By Teresa Rivas

The internet has made shopping easier -- and more dangerous -- than ever before.

A 31-year-old from Maryland ordered watches from Etsy last year to give to her fiancé, father, and father-in-law as gifts for her wedding. She thought the watches looked nice for the price. Too nice, as it turns out.

Between July and August, customs seized the watches after determining them to be designer knockoffs. The woman was out $650. It got worse. In September, the government revoked her Global Entry, a program that allows low-risk travelers to clear customs quickly, because of customs violations.

The Maryland woman isn't alone. High-tech crooks are using artificial intelligence to make fraudulent listings nearly indistinguishable from the real deal on social-media platforms like Facebook, Reddit, TikTok, and WhatsApp. Although numbers are hard to come by, social-media sales of counterfeit goods are almost certainly in the millions. The RepladiesDesigner subreddit, which is a community for buyers of designer copies, has more than 200,000 members, while posts about unofficial suppliers of weight-loss drugs on GLP1forum, a website for people to discuss these medications, get hundreds of comments.

While the social-media platforms benefit from an increasing number of users, shoppers take the brunt of the consequences from unpoliced merchants. "There's a level of unfairness there," says Saleem Alhabash, professor of advertising and public relations at Michigan State University.

From fiscal 2020 to 2024, which ends in September, the volume of goods seized for intellectual property violations in the U.S. more than doubled, and the total manufacturer's suggested retail price, or MSRP, of goods seized for IP violations jumped 95% in 2024 alone, according to Customs and Border Protection. Goods shipped from China and Hong Kong accounted for approximately 90% of the quantity seized. A 2023 Michigan State survey of global consumers by Alhabash and his colleagues found that more than two-thirds of respondents were deceived into buying counterfeits in the past year. Sixty-eight percent did so via Facebook.

Now that social media has integrated shopping with scrolling, counterfeiters have jumped from traditional marketplaces into users' feeds. They buy advertising space or set up profiles like legitimate companies do, or post on dedicated forums devoted to specific items, like medications. Alternatively, users pool their experiences on dedicated Reddit forums, where they share tips on which vendors are reliable and which deliver high-quality fakes.

Artificial intelligence is making the problem worse. Generative AI allows counterfeiters to remove obvious details like misspellings and bad grammar that used to be reliable red flags, and emulate legitimate listings. Even more worrisome, high-quality AI-generated images can look indistinguishable from real photographs: "It's nearly impossible for the consumer to figure it out," says Alhabash.

Social media has provided counterfeiters with a direct line to shoppers. Swindlers initially used e-commerce sites like Amazon.com and eBay to peddle fake goods, but the two sites have since cracked down on counterfeits via lawsuits and user bans. That has led many sellers to social-media sites, which have prioritized policing other, more toxic content like child pornography.

Dedicated teams, like those that monitor for violence or sexual content, are one possibility to stop counterfeits, as is requiring ID verification for sellers. AI can also help, given that it can quickly spot suspicious user patterns. "With all the technology today, it wouldn't be that hard to stop," says Mark Weinstein, author and founder of ad-free social network MeWe.

Etsy, Reddit, and Meta Platforms -- owner of Facebook and WhatsApp -- didn't return Barron's request for comment.

To be sure, brands from Nike to Novo Nordisk have been quick to move against fakes; the former filed lawsuits against counterfeiters, and the latter publicly warned about the safety of faux-Ozempic weight-loss medicines.

The stakes are high. Even seemingly safe things like toys, apparel, and accessories can be dangerous: The American Apparel & Footwear Association found in a 2022 study that nearly 40% of knockoffs tested failed to comply with U.S. product safety standards.

Counterfeit airplane parts and air bags can have even more dire consequences. Fake parts have been linked to fatal car crashes in the past and were found in more than 100 engines after an investigation in 2023. Customs and Border Patrol warned that it saw an increase in counterfeit air bags last year, which can injure or kill victims in otherwise survivable crashes.

Yet social-media companies may feel little need to police merchants, experts say. "One of the issues is that all of our actual civil and criminal counterfeiting laws, at the federal and state level, only address the person or company manufacturing and selling [the goods]; they don't really address any other facilitators" like online retailers and social-media platforms, says Kari Kammel, director of the Center for Anti-Counterfeiting and Product Protection at Michigan State University. The result is a voluntary hodgepodge of responses to counterfeiting that varies by platform, brand, and country.

Congress passed the 2023 Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act to increase transparency among online sellers, thereby more easily exposing counterfeiters. While it's a step in the right direction, it isn't legislation "with a lot of teeth, and not very specific to counterfeit postings," says Kammel. "One glaring fact is that it has been enacted for almost two years now, and we've seen nothing. No action from the Federal Trade Commission; we haven't seen any attorneys general bring cases under it."

The law places the burden on consumers -- not multibillion-dollar brands or tech giants -- to flag suspicious products and sellers, even though there isn't a clear reporting mechanism in place.

Another potential law, the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce Act, hasn't made it out of Congress. It has faced a lot of opposition, as it would shift more responsibility to the platforms to vet sellers and products.

"The notion of any kind of legislation that's protective of consumers in the current Congress -- really?" asks Richard Daynard, University Distinguished Professor of Law at Northeastern University.

Daynard is well versed in taking on corporate interests: He led the legal fight against Big Tobacco and more recently has argued that sports betting is a public-health risk. He says that tech companies' nudging of consumers to shop no matter what in pursuit of profits isn't that dissimilar: There's the same potential for addiction, and the fact that tech has only recently allowed it to happen any time anywhere. "Whether it's compulsive shopping or compulsive gambling, many people wouldn't be doing it without all the prompts that are designed to activate your impulses. They're jumping on people's vulnerabilities," Daynard says.

Kammel thinks that there may be some hope that recent court decisions could eventually provide greater support for anticounterfeiting measures in principle, even though they are more centered on free speech and the First Amendment.

The first decision is Anderson v. TikTok, in which the site's algorithm showed a 10-year-old the dangerous "Blackout Challenge" that led to her death. In that case, the ruling could be interpreted as holding that when a site uses its algorithm to push out content that consumers aren't even searching for, that is no longer protected third-party speech. Reading the ruling this way would mean that content pushed on users by the algorithm loses immunity, as it becomes first-party platform speech, she notes. The second is Moody v. NetChoice, which also addresses how much content moderation social-media sites must do, balanced with free speech. "If that holds, I think this opens up a whole new era," Kammel says.

These cases haven't been fully decided yet, however, as appellate courts have returned them to trial courts, meaning they can't be used as precedent right now, even if they are ultimately settled in that way.

Counterfeits have existed as long as brands have, so it's unlikely they can be wholly combated even with the cooperation of brands, governments, and tech companies.

Yet, at the end of the day, tech and social media has opened up a whole new way to shop -- one that laws haven't caught up with and that offers consumers bogus goods that simply aren't at supermarkets or malls. Counterfeiters can now directly reach huge mass audiences, and some of the world's most valuable companies are benefiting from these transactions without much in the way of legal guardrails.

Consumers are the ones left holding the (potentially fake) bag.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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July 18, 2025 01:00 ET (05:00 GMT)

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