Online Counterfeiters Gain Strength

'Cybersquatters' mimic familiar brands' domain names for profit—and sometimes fraud.

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"Cybersquatting"—the use of domain names designed to mimic those of large brands—is up 33 percent compared with a year ago, according to a study by MarkMonitor being released today. The cybersquatters often use misspellings in website addresses to attract visitors looking for big-name brands. They make money through pay-per-click advertising or selling counterfeit products.

The study also found that the recent crackdown on such counterfeiting seems to be working. "Brand holders who are actually going after this are having some positive effects," says Frederick Felman, chief marketing officer of MarkMonitor. Partly as a result of several lawsuits, one form of cybersquatting known as kiting, where a domain name is registered for only a short time, is on the decline.

Some of the biggest jumps in brand mimicry were in apparel, up almost 50 percent, and food and beverage, up 67 percent. If consumers actually make purchases on such sites, says Felman, they are opening themselves up to security risks because cybersquatters could steal consumers' credit card numbers and other personal information.

The study found that the United States leads the world in websites hosting brand abuse, with 68 percent based domestically. Germany accounts for 9 percent, the United Kingdom 4 percent, and China 2 percent.

Consumers, Felman says, may be more vulnerable to counterfeiters online than in person. "At least in person, you look at the quality of the goods," he says. "Online, for some reason, consumers' BS meter doesn't really go off as well."

His advice? Stick with vendors you trust, and if you're looking for a big-name store, do a Web search on its name and click on the first result that comes up. That's almost always going to be the legitimate site. If you're entering a site name directly into a Web browser, watch for typos that could lead you astray.