How counterfeit networks operate

 

Counterfeit networks are organized groups that produce, finance, transport, and sell fake goods. Although strictly local groups also exist, most of these networks are part of larger structures that span national borders.

 

The production and trade of fake goods seriously affect brands, consumer health and safety, the global economy, and the environment. Currently, the global trade of fake goods is estimated to be worth $467 billion, representing 2.3% of all imports worldwide. In the EU alone, this number is $117 billion, around 4.7% of all goods imported into the bloc.

 

| The global trade of fake goods is estimated to be worth $467 billion

 

For e-Commerce, this translates to fake product listings, ads, and other infringing content appearing on online marketplaces, social media platforms, and single webshops. Depending on the size of the platform, these listings can reach millions in number.

 

Find out all about the 70 million counterfeit listings taken down from TikTok alone!

 

 

What are counterfeits

A "counterfeit is an item that uses someone else’s trademark without their permission." This item can be money, a product, documents, or any other valuable item.

 

Counterfeits are often imitations of a genuine branded product, usually popular and/or high-value items that counterfeiters try to pass off as an original product, albeit discounted for whatever reason for a limited period of time. Thus, the intent behind creating a counterfeit is financial gain, e.g., the sale of the item.

 

 

Illustration of a salesperson displaying a luxury watch for sale

 

 

Piracy, on the other hand, is the copying and distribution of copyright-protected works. Pirated works are exact copies of the original and usually affect cultural products, like books, music, and visual art. Financial gain is the main motivating factor behind piracy as well.

 

An important distinction needs to be made between counterfeit, pirated, and grey market products. While counterfeits are imitations, pirated goods are copies, and grey market products are originals sold outside of a brand’s authorized distribution network.

 

This means that grey market products are not strictly illegal, yet can be equally damaging to brands’ reputation, pricing strategy, and revenue.

 

 

Counterfeiting	Piracy	Grey market
Using someone else’s trademark in items without their permission	Copying and distribution of copyright-protected works	Selling original products outside of a brand’s authorized distribution network

 

    

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What is a counterfeit network

A counterfeit network is a structured cooperation of various groups involved in the production and sale of fake products. A counterfeit network encompasses a variety of actors fulfilling different roles, including manufacturers, sourcers, intermediaries, sellers, as well as logistics and payment operators.

 

Depending on the complexity, size, and location of the network, its operation can vary from loosely organized to very hierarchical. In any case, the network usually contains a decision-making hub that is surrounded by smaller operative circles of subcontracted specialists.

 

As Europol’s 2025 report on the changing DNA of organized crime discovered, the structure of counterfeit networks often mirrors those of legitimate businesses. This includes outsourcing, which in this case means that some functions (e.g., warehousing, payment processing) may even be provided by legitimate companies.

 

The Europol report also found that counterfeit operators often try to infiltrate legitimate supply chains at various points, including sourcing, manufacturing, and selling, to gain access to materials, providers, and infrastructure.

 

This indicates that a counterfeit network doesn’t have to be one closely cooperating group. In fact, it can be formed of a diverse group of actors loosely connected by a supply chain.

 

Discover the difference between grey and black markets!

 

 

How counterfeit networks operate

While they may be different in size and scope, the operation of counterfeit networks usually follows a similar pattern.

 

1. Product design and branding

 

Fake products are designed to imitate an original, branded product. Depending on the nature of the original and the quality of the counterfeit, product design may be a simple act of trying to recreate the exterior of a product, or may involve much more complicated processes that aim to imitate even the internal components as well.

 

 

AI-generated illustration of a chair’s design and proportions being analyzed on a tablet

 

 

Product design, manufacturing, and final assembly often occur in separate locations, with the latter taking place near or even within the target market.

 

In all cases, the packaging and branding materials, including logos and labels, usually try to copy the originals as much as possible.

 

2. Sourcing materials and manufacturing

 

Counterfeit networks tend to source raw materials, blank products, infringing labels, packaging, and accessories separately. This serves multiple purposes:

• Ensuring the operation remains active even if a shipment is seized
• Reducing the chance of identifying the final counterfeit product from a seized shipment.

 

This is especially relevant for network operators dealing with high-value fake versions of electronics, luxury goods, beauty products, and apparel.

 

3. Cross-border transport and concealment

 

Customs agents worldwide face an ever-increasing burden to swiftly identify and process counterfeit shipments. However, due to the sheer volume of international trade, illicit operators have ample opportunities to conceal their infringing goods with cover loads, false invoices and customs documents, misdeclared cargo, and many other tricks.

 

For example, separating the goods from branding and transporting them independently can contribute to evading a customs seizure.

 

4. Distribution

 

Just like in the case of genuine products, the sale of counterfeits can occur online, offline, or via a hybrid model.

 

Online marketplaces, social media platforms, closed buying chat groups, single webshops, fake brand websites, and many other selling points can participate in the online distribution of counterfeits.

 

Discover the telltale signs of a fake webshop!

 

As for offline sales, physical markets remain an important hub for connecting would-be customers (both locals and tourists) with illicit goods. Physical markets have essential features, including established retailer networks, sales infrastructure, and, more often than not, recognizable branding as a source of cheap products, which is why using them is usually worth the risk.

