Unauthorized Use of Brand Assets:

One of the most prevalent issues on Temu is the unauthorized use of brand names, logos, and images by counterfeit sellers. These bad actors create listings that mimic legitimate products, falsely portraying them as authentic.   Below are a few notable examples highlight the extent of this problem:

Keyword Camouflage: Some counterfeit products are disguised using functional or misspelled keywords. For example, searching for “Car Light Up Sign” may yield results for fake Uber or Lyft LED signs.

Laneige Counterfeits: The skincare brand Laneige faced a flood of counterfeit products on Temu, particularly fake versions of its popular lip sleeping masks. Counterfeiters used Laneige’s brand name, logos, and images to create deceptive listings, misleading consumers into purchasing what they believed were genuine products. Eventually Laneige decided to build a reporting portal for identifying and reporting counterfeit products.

Grey Market Activity:

The grey market on Temu.com works by taking advantage of price differences across regions, often involving unauthorized resale of authentic products. Sellers purchase items, typically electronics or other high-demand goods, from countries where prices are lower and resell them on Temu at discounted or inflated rates without the brand’s consent. This process bypasses official distribution channels, which can lead to confusion among consumers, particularly when the products don’t come with warranties or support.

For example, a Samsung Galaxy smartphone could be purchased in other countries and then resold on Temu in the U.S. to take advantage of price differences for profit. At first glance, these may seem like minor discounts, but when combined, these small profits can significantly undermine the earnings of authorized retailers, totaling thousands or even millions.

Cybersquatting and Fake Marketplaces:

To make matters worse, counterfeiters clone or create fake websites and apps that closely mimic Temu’s official platform, deceiving consumers into believing they are on legitimate Temu channels. This type of spoofing technique often leads to consumers unknowingly purchasing counterfeit products or having their personal and financial information stolen, posing significant risks to both consumers and the brand. 

In November 2023, Temu filed a lawsuit against several websites accused of unauthorized trademark use. The lawsuit targeted 20 domain names, including sites like temuapp.biz, temucouponcodes.com, and temudeals.store, which were involved in creating fake Temu apps, look-alike marketplaces, and unauthorized promotions. These fraudulent sites tricked customers into placing orders, often resulting in the delivery of counterfeit goods or nothing at all. 

Manipulation of Product Reviews and Ratings:

Sellers use phony reviews to create a false sense of trust and credibility around counterfeit products on Temu. By flooding their product pages with fabricated reviews, these sellers artificially boost their ratings, making counterfeit goods appear more legitimate and appealing to potential buyers. This manipulation can deceive consumers into purchasing low-quality or inauthentic items, believing them to be highly rated and trustworthy.

These counterfeit sellers often exploit referral promotions to encourage users to post overly positive reviews in exchange for discounts or rewards. Additionally, the similarity and recycled nature of many reviews across various listings further reveal the fraudulent intent behind these tactics.

Exploiting Legal Loopholes:

Counterfeiters often exploit gaps in international trade and online marketplace regulations by operating across borders, which allows them to evade stricter regulations in certain regions. This is especially prevalent in countries with lax enforcement of intellectual property laws, where counterfeit products are shipped directly to consumers. A prime example is the exploitation of the “de minimis” loophole where it permits products valued under $800 to enter the United States without tariffs or rigorous customs inspections, enabling counterfeiters to flood the market with fake goods with smaller batches while avoiding the scrutiny that higher-value shipments would typically face. 

Legal Options

Collaboration with Customs Authorities & Government Agencies: Brands should collaborate closely with customs authorities to intercept counterfeit goods before they reach the market. By utilizing the U.S. Customs and Border Protection’s (CBP) e-Recordation program, IP owners can register their trademarks and copyrights, empowering customs to detain counterfeit shipments at the border. 

For example, Nike has partnered with CBP to prevent counterfeit products from entering the United States. As part of this effort, Nike has donated proprietary technology to assist in authenticating their merchandise. This technology is tested at select international mail and express consignment facilities, enhancing border security and protecting consumers. 

Another notable development is that in May 2024, the European Commission has formally designated Temu as a Very Large Online Platform (VLOP) under the Digital Services Act (DSA), which means, Temu will have to comply with the most stringent rules, such as the risk assessments stemming from their services, including the listing and sale of counterfeit goods, unsafe or illegal products, and items that infringe intellectual property rights.

Strengthening IP Enforcement Mechanisms: To combat the widespread IP infringement on Temu, brands must proactively pursue legal action to enforce their intellectual property rights. This includes filing lawsuits against counterfeit sellers and the platform itself when it fails to take appropriate action. Brands should also take strong legal precautions like cease-and-desist letters to prevent counterfeit goods from being sold in the first place.  

Understanding Temu’s Counterfeit Listing Removal Process: Temu has gained notoriety for its convoluted counterfeit listing removal process, which can be challenging for brands to navigate. To request the removal of a counterfeit listing, IP owners must first set up an account through Temu’s Intellectual Property Complaint portal. The process involves selecting the country of infringement, specifying the type of IP being violated, providing URLs of the infringing listings, and submitting detailed documentation supporting the IP claim. While Temu’s process is lengthy and complex, following each step carefully can result in the successful removal of counterfeit listings. Brands should track their applications closely and adjust their submissions if an initial request is denied. 

Engaging in Cross-Border Legal Action: Given that many counterfeit operations are based in countries where IP enforcement is weak and not rigorous, brands must engage in cross-border legal actions, either independently or in collaboration with international legal bodies. For instance, luxury brands like Louis Vuitton have successfully won lawsuits against counterfeiters in China by working with local authorities and law firms to shut down counterfeit production facilities.

Industry Coalition

Centralized Reporting Hub: In the ongoing battle against counterfeiting and intellectual property infringement, a unified approach is critical. An industry coalition can establish a centralized reporting system to effectively combat the online exploitation of counterfeits, facilitating collaboration among brands without compromising individual brand confidentiality.

Vertical Integration: In the past, collaborating with competitors to streamline the takedown of counterfeit listings might have seemed ridiculous or impossible. However, in 2021, two carshare giants, Uber and Lyft, launched the Industry Sharing Safety Program in the U.S. This initiative aims to enhance safety across the entire ridesharing sector, providing companies with vital information to better protect their customers.

Technological Advancement

Implementing AI-Powered Investigation Management Systems: AI-driven tools can identify and analyze unauthorized products at scale. It can flag items that appear to be counterfeit based on inconsistencies in branding, pricing, or seller behavior, allowing brands to act swiftly to remove infringing products.

Blockchain for Product Authentication: Each item in a brand’s inventory can be tagged with a unique digital signature stored on a blockchain, making it easy for consumers and businesses to verify whether a product is genuine. On platforms like Temu, where counterfeiting is rampant, blockchain solutions can also help consumers check the provenance of a product through a simple scan, ensuring that only legitimate products are purchased.

Educational and Public Awareness Campaigns

Consumer Education on Identifying Counterfeits: Brands and e-commerce platforms can proactively educate consumers on identifying counterfeit products through comprehensive public awareness campaigns. These efforts includes creating detailed guides, informative videos, and targeted social media content that clearly differentiate genuine products from fakes.

Louis Vuitton exemplifies this approach with its “The Art of Craftsmanship” campaign. This initiative provides consumers with in-depth resources, such as guides and videos, alongside in-store events that highlight the intricate craftsmanship behind authentic Louis Vuitton items. By engaging consumers in understanding these subtle differences, the campaign not only educates but also empowers them to avoid counterfeit goods.