morgan; “Trade in counterfeits not only damages our economy, but it also threatens national security and consumer health and safety, counterfeits hurt the company whose products are pirated, but the profits from counterfeiting can also fund other serious crimes, including narcotics trafficking and even terrorism.”

No information on licensing could be found for this product or any of the other Ferrari, Porsche, Gulf, or other branded posters, apparel, and phone cases being offered for sale on the site. Greenlight the, licensing company for Steve McQueen, confirmed this is not an authorized product. 

But Company-X isn't the only player in this game, many companies are wholly based overseas and simply set up a Facebook page and start running ads. One retail site selling Formula 1 products redirected to a website called "Chrystal Arch" which hadn't even bothered to replace the filler language in the template website they had set up. On the Chrystal Arch website, you could find your favorite Ferrari, Martini Racing, Mercedes-Benz, Red Bull, or just about any other motorsports-related hoodie, shirt, or jacket, all for 50-70% less than the official merchandise offered by teams.

One Facebook page called "Gallery T-shirts" was promoting retro NASCAR shirts which linked to a site called LuckyTees. The site was down in a matter of days meaning everyone who placed an order had no recourse and likely never even received their product, and today if you attempt to visit the site it tries to auto-download a virus to your computer. However, in the weeks while I was researching and writing this story, another Facebook page called "Memory Tee" started running ads on Facebook offering the same collection of NASCAR tees, this new page was established in February and like the others, it redirected you to site with a different name and once again the shopping pages were only accessible by direct link.

In addition to violating trademark and copyright law, many of these retro NASCAR shirts would be considered in breach of the 'Family Smoking Prevention and Tobacco Control Act' which bans the sale of apparel and other promotional products that feature Tobacco products, so the Skoal Bandit and Wiston Cup shirts couldn't be legally produced today even under license. This new Facebook page and the site it was linked to shares a physical address with dozens of other tee shirt websites all of which are registered as private domains.

As one might imagine. the Facebook pages for these sites are full of negative reviews, similar to what we saw on Better Business Bureau and Trustpilot reviews, products never received, wrong products shipped, low quality, no tracking, no reply or refund.

So how do they get away with it? Firstly Facebook doesn't check that advertisers have the right to sell branded products, plus it's not in their interest to limit ads sales or put in the infrastructure to police these ads promoting counterfeiting operations. Some counterfeiters are even creating pages using the brand name they are ripping off,  making it look even more official, one Facebook ad for what appear to be counterfeit Star Wars shirts was being marketed by a page called "Star Wars" that had just a few fans, but to users who didn't visit the page, it had the appearance of an official Star Wars advertisement. 

To avoid coming up in Google searches the bulk of these webpages are not indexed, with the only access to them via the link that is running in the Facebook ad, meaning brands searching for counterfeit products have a harder time finding them. Since most of the sites are deleted within just a few weeks or months, consumers who get duped into buying these products end up with nowhere to turn if they never receive the product or get a sub-standard product.

As someone who has worked in the world of apparel and licensing I can tell you it is frustrating, but the biggest problem is that platforms like Facebook are profiting from ads selling unlicensed products, and seem to be doing little to police it. It is amazing that a platform can find all kinds of ways to censor content, but doesn't have a basic check to make sure that the products they are advertising are legal to sell. I reached out to Facebook, asking for a comment or certification but after weeks they have not responded.

With the COVID-19 pandemic in full swing, several pages have popped up on Facebook, like the one above, selling what appear to be unlicensed face masks. The masks feature Ferrari, Porsche, Megadeath, NFL, MLB, Disney, and many other major brand logos. Attempting to trace the page, which was created in early March, to an actual company is nearly impossible. The site claims it is copyright to a company that of another name, the domain is registered in Japan, yet it lists an address that turns out to be a hotel in San Diego, and a phone number for customer service... well that rings to the Washing DC area information directory.

Once you click on "Buy Product Here" for your "Ferrari" mask, instead of taking you to a shopping cart, it redirects to yet another website to actually order, however, this new site appears to be for a company based in Singapore and has a customer service number for Los Angeles and a website registered in Vietnam. While Facebook hasn't responded to my inquiry, I am sure that their response would simply that there are far too many ads being sold on Facebook for them to catch everything and that they are platform, not a publisher. We do not accept illegal advertising from print publications or television broadcasters and the FBI is already prosecuting the owners of other sites for third-party advertising content, yet this issue seems to only be growing on Facebook.

Now I am a big fan of Facebook and what it has done to connect people, in fact, there is a good chance you saw this post because it was shared on Facebook. I believe that Facebook could fix this if they wanted to, the same way they have put in fact-checker warnings on dubious content and require legitimate pages to "handshake" with their promoted content partners. Using AI to recognize a prominent logo and flag the ad for review or require that it tag the brand for approval would reduce a lot of the piracy that is happening on Facebook today, but it would require that legitimate brands pressure Facebook to make the change. In Facebook's defense, they do remove a fair number of the ads if they are reported, in the course of this story about 70% of the ads we reported ended up being removed for violating advertising guidelines.

 The only thing we can do as consumers is, not buy unlicensed products and report the ads when we see them. Not only does the counterfeit industry hurt the brands and artists we claim to be fans of, but the products if they do ever arrive are generally low quality, may not meet safety standards, and besides, do you really want to wear a fake product?