 

Hybrid models operate both on- and offline in a variety of setups. For example, a physical store can serve as a warehouse/transport hub for an online shop, or a seller can operate both channels with the two sharing a supply network.

 

Read about the rise of hybrid commerce!

 

5. Payment, profit and laundering

 

Payment is a typical part where legitimate providers come into play to increase trust with customers. However, the proceeds have to be hidden through a string of shell companies, complicated business structures, misfiled invoices, and opaque distribution chains to evade capture.

 

For example, a business registered in a foreign country can issue the invoice for the payment. When investigating the transaction, agents can find that a different entity registered in yet another country owns the original business and that the contact information leads to a fake PO Box address and an unresponsive phone line.

 

Finally, some networks let the money flow through a legitimate business, e.g., a restaurant, to launder the proceeds gained from counterfeit trade.

 

 

AI-generated illustration of an elegant, empty restaurant

 

 

Counterfeit networks across the world

Counterfeit networks can be located everywhere and anywhere in the world. However, the OECD has identified several hubs with noteworthy counterfeit activities.

 

 

East Asia: China and Hong Kong

When analyzing seized counterfeit goods, their source is most often found to be China (45%) or Hong Kong (17%). This indicates that almost half of all fake products circulating in the world are manufactured in China.

 

Hong Kong currently stands in third rank behind China and Türkiye, most often serving as a transit hub for trade towards the West.

 

| Almost half of all fake products circulating in the world are manufactured in China

  

 

The Europe-Asia corridor: Türkiye

Türkiye is the second most likely source of counterfeits in the world, with 18% of all goods seized by customs originating in the country. Due to its strategic geographical position between Asia and Europe, Türkiye often acts as a provenance economy for fake goods entering the EU, with its physical markets playing a central part in global distribution networks.

 

However, it is also a significant producer of counterfeit products, especially in the categories of apparel, leather goods, food, and cosmetics.

 

 

Central Asia: Kyrgyz Republic

A large wholesale and retail spot, the Dordoi Market in Bishkek organizes its stalls in shipping containers that stretch for over a kilometer. The market also serves as a distribution hub for counterfeit products, predominantly apparel, footwear, and luxury items on their way from China to Europe and Russia.

 

 

Latin America: Argentina, Paraguay and Mexico

There are several distribution hubs in Latin America that facilitate the trade of counterfeits from South America to the US and Canada. La Salada in Buenos Aires, Argentina, for example, is one of the main logistics centers that deal with fake apparel, while major physical markets in Mexico distribute counterfeits across many product categories.

 

As for production, an INTERPOL raid identified a manufacturer of counterfeit shoes in 2024 and seized products worth $750,000, while during the same campaign, authorities in Ecuador uncovered and dismantled a criminal group producing and selling counterfeit liquor.

 

 

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Popular online marketplaces across the world

 

 

Why counterfeit networks are difficult to disrupt

Besides the deliberately clandestine way of operation, counterfeit networks have a few special features that make them hard to discover and even more difficult to disrupt.

 

The international nature of these networks ensures that they fall under the jurisdiction of two or more national law enforcement authorities. The lack of systematic information exchange and slow joint enforcement authorizations between these authorities make investigations and subsequent legal procedures much more challenging.

 

As counterfeit networks often use regular companies for various key functions, they can rely on a perfectly legitimate, well-oiled business infrastructure for their illicit activities as well.

 

Moreover, these networks tend to be very resilient and flexible, adapting to minute changes in consumer behavior, technological development, and even regulations, forcing usually slower-moving legislators into a role where they’re constantly trying to catch up.

 

 

Illustration of a person checking a data chart on a tablet

 

 

Finally, thanks to their multitude of channels, a takedown of one or two listings, or even the closure of a physical selling point won’t be able to significantly disrupt the organization as a whole.

 

 

How brands can dismantle counterfeit networks

This all indicates that brands need to take a comprehensive approach to protect their IP rights from the dangers of counterfeit networks.

 

Continuous online monitoring of all kinds of content, including product listings, ads, social media posts, etc., is necessary to detect infringements in real time.

 

The next step is background research: this is crucial to discover hidden connections between seemingly independent cases of infringement. Indeed, background research is one of the best weapons against counterfeit networks, because it targets the connecting points and allows investigators to not just take down one or two product listings, but actually dismantle the network as a whole.

 

Test purchases are a great tool for uncovering more information about the origins of a product and the identity of a seller. To get an even clearer picture, a round of marketplace sales tracking is recommended to discover the selling volume of each seller. This allows brands to prioritize their responses and create a sequence of measures (e.g., takedowns) that maximizes the efficiency of their enforcement efforts.

 

 

Conclusions

Counterfeit networks thrive on connections, which means that appropriate responses can’t be fragmented. This is why globaleyez and SCRIBOS have developed the Online-to-Offline (O2O) approach.

 

O2O brand protection connects the digital and the physical, ensuring that hidden links between online and offline infringements are uncovered. This enables faster, more efficient investigations and enforcement.

 

Learn all about the O2O approach!