E-commerce is a great market for counterfeiters, providing criminals with a direct route to deliver knockoff products to global consumers. However, one Camarillo company is taking on the booming counterfeit industry one product at a time, even when it means going up against corporate giants such as eBay Inc. and Walmart Stores Inc. The Counterfeit Report is a website that investigates and exposes counterfeit products sold in stores and online. The company aims to educate the general public on the prevalence and dangers associated with phony goods. “We purchased over 2,500 products from eBay in 2015. Not one of them was authentic,” said Craig Crosby, chief executive and publisher of the Counterfeit Report. He and his team are not chasing after $50 knockoff Gucci purses or other items that consumers know are fake but buy anyway for the appropriated logo. Instead they are looking for products that are designed to imitate the real item and, therefore, fetch the same price as the original. The company finds leads from complaints filed by consumers on its website. It also self-initiates investigations based on its own independent research or conducts test purchases for manufacturers, who hire Counterfeit Report to find brand knockoffs. Crosby said the company generates most of its leads internally or from manufacturing clients. From there, once Counterfeit Report identifies that a product is potentially counterfeit, the company makes a test purchase. If the product is determined to be an imitation, the firm notifies the outlet, typically an e-commerce site such as eBay or Amazon.com Inc., that it is selling a bogus product and monitors its response. “We never return the item. That puts it back into circulation,” said Crosby, adding, “It is also illegal to mail or ship counterfeits.” High-profile cases Instead of returning a bogus product, the company keeps it as evidence for potential criminal or civil actions by the manufacturer. It photographs the product and documents the purchase to notify the public of the fraud. The information is displayed on the firm’s website to make people aware of the counterfeit. Earlier this month, the company purchased 30 Duracell AA and 10 Duracell AAA batteries on Walmart.com, the website run by the world’s largest retailer, Walmart Stores Inc. of Bentonville, Ark. Duracell later confirmed that the batteries were counterfeit. Counterfeit Report investigated further and discovered the batteries were sold by a third-party vendor on Walmart.com, which is open to select sellers. Also this month, the firm discovered fake generic microSDHC memory cards, which are sold on eBay, often at a discounted price. The company purchased dozens of these devices only to discover they were not genuine. The cards tested at around 7 gigabytes or less of memory when many boasted memory capacities of 32GB or more, which the parent company of the actual product said don’t even exist in its product line. When tested, the devices often failed or would overwrite data when reaching capacity. Currently, the Counterfeit Report has two arbitrations against eBay – one for fraud and one for false advertising – based on purchases made by the company. The firm claims that after receiving counterfeit items from the e-commerce conglomerate, the company promptly reported it to eBay with documented proof from the manufacturer, left negative seller feedback on the website and opened a refund claim per item. Yet the items remained listed on the website, sometimes even after repeated test purchases. “We take issue when a buyer purchases something that may be dangerous,” said Crosby. “We notify the seller that the product is a counterfeit and may be dangerous. They tell the buyers they have nothing to worry about.” EBay’s user agreement specifically limits buyers to arbitration as legal recourse and does not allow class-action lawsuits, according to Crosby. He said both arbitrations will be held within the next month. “EBay cooperates fully with law enforcement in counterfeit investigations, and through its Verified Rights Owner Program, works with brands to combat counterfeits on the site,” eBay Senior Manager of Global Corporate Affairs and Communications Ryan Moore said in an email. “Mr. Crosby is neither law enforcement nor a rights owner, nor does he claim to be an authorized representative of either. We did invite Mr. Crosby to participate in the formalized program, but he declined our offer.” The Verified Rights Owner Program allows companies to ask eBay to remove items that infringe on their intellectual property rights. When asked about the program, Crosby said that the Counterfeit Report did not decline membership and has been a member since June 2015. However, he added that the Counterfeit Report feels the program is “illusionary, ineffective and obfuscates the overall counterfeit problem facing eBay.” He said although the program does remove some counterfeit products, many sellers remain on the site and relist the items. Whether the merchandise is pharmaceuticals, car parts or electronic devices, consumers bear the risk in e-commerce counterfeiting. “Ingestible counterfeit products can pose a very serious health risk,” said Bill Cummings, vice president of marketing for Thinfilm, a Norwegian company that specializes in printed electronics to track products and deter counterfeiting. “Imitation cosmetics are just one of the most current examples, as fraudulent makeup recently discovered in China was found to contain mercury, lead, arsenic, cyanide and even human feces.” In addition, there have been cases where counterfeit automotive suspension systems and brake pads have failed, causing injury. Counterfeit medications have led to hundreds of thousands of deaths a year and there was even an instance where a fake iPhone charger shocked a woman to death. Confidential agreements The Counterfeit Report consists of Crosby, two corporate lawyers, a graphic designer, two web technicians and a mechanical engineer. However, Crosby would not disclose certain details of the business, such as contract terms with manufacturers, revenue and location. He said that he and his team must be very cautious because many counterfeiters are criminal organizations and terrorist groups that lose money because of investigations done by the company. It has even been reported that seized al-Qaida training manuals strongly recommend selling fake products to finance terrorism efforts. “We see threats and challenges against the website on a daily basis,” he said. According to him, more than 90 percent of all counterfeit products come from China, which he partially attributes to the availability of cheap labor as well as unregulated intellectual property laws. Tod Burke, a criminal justice professor at Radford University in Virginia, also attributes China’s role in counterfeiting to the country’s large economy. “The reason China is the leader in counterfeit products is simply a matter of supply and demand,” Burke said. “China is the world’s leading exporter, so it makes sense that they are able to meet market demand on products.” The International AntiCounterfeiting Coalition projected $1.7 trillion of global trade in counterfeit and pirated goods in 2015. This large sum has a lot to do with unregulated e-commerce, globalization and supply chain management. “Fighting counterfeiters often feels like a giant game of whack-a-mole,” said Mitch Stein, a partner at New York law firm Sullivan & Worcester who specializes in intellectual property. “As soon as inspectors or investigators find and stop one, another pops up.” Crosby monetizes his business by working as an agent for manufacturers, helping companies protect their brands’ reputations by exposing and taking knockoffs off the market. Nonetheless, the Counterfeit Report’s ultimate goal is to drive consumer awareness, which should, in turn, reduce counterfeit sales. On the Counterfeit Report’s website, it outlines steps to take if a counterfeit product is purchased, which include notifying the seller, the credit card company for the purchase, the legitimate manufacturer and legal authorities. “We do this, because we are the only ones that do it,” said Crosby. “I think the ultimate inspiration (to start the company) was the number of counterfeits I saw growing over the years. Counterfeiting is the largest criminal organization in the world, and when you start to see counterfeit items, you feel like something has to be done about it.”