Counterfeiters Could Potentially Exploit Instagram Checkout, Says Report

Instagram has been steadily rolling out shopping features, turning what once was a photo-sharing social platform into something of a virtual mall. The rise of the platform as a shopping destination has attracted countless consumers as well as counterfeiters, according to a recent report from data analysis firm Ghostdata.io.

The firm first reported the issue of fakes on social platforms in 2016. The original report, which was published by The Washington Post, highlighted the proliferation of spambots and fake accounts across the Instagram platform. At the time, Ghostdata.io reported, the bots they interacted with during their research “featured limited capabilities, and most of them were unable to interact properly and keep a conversation with sensible answers.” However, the firm said, “their general level of automation seems good enough for their main function: promoting an illegal business and encouraging to buy fake items.”

Three years later, after analyzing 4 million Instagram posts or stories that included hashtags related to fashion brands, Ghostdata.io has released new findings. In its 2019 report entitled “Instagram and Counterfeiting in 2019: New Features, Old Problems,” the firm said that the trend toward counterfeiting has “gained strong traction on Instagram by exploiting its penetration especially among young users worldwide.”

One key objective for both counterfeit bots and “legitimate” counterfeit sellers (i.e., actual people) is expanding visibility through prolific platform usage. The accounts use hashtags that pertain to popular search topics, including luxury brand names. Between regular posts and Instagram Stories (which allow fake sellers to create ephemeral illicit content that disappears without a trace), most counterfeiters published at least 100 posts each. 32% of them published between 100 and 500 posts, while over 21% published more than 1,000 posts.

Some fake accounts are easy to spot, Ghostdata.io wrote. Poor grammar and a dearth of information are signifiers of illegitimate businesses. But other accounts “do their best to resemble a legitimate e-store,” the report explained. “They take advantage of Stories functionalities and create an appealing profile to catch a potential buyer’s eye,” the firm explained, pointing to feeds with well-staged photos and graphics.

Still other accounts gain traction through offering products that have seemingly just been released by high-fashion brands, stoking consumers’ impulses to jump on the latest “drop.”

While Instagram has become the top showcase platform for counterfeiters, Ghostdata.io reports, they’re using mostly external applications to communicate securely with potential buyers.

The data revealed that 57% of the counterfeit accounts on Instagram are using WhatsApp to communicate with consumers. Should a fake account be flagged or kicked off Instagram for violating the terms of service, it can still keep in touch and complete the sale. Sellers often use “immediate, secure and well-known” payment methods like WeChat Pay or PayPal for transactions.

Most counterfeit goods (43%) originate from China, the report asserted. Russia is responsible for 30% of the fake goods on Instagram, while Indonesia is responsible for 13.5%.

This spring, Instagram began allowing 23 top beauty and fashion brands to sell directly within its app using a secure feature called Checkout With Instagram. Instead of directing consumers to retailer websites to complete the checkout process, the program uses stored payment and shipping info to complete purchases within the app.

Ghostdata.io’s report warns that the growth of Instagram as a shopping channel will “inevitably exacerbate” the platform’s problems with counterfeiting, adding that the “multibillion-dollar underground economy” is “surely eager to somehow exploit this new Instagram feature.”

Editor’s Note: This story was reported by FN’s sister magazine Sourcing Journal. For more, visit Sourcingjournal.com.

Watch the highlights at the 2018 FNAAs.

More From Our Brands

Access exclusive content