Counterfeit Sports Memorabilia

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The counterfeiting of major league sports merchandise is an illegal business practice that sells between $600 - $700 billion of fraudulent products annually. Counterfeiters disregard the legal ownership of the owner’s brands and reaps the profits for their copyrighted merchandise. Most of the goods are sold online which makes it extremely difficult for consumers to differentiate between fake and authentic merchandise. Counterfeit merchandise, such as sports apparel and memorabilia, is illegally sold using a major sport’s organization’s brand/logo. Although the selling of fraudulent merchandise spans industries, it is very prevalent in the sports industry. Sports leagues have a strong understanding of the effect counterfeiting has in the sports industry and on all stakeholders. To effectively address this issue, they must be more proactive in tackling the problems.

Background

Radón (2012) explains the “counterfeiting of famous luxury brands with a strong brand name and high-visibility is an ever-growing global industry” (p. 1). Her statement explains why many people are victimized by counterfeiters, especially in the digital age where visual access of merchandise is almost immediate using smart phones and other apps. Most sports fans purchase their sports merchandise online and are lured in by counterfeiters offering them what appears to be, or is described as, authentic products for less than they would pay if they made the purchase on the sports’ league home page or through other authorized websites. In fact, Hanes & Roll (2008) argue that this form of internet safety does not get the attention of other forms of internet safety and is another flaw in internet safety that effects many people. Brettman (2013) takes the argument farther by arguing “the sale of counterfeit jerseys and other sports items undermines the legitimate economy, takes jobs away from Americans and fuels crime overseas” (para. 4). Considering the negative impact on society, sports leagues, such as the NFL, have a corporate responsibility to take even greater steps to protect their brand, fans, as well as other stakeholders and other interests.

While counterfeiting is a problem that effects all stakeholders, the issue to be addressed is how sports leagues could be more effective in helping tackle the problem. Realizing the negative impact counterfeit merchandise has on their collective fan bases, professional sports leagues, such as the NFL, have partnered with Immigration and Customs Enforcement (ICE) and other law enforcement officials to help protect the public from purchasing bogus merchandise, especially during high-profile events such as the Super Bowl. However, the first step to addressing the issue should be to tackle the problem strategically.

The best method to deal with sports league’s industry wide threat is to develop a strategic solution to mitigate the threat. The risk of the selling of counterfeit sports apparel and other memorabilia is an external threat that continues to increase, and industry leaders must prevent, or at the very least, significantly decrease that risk of that threat. Some strategies that should be, or have been, implemented include creating a task force, incorporating technology, assessing relationships with 3rd party vendors and entering strategic alliances.

Strategies

Task Force

While selling counterfeit sports memorabilia with the clear intent to defraud is a federal criminal matter that needs to be resolved in a court of law, sports leagues, such as the NFL should play a more active role in trying to combat the problem, such as establishing a Counterfeit Memorabilia Prevention Task Force (CMPTF). Although the task force could not act in legal capacity, it could help the league be more proactive in creating several different types of strategies to help prevent or minimize the selling of counterfeit NFL sports memorabilia. The creation of a task force would allow the entity to brainstorm with all stakeholders to develop different approaches to tackle the issue. One strategy could be taking advantage of technology to make it harder for criminals to produce counterfeit products.

Technology

Asadizanjani, Tehranipoor, & Forte (2017) discuss how technology can be used to detect counterfeit Integrated Circuits, which raises the question as to whether similar technology could be used if chips were embedded in sports merchandise. If sports leagues design sports memorabilia that would enable chips to be placed in the merchandise, it could act as a deterrent to those who traffic counterfeit sports merchandise. The author’s also suggest creating a database as a way to keep track of “counterfeit incidents, support education and increase [consumer] awareness about counterfeit” activity within the sports industry (p. 5).

Kusic (2014) also discusses using technology to help combat counterfeiting by making it easier for consumers to detect fake sports merchandise and apparel. He explains that “product markings, apps, websites and mobile surveillance devices [can be] used as a line of defense against counterfeiting” (para. 2). The NFL could design its products using distinct markings. The sewing fabric used to create the markings are inexpensive and have been proven hard to duplicate. When viewed in the light, the markings are visible. This allows consumers to see that the merchandise is authentic. This type of strategy would work in situations where sports memorabilia is being sold during games, or at other major sports league sponsored events. In terms of internet sales, 3rd party sellers or vendors can use the technology to make sure the professional sports products being sold to consumers are not counterfeit. Sports leagues could also use security images to aid in authenticating its major sport’s league memorabilia, such as those used on credit cards.

