Cyber counterfeiters are on the rise but NetNames is helping companies fight back, writes Amy Wilson
Cyber crime may sound like a worry too far for a small business struggling to keep going while the economy remains in the doldrums.
But when someone starts selling goods that look almost exactly like yours from a website that looks almost like yours — taking at least 10pc of your customers away and palming them off with inferior and even dangerous products in your name — it becomes a very real and immediate problem.
Simon Jackson, the chief commercial officer at NetNames, which works with companies to improve online security and manage the web addresses which they own, claims a combination of developments is making online brand protection an everyday requirement.
Firstly, many more people are buying online. Secondly, anyone can put up a website and finally, counterfeit-goods makers are getting more sophisticated. With 3D scanners, they can plot the exact scale of items such as sunglasses, which a factory can then copy in bulk.
“When we surveyed companies about online brand protection, they said it was about stopping people passing off fake goods as theirs, and social media monitoring looking for people saying negative things about you,” he said. But, he added: “There wasn’t any awareness that if you have a consumer-facing brand, then you will have people diverting your customers away and costing you money.”
As well as lookalike sites selling counterfeit goods, sites are set up that automatically direct anyone who clicks on them to a rival’s website or to malicious sites which ask for personal information such as bank details.
There is also an issue with so-called “affiliates”; online advertising companies that drive traffic to your site and get commission for any resulting sales. Some are buying up web addresses that direct you to the proper site after you click on them. The affiliate charges the brand because the customer has technically come through their site.
Trying to get these sites taken down can be an expensive headache for companies not used to dealing with the arcane world of who is responsible for what online. “People immediately think they need to bring in the intellectual property lawyers and the cease-and-desist letters,” said Mr Jackson.
NetNames, whose core business is managing domain names for 1,800 companies, offers a service to have fake websites taken down within days. “Because of our domain-name business, we have established relationships with the 240 or so registrars worldwide,” said Mr Jackson. “If we can prove the site and the products on it are infringing our client’s trademarks, then the registrar responsible for that site can take it down in a matter of hours.”
In Europe and the United States, it is illegal to sell counterfeit goods and registrars are obliged to take down any site that does so. In China, where the biggest counterfeit and piracy market is based, it is not. However, “mis-selling” — claiming that something is genuine when it is not — is illegal there and NetNames pursues malicious sites through that route. The company says it has a 90pc success rate.
“If you’re a big luxury goods brand making handbags, you might have 6,000 infringements in a month, two-thirds of them from Asia,” said Mr Jackson. Because of the unregulated nature of the internet, brands only tend to find out they have a problem when they come across a fake site themselves. “If you’re finding 30-50 infringements in a month, there’s probably more like 600 to 800 going on,” said Mr Jackson.
NetNames has software that searches for images of the various component parts of a brand’s wares, as well as the name and descriptions of it. The data is then trawled by analysts in Cambridge who speak 25 languages between them. They report on the extent of the problem and what to do about it.
The company charges an average-sized firm about £30,000 to carry out such an analysis and have rogue sites taken down and then make sure they do not start mushrooming again. However, if you’re a small consumer-goods company rather than a Louis Vuitton, spending tens of thousands to fix a cyber crime problem is unlikely to be an option. Mr Jackson advises all business owners to be thinking about what web addresses they need to own from the outset, to protect their online revenue as they expand.
“You might think you’re fine with joebloggs.co.uk and .com, but you probably want joebloggshandbags.co.uk and joebloggsluxury or whatever you sell,” he said. If you don’t own the addresses, as your brand becomes known, speculators will buy them and either use them maliciously or sit on them in the hope you have to buy it from them for a lot more in the future.
Consumer goods company Unilever, NetNames’ biggest customer, has a portfolio of about 14,000 domain names to cover all its brands worldwide. However, this does not mean a small business needs to spend a fortune on millions of web addresses.
NetNames has been around for 15 years and was bought by private equity firm HG Capital for £150m at the end of 2011 and delisted. Since it has been privately owned, revenue in the brand protection business has increased 40pc and NetNames had a turnover of £60m in the year to the end of June.
The new owners see a big opportunity in a recent change by ICANN, the governing body of the internet. It has allowed a large expansion in the suffixes which can be used in a web address, to include company names: for example. hsbc and industries such as .bank. “It’s an opportunity and a threat,” said Mr Jackson. “If you missed the boat on the .com version of your name, you could get something even more relevant, but if you do nothing then your competitors or cyber criminals could buy them.”