San Jose, Calif. – If you find a deal at an online auction site for a price that seems too good to be true, look twice.
One company that makes sunglasses, Oakley, went online and found more than 19,000 auctions on eBay and other websites last year that were selling fake Oakley sunglasses. When Oakley investigated further, the Southern California company traced some of the counterfeit to an Oregon man’s house where they found 33,000 more.
“EBay is a huge problem for a lot of us brand-holders,” said Vance Lommen, director of legal affairs for Oakley, based in Foothill Ranch, Calif. “It’s also any auction sites. EBay at least is working with us to close these sites down.”
Now that counterfeit goods have become big business at online auction sites, companies are expanding their efforts to thwart it.
“We have several attorneys who do nothing but collect the information on the auction sites 24 hours a day,” Lommen said.
The auction sites are the places where small-time counterfeiters sell goods one by one under their real names, supplementing their incomes and hoping no one notices, but mixed among them are wholesalers who sell goods by the dozens, often using both fake identities and credit cards.
For consumers, it’s easy to fall prey to them. Counterfeiters will advertise a real pair of Oakley sunglasses in a listing and then send a fake pair to the winning bidder.
“It’s called ‘gray market diversion,’ ” Lommen said.
EBay, the San Jose online auction giant, says it has more than 1,000 employees dedicated to stopping fraud, counterfeiting and illegal sales on its site, but that number is dwarfed by the monitoring task at hand.
The online auction site has 6 million new listings a day.
“Technology in this case is a double-edged sword,” said Hani Durzy, a spokesman for eBay. “There’s no doubt the Internet makes counterfeiting easier. The other side of that is that technology makes it harder to be anonymous.”
Durzy estimates that one one-hundredth of 1 percent of goods sold on eBay involve some kind of fraud, whether it’s counterfeiting or trademark violations or something else illegal, but manufacturers fear the numbers are high and just getting worse.
In response to complaints, eBay has started cracking down on fraud and counterfeiting through its VERO program, which enables tens of thousands of goods-makers to request that questionable auctions be shut down.
Some companies hire private investigators such as Robert Holmes at IP Cybercrime in Beverly Hills, Calif., who spend their time trolling through auctions for culprits. Holmes has to first wade through the small mom-and-pop sellers to identify their larger distributors, and then his clients take legal action against the bigger fish.
While successes are growing, so is the problem. Rolex stopped just 180 Internet auctions of counterfeit goods in 1998, but in 2005, it shut down more than 4,000 such auctions.
Technology companies are lending their help. GenuOne, a software company in Boston, has more than 500 subscribers to its service for monitoring eBay auctions for suspicious transactions. The software automatically trolls through eBay listings and lists red flags, such as 1,000 auctions posted by the same person. When GenuOne chief executive Jeffrey Unger demonstrated the software at a Starbucks, he pulled up hundreds of suspicious auctions of Apple iPods.
Some large companies are demanding that online auction sites do more to stop the problem.
