The Internet has opened up a wealth of possibilities for new businesses. Its speed, connectivity, and anonymity make it possible to sell nearly anything to anyone at anytime. Unfortunately, that can include the sale of fake products as well -- everything from counterfeit purses or shoes, to knockoff clothes, and even fake medications. Although selling fakes online can be big business, it's a common online scam.
Depending on the kind of fake products a scammer may try to sell, different sets of laws, governing agencies, and penalties may apply.
Selling Fakes Online Using Someone Else's Trademark
A trademark is a word, name, slogan, or symbol businesses use in order to distinguish their goods or services from those of others. By registering a trademark, businesses can prevent others from using their name, image, or catch-phrase to sell products. Counterfeiters sometimes steal the designs or trademarks of others in order to dupe customers into buying fake products. A common example of this is a counterfeit purse bearing Louis Vuitton's trademarked logo.
People who use counterfeit trademarks to sell fakes can be penalized in two ways. First, the rightful owner can sue the person using her trademark falsely in order to obtain any ill-gotten profits. Second, a seller can be prosecuted under the Trademark Counterfeiting Act of 1984. The Act makes it illegal for individuals to knowingly use a counterfeit trademark to sell goods or services. A counterfeit mark is one that:
Counterfeit trademarks can appear on labels, stickers, packaging, tags, signs, and more. If a company violates the Act, it could be fined up to $15 million. Individuals who are convicted under the Act can face up to a $2 million dollar fine and 10 years in prison. Individuals who are charged more than once for trademark infringement may be fined up to $5 million or imprisoned for up to 20 years. Counterfeiters who sell safety-sensitive products, such as pharmaceuticals, generally receive the maximum penalty.
Selling Fake Pharmaceuticals
The Food and Drug Administration (FDA) is responsible for ensuring that all the food, beverages, and drugs on the marketplace are safe and, in the case of drugs, effective treatments. Just like knockoff consumer products, knockoff food and medications might fail to comply with all the safety standards or contain harmful chemicals. Individuals who distribute counterfeit drugs may receive a fine of up to $2 million or a prison sentence of up to 10 years.
As the threat posed by selling counterfeit drugs online increases, both states and the federal government look for more ways to enforce the ban against selling these fake drugs.
Selling Fakes Online and Consumer Safety
The Consumer Product Safety Act gives a branch of the federal government called the Consumer Product Safety Commission (CPSC) power to regulate products in order to protect consumers from injury. Counterfeit products sold online often don't comply with CPSC guidelines. The CPSC can sue people who manufacture for sale, sell, distribute, or import these products, seeking civil penalties up to $1,250,000. If a vendor knows their product violates the Act but sells or distributes it anyway, they could be subject to criminal penalties, including a $50,000 fine or up to a year in prison.
Charged with Selling Fakes Online? Talk to an Attorney
Selling fakes online seems like a victimless crime, but you might be surprised how seriously it's taken by law enforcement agents and courts. Companies place pressure on law enforcers and prosecutors to take their complaints seriously, so you need someone in your corner too. Consider getting in touch with a local criminal defense attorney to discuss your case.