According to Kusic (2014) security images, such as “the Morpho butterfly’s iridescent blue and green wings” can be embedded in jerseys, caps, jackets, and other NFL, or major sports league’s team memorabilia to help consumers quickly spot bogus merchandise before they purchase it from criminals who peddle fraudulent products (para. 6). The security image utilizes an “embossing technique that can be applied to a variety of surfaces from fabric to metal” (para. 7). The outlay to incorporate this preventative method against counterfeiting is very cost effective, not that finance is an issue for the NFL and other professional sports leagues. The tasks associated with copying this type of technology would be costly and very complex for counterfeiting criminals to duplicate. The design can be utilized on many types of fabrics. Kusic (2014) also explains there are also apps that can be used to help decrease the selling of counterfeit merchandise.

Sports leagues should be more proactive in alerting consumers on ways to help them decrease their chances of purchasing counterfeit merchandise. One way to do this would be to utilize the task force to do more research on technologies such as special phone apps that have the ability to let users to immediately check to see if sports merchandise is genuine before they spend money on the goods. The app allows “retail companies to place a Unique Product Identifier (UPI) in the fabric or on the package [and] consumers can use their smartphones to scan the UPI. If the UPI has been counterfeited, the system will notify the consumer that the product can’t be authenticated” (para. 14). The continued education of  fans and consumers about the prevalence of counterfeiting in the sports industry is another strategy sports leagues should execute to help protect consumers from purchasing counterfeit sports memorabilia. As technology continues to evolve, so will the abilities of counterfeiters to deceive and rip off consumers.

Sports leagues should do more to educate fans and consumers about counterfeit products being sold. Sports companies should use their websites to run a trailing banner across the top and/or bottom of the page informing consumers about ongoing scams targeting consumers by selling them bogus tickets and other merchandise. The leagues could also use its home page, the news section in particular, to keep consumers up to date about the progress it has made working with law enforcement officials to help combat the counterfeit problem. This not only helps consumers but also puts the sport league in a more positive light showing they are aware and are committed to help protect fans from becoming victims of counterfeiting. NFL.com (n.d.)  should better utilize its marketing and promotion strategies to make it more affordable for consumers to purchase products directly from the sport’s league home page.

Sport’s league can make purchasing sports apparel by offering discounts if users purchase directly from their websites. This would be a win-win situation for all stakeholders. The sports leagues wins because they will be more visible in their approach to help protect fans from being frauded by purchasing counterfeit sports memorabilia and apparel. Consumers win, because they have the confidence of knowing that purchases made through the website are authentic. Also, sports leagues should also close all loop wholes that allow counterfeit merchandise to be sold to consumers, such as taking a closer look at 3rd party vendors who they have authorized to sell their merchandise, especially through other sellers.

3rd Party Vendors

The NFL, as well as other sports leagues, should re-examine its relationships with reputable companies and vendors. Companies such as eBay and Amazon already have an established web presence, large supplier networks, and distribution channel efficiencies, which makes them an ideal source for sports leagues to work with. However, the leagues should develop control procedures to ensure vendors are held accountable if any counterfeit memorabilia is sold through their websites. One way some sports leagues have done that was to enter into strategic alliances with law enforcement officials, as well.

According to Soper and Soshnick (2017), partnering with local and federal law enforcement officials would allow the sharing of “records of counterfeit removal requests so they can get their hands-on sellers' physical and IP addresses as well as their preferred payment methods. The data would be used to spot trends and focus enforcement” (para. 5). Although strategic alliances with law enforcement officials have been successful, it has become more of a challenge, especially during major events, such as the Super Bowl, NBA Playoffs, World Series, etc. As a result, sports leagues should consider stopping the selling of merchandise near venues where high profile games are being played.

Mavlanova & Benbunan-Fich (2011) argue that counterfeiters have the edge, because online technology has made it possible for them to sell merchandise to consumers prior to the examination of authenticity. The authors explain that U.S. Customs Office list apparel as one of the most popular items favored by counterfeiters. They also explain counterfeiters are also successful, because in most cases they do not have established relationships with those who purchase from them. Counterfeiters are also skilled at bait and switch tactics, which presents digital images and descriptions of authentic merchandise, such as sports apparel, to gain user’s trust. Consumers then feel confident enough to engage in commerce with them, only to receive bogus goods. As a result, sports leagues may have to consider strategies to have more control over the selling of their own sports apparel and collectibles.

Holding 3rd party online vendors more accountable would give sports leagues more control over selling their own merchandise and help reduce the counterfeiting of sports merchandise. The leagues would have complete authority overstocking, managing and shipping inventory. Monitoring 3rd party sellers is also more cost-efficient, because sport’s leagues could be ensured that consumers could are protected and are receiving high quality, authentic merchandise. The leagues could also strengthen its partnerships and strategic alliances with federal and local law enforcement officials.

