The AAFA’s whitepaper titled ‘The Rising Risk of Fraudulent Websites: Spotlight on the Digital Devalue Chain of Counterfeits,‘ urges policymakers to consider every possible approach to combat the proliferation of fraudulent websites within the textile and apparel sectors.
It also aims to dismantle the chain of counterfeit digital transactions that pose threats to consumers, governments, and authentic fashion brand proprietors.
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The intention is for both governmental bodies and industry stakeholders to recognise and implement effective strategies to address this escalating problem. The document further provides actionable recommendations for service providers to enhance consumer, business, and government protection.
The objective of this report is to outline prevailing trends and challenges, articulate the shortcomings of existing mechanisms in halting deceptive websites, and propose legislative and policy reforms aimed at eradicating these harmful sites.
AAFA says the report does not exhaustively cover all potential remedies against fraudulent websites nor does it prescribe specific measures targeting any particular online service providers.
AAFA president and CEO Steve Lamar explains: “As policymakers look at the risks of tech on our young people and national security, they must also look at the risks to business as counterfeiters, fraudsters, and other illegal actors take advantage of consumers seeking low-cost and readily available alternative goods.
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By GlobalData“This whitepaper builds on previous awareness efforts around the need for legislation and consumer awareness efforts regarding illicit trade and the type of fraud perpetuated by fake advertisements, dupe influencers, and the entire digital devalue chain of counterfeits. As website fraud continues to expand and grow in both scope and sophistication, it simply cannot be overlooked.”
The report draws on data from the US Federal Trade Commission (FTC), which shows fraud targeting Americans reached a record 2.6m cases in 2023, resulting in losses exceeding $10bn. Among these, online shopping scams ranked second, highlighting the scale of the problem.
The survey revealed a concerning trend with respondents reporting a doubling in the number of fraudulent sites they identified and attempted to remove during the first half of 2024 compared to the same period in 2023.
The consensus among respondents is that current measures to combat such websites fall short, calling for a more robust system that fosters consistent collaboration with relevant online service providers.
In the paper, the association said that over a third of counterfeit apparel, footwear, and accessory products tested by the AAFA in 2022 did not meet US product safety standards, with levels of hazardous chemicals such as arsenic, cadmium, phthalates, and lead exceeding acceptable limits.
The findings of this study showed counterfeit products pose significant risks regardless of where these are purchased, including through fraudulent websites.
The National Association of Manufacturers (NAM) estimated that in 2019, counterfeits in the US had a significant economic impact, leading to “$22.3bn of lost labour income, 325,542 fewer jobs, $5.6bn of lost federal tax revenues and nearly $4bn less in state and local tax collections.”
AAFA brand protection senior director Jennifer Hanks said: “By flagging current trends and detailing the limitations of the current system, we hope to position concerns for policymakers and elected leaders to help identify long-term solutions to stop counterfeiters and illegal fraudsters.”
Ongoing advocacy for Intellectual Property protections
As part of its broader advocacy, AAFA has consistently championed intellectual property rights protection and raised awareness about the harmful effects of counterfeits on businesses, consumers, workers, and the environment.
In December 2024, the association reached out to President-elect Donald Trump through a multi-industry letter, urging that intellectual property protections be included in economic policymaking discussions.
The association said it is also open to collaborating with brands and service providers to create long-term solutions and a safer online environment for US consumers.
In February, the AAFA warned that threats to the United States Agency for International Development (USAID) could have a far-reaching impact on the global fashion supply chain.
