The underground world of counterfeiting scams Americans out of billions of dollars. Now there’s a new twist deceiving consumers. TODAY National Investigative Correspondent Jeff Rossen reports.
It’s been going on for decades: Counterfeiting of everything from electronics to software. But now the criminals have become so sophisticated that they’re buying real ad space and selling to you on popular and trusted websites we visit every day. And some say those websites are profiting from it.
We went on the hunt with U.S. Customs and Border Protection, searching incoming cargo to stop a criminal epidemic before it reaches your home: expertly designed counterfeit products sold as real. And where are Americans finding them? On top sites like eBay and on Google, where criminals pay big bucks for prime placement.
High school senior Lauren McMillen just wanted to learn Spanish. So her dad went on eBay and spent $200 on what he thought was a never-opened Rosetta Stone software kit. "The ad said it was brand new and shrink-wrapped," Brian McMillen said. "Seemed absolutely legit."
It arrived and it looked legit, down to the instruction manual, stickers, even inscriptions on the disks. But, Brian said, "We tried to install it, and it kept popping up an error message every time you started the product."
It didn't work because it's a fake. Authorities say some even install viruses on your computer to steal your personal information. "It's not just some college kid in their basement putting this together," Lauren McMillen said. "This is a real business going on, and somebody is making a lot of money off of it."
And some say it's not just the ciminals cashing in; it's the popular sites that allow them to advertise. Tom Adams, the CEO of Rosetta Stone, said they've caught Google selling coveted top-of-the-page ad space to more than 1,600 rogue websites peddling fake Rosetta Stone.
Here's how it works: You go to Google and type "Rosetta Stone" into the search bar and you get a list of websites — the real one and, on the day the company showed us, many fakes offering discounts. Click on them and they look legit.
"They're essentially scraping our site, taking whatever media that we have, photographs, text, descriptions of our method," said a "disgusted" Tom Adams. Even his own picture was appropriated by counterfeiters. And he said Google isn't doing enough to stop them.
"When you complain to Google and say, 'Get these ads down,' what's the response?" I asked him.
"They're back up very shortly thereafter," Adams said, "because although Google takes them down, it's a game of whack-a-mole. These pirates have multiple accounts they're able to operate with.
"And Google will do business with them again," he added.
In fact, the Justice Department has caught Google doing business with criminals before. Last summer, the company paid $500 million to avoid prosecution on charges that it knowingly sold ads to illegal online pharmacies. Google declined our request for an on-camera interview, but in a statement told us "We take responsibility for our actions," and "Google does not allow ads for ... any counterfeit goods. We use a combination of manual and automated processes to enforce this policy. We are constantly working to improve our practices and tune our systems. In 2011, we shut down approximately 95,000 advertisers for ... counterfeit goods."
But Rosetta Stone said it's not working. They keep hearing from angry consumers, and had to hire their own investigators to scan for counterfeits. One of them, Jason Calhoun, showed us a fake Rosetta Stone product for sale on eBay. "It's got 28 bids and it's up to $242," he said.
It's also frustrating for law enforcement, who admit they can't keep up with the flood of fakes. "It's increasing every year," said Roland Suliveras, a port director for U.S. Customs and Border Protection. "It's increasing every year. We've had a 24 percent increase from last year."
Part of the problem: Many of these criminals are based in China — out of reach for U.S. authorities. That's where Lauren McMillen's kit came from. After she complained, eBay ultimately gave her a refund.
"Something needs to be done about this," Lauren said. "People need to be aware that this is going on, on the Internet, and there needs to be a stop to it."
In a statement, eBay told us it has more than 300 million listings, and counterfeits are not welcome on its sites. It's a leader in partnering with law enforcement and brand owners in combating the sale of fakes, and it took down the ad that Lauren responded to the day after it was posted.
Here's the takeaway: If you see brand-new products for sale at steep discounts, that could be a red flag. And just because it has prime placement in a search, and looks real, doesn't mean it is.
To read statements from eBay and Google in response to this report, click here.
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