Curbing Counterfeit Imports With Better Public-Private Data Sharing and AI Could Add 20,000 U.S. Manufacturing Jobs

March 3, 2021

WASHINGTON—U.S. authorities seize tens of thousands of shipments of counterfeit goods every year, stopping billions of dollars’ worth of illicit and potentially dangerous merchandise from reaching American consumers. These shipments are on the rise in recent years, with counterfeiters taking advantage of shifting consumer habits and the growth of online marketplaces. To thwart the growing scourge, a new report from the Center for Data Innovation argues the United States must step up data sharing and coordination between industry and law enforcement.

The Center’s report, released during National Consumer Protection Week, proposes creating a public-private partnership under the auspices of the U.S. Customs and Border Protection Agency (CBP) to share data among brand sellers, online marketplaces, and enforcement agencies and to foster data-driven strategies to reduce the spread of fake goods and disable counterfeit networks. If it succeeds in cutting counterfeit imports by 50 percent, the Center estimates the initiative would add 15,000 to 20,000 U.S. manufacturing jobs while reducing the trade deficit.

“Particularly in China, there are many companies with business models based entirely on counterfeiting. They are strategic and adaptive in taking advantage of siloed, uncoordinated countermeasures in the U.S. marketplace,” said the Center’s Associate Director, Sujai Shivakumar, who authored the report. “The prevalence of counterfeit goods threatens U.S. consumers’ health and safety, lowers confidence in businesses and markets, and harms U.S. innovation and economic growth. A well-crafted data-sharing partnership can address these issues by leveraging data analytics and artificial intelligence to identify and respond to the counterfeiters’ strategies and tactics.”

The Center’s report highlights the pervasiveness of global counterfeiting networks, which cause tangible harm to U.S. citizens and businesses, particularly during the COVID-19 pandemic—as when federal agents seized approximately 10 million Chinese-made counterfeit N95 face masks bearing the 3M logo.

The report then reviews the anti-counterfeiting efforts of leading brand sellers, online marketplaces, and federal law enforcement agencies, concluding that lack of coordination undermines the efforts’ effectiveness. Moreover, the report finds that current legislative proposals would not fix the information-sharing problem.

The Center therefore offers two recommendations for Congress: 

  • Amend laws and regulations that prevent real-time data sharing to thwart counterfeiting.
  • Direct CBP to establish a public-private partnership where enforcement agencies, brand sellers, and online marketplaces can work together to stop counterfeiters and disrupt their networks by creating a shared data repository, developing common industry standards, and conducting research on proactive measures to identify and disrupt counterfeiter networks.

“There needs to be a much more proactive and systemic approach to identify and disrupt the counterfeiters’ networks,” said Shivakumar. “A public-private partnership can provide the coordination that’s needed among sellers, marketplaces, and law enforcement by developing common standards for data collection and building a platform for advanced analytics and innovative solutions.”

Read the report.