In an industry so reliant on the safety of it’s products, the infiltration of substandard fakes and copies can be devastating for both businesses and consumers alike.

The Problem of Counterfeiting

For the uninitiated, counterfeiting is a global problem which threatens almost every consumer product, across any category that you care to name. And the issue isn’t new. What is new, however, is the substantial growth of online marketplaces, with over half of UK consumers now preferring to shop online than in-store 1. This preference for the online store, while convenient, can make establishing the authenticity of products more difficult. What’s more, and unlike bricks and mortar, online suspect sellers can hide in plain sight, often using legitimate platforms to sell counterfeits and copies to unsuspecting consumers.

Yet counterfeiting doesn’t just impact the consumer. Along the way, they cause devastating effects in terms of brand reputation and diverted revenue streams. Where large companies typically benefit from expert brand protection, small business owners can often lack the resources and know-how to defend their intellectual property. As a result, SMEs which manufacture and sell online may find themselves struggling to combat counterfeits.

Broken bike

The Toy Industry

Not immune to this trend, the toy sector is an industry giant generating over £70bn worldwide, with an average spend of £400 per child in the UK alone. Dominated by five key players – Hasbro, Lego, Mattel, Namco Banda and Jakks Pacific (each of which form a significant proportion) – the majority of businesses in the toy industry today are small to medium-sized enterprises. With around 5,000 of toy companies European-based, nearly all (99%) are SMEs, creating over 200,000 direct and indirect jobs – and bearing the brunt of counterfeiting activities 2. According to the British Toy and Hobby Association (BTHA), these days 37% of all toy purchases are completed online. Given over half of consumers believe everything online is safety-checked, this is a scary statistic.

The Importance of Safety

As we know, product safety is the number one priority in the toy industry, with all brands required by law to ensure goods reach or exceed the high standards set out by EU & UK regulations. For many, this requires a heavy investment of time and money in preliminary research and testing. While this may seem like overkill, particularly for small brands strapped for cash, there are many hidden dangers associated with poor quality toys, including: small, sharp and poorly fixed parts which fall off and become choking hazards; toxic low-quality paints and glues; and poor electrical wiring leading to electric shocks – to name just a few.

Counterfeiting in the Toy Industry

In 2017, the European Commission reported seizure of approximately 3.5 million counterfeit toys at EU borders, equating to a value of over €21 million. Despite such efforts, the industry is still estimated to lose €1.4 billion each year, purely from counterfeits which slip through the net 3. While fakes might not seem like such a big problem when buying a designer knockoff at the local market (Note: it IS a big deal), when it comes to toys, which parents are relying on for quality, reliability and safety, it’s clear the issue becomes far more personal – and pressing. Who hasn’t, after all, read about the heart-stopping cases of near-fatal scenarios involving fake toys that should never have got into the hands of children? Earlier in the year the BTHA launched their own campaign, after finding that 58% of toys selected for assessment were non-compliant with UK toy safety regulations (and 22% demonstrating serious safety issues), signalling a welcome call for government action, ensuring hazardous toys are proactively identified and removed from the market 4.

So, what can you do?

There are several simple and straightforward measures that brands can take to protect themselves from becoming the target of counterfeiters:

  • Monitor e-commerce sites diligently in languages other than English and certainly in Chinese. Look frequently and often for your trademarks, misspellings of your trademark and product descriptions, and straplines.
  • Know your distribution chain and resellers. If you lose sight of who is selling what where, it’s easier for the fakers to go unnoticed.
  • Report infringing items and sellers for removal. Most online marketplaces have procedures in place to report cases of infringement. It’s a relatively simple process and with proof of originality the offending link should be removed. [If you’re stuck, ask us for help!].
  • If you find a fake buy a sample. Get to know it intimately so you can tell the difference between genuine and fake, and share this information with your trusted distribution chain. Better the devil you know…
  • Register products with the EUIPO Enforcement Database, a free service that helps to prevent the movement of infringing goods throughout Europe.
  • When creating products, wherever possible, build in quirks, which just ‘happen to be part of the manufacturing brief’ and that a counterfeiter will most likely to miss when copying.
  • Finally, be honest. If your brand is targeted, then encourage purchases from genuine sources and highlight dangerous issues with fakes. Doing so is the best way to keep your consumers – and your brand – safe.

 

References

  1. https://ecommercenews.eu/51-uk-consumers-prefer-to-shop-online-than-in-store/
  2. https://www.statista.com/topics/1108/toy-industry/
  3. https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/observatory/resources/research-and-studies/ip_infringement/study4/toys_games_en.pdf
  4. https://www.btha.co.uk/wp-content/uploads/2019/06/Toy-Safety-Campaign_FV-19.06.2019.pdf