Strategic Alliances

“ICE’s Homeland Security Investigations (HSI), CBP, U.S. Postal Inspection Service (USPIS), and state and local police departments around the country [partnered] with the NFL and other major sports leagues” (para. 4) working together seized just under $20 millions of counterfeit NFL merchandise in what officials called “Operation Team Player.” The partnership has been proven effective, as is evidenced by the amount of merchandise seized. This is a major criminal activity that affects all stakeholders, including the public. Saldaña (2015) states that counterfeiting “is most certainly not a victimless crime” and regardless of who the perpetrator is and their motive for doing so, “intellectual property theft is a very real crime with very real victims [and] no good comes from counterfeiting American products regardless of whether they are all-star jerseys, airbags, or aspirin.” (para. 5). However, federal officials admit keeping up with counterfeiters in the future may be more a challenge than anticipated, especially when it comes to preventing the sale of counterfeit football merchandise.

Soper and Soshnick (2017) describes how the NFL has worked with law enforcement officials to produce “Operation Team Player, timed for Super Bowl 51 [which was] designed to publicize the growing prevalence of fakes” (para. 1). This shows that sports leagues, in this case, the NFL, have become more responsible in trying to tackle counterfeiting in the sports industry. As a result of their efforts, lots of merchandise was seized by law enforcement officials. Also, in 2016, the Federal Government seized $1.38 billion in counterfeit products.  However, although the league’s work with law enforcement has been successful, the issue remains.

Also, according to Soper and Soshnick’s (2017), the article, the counterfeiting of sports merchandise is “a problem that's getting worse and harder to control” (para. 2). One reason is that consumers around the world are using companies like Amazon and eBay to purchase products online and shipped directly to customers, which is why it was argued in a previous section of the paper that the NFL should hold these companies accountable or require they also work with law enforcement officials, as also discussed above. The reason this is difficult is because “officials must find counterfeits one-at-a-time in a stream of 250 million individual packages entering the country each year,” which is difficult to say the least (para. 4).

Conclusion

Counterfeit sports merchandise and apparel costs is a major problem affecting the sports industry and is an illegal business industry that brings in revenue in excess of  $600 - $700 billion annually. Major sports leagues understand the impact of this problem and have teamed up with local and federal law enforcement officials to help combat the problem. Although, the partnership shows that the leagues are proactive in helping combat the problem, technology has been making it harder to prevent the problem since most purchases are made over the internet. The counterfeiting of sports merchandise not only affects the sports industry but stakeholders and tax payers, as well. As a result, sports leagues must do more. There are many strategies that can be implemented to mitigate the problem. Whatever strategy the leagues decide to implement, they have a corporate responsibility to protect all stakeholders.

References

Asadizanjani, N., Tehranipoor, M. & Forte, D. (2017). Counterfeit electronics detection using image processing and machine Learning. Journal of Physics: Conference Series, Vol. 787(1). Retrieved from http://iopscience.iop.org/article/10.1088/1742-6596/787/1/012023

Brettman, A. (2014). Federal agents announce arrests, seizures of counterfeit sports merchandise. The Oregonian. Retrieved from http://www.oregonlive.com/playbooks-profits/index.ssf/2013/02/federal_agents_announce_arrest.html

Hanes, M. & Roll, M. (2008). Internet safety. The Phi Delta Kappan, Vol. 89(10), 1. Retrieved from http://www.jstor.org/stable/40792281

Kusic, M. (2014). How technology is used to prevent counterfeiting. Lawjical. Retrieved from https://www.pinow.com/articles/1796/how-technology-is-used-to-prevent-counterfeiting

Mavlanova, T. & Benbunan-Fich, R. (Winter 2010-11). Counterfeit products on the internet: The role of seller-level and product-level information. International Journal of Electronic Commerce, Vol. 15 (2), 79-104. Retrieved from http://www.jstor.org/stable/27919913

NFL.com. (n.d.). Dream Super Bowl LIII matchups. NFL. Retrieved from https://www.nfl.com/

Radón, A. (2012). Counterfeit luxury goods online: An investigation of consumer perceptions. International Journal of Marketing Studies, Vol. 4(2), 1-6. Retrieved from http://www.ccsenet.org/journal/index.php/ijms/article/view/13525/10859

Saldaña, S. R. (2014). Federal seize more than $19.5 million in fake NFL merchandise during ‘Operation Team Player. U.S. Immigration and Customs Enforcement. Retrieved from https://www.ice.gov/news/releases/federal-agencies-seize-more-195-million-fake-nfl-merchandise-during-operation-team

Soper, S. & Soshnick, S. (2017). Feds are losing the war of fake Super Bowl merchandise. Chicago Tribune. Retrieved from http://www.chicagotribune.com/business/ct-fake-super-bowl-merchandise-20170202-story.html