Mercado Libre, the leading Latin American e-commerce group, has launched a partnership with fashion brands Victoria’s Secret, Levi Strauss, Pink, Tommy Hilfiger and Under Armour to create an anti-counterfeiting solution to provide safe online transactions for its products and services.
Latin America is the fastest growing e-commerce market in the world. In May 2021, the total e-commerce retail sales in the region registered 36.7% growth compared to 2020. Argentina was the fastest growing country at 79%, followed by Brazil, 35%; and Mexico, 27%.
On-line marketplaces face difficulties to filter and verify the products that are being advertised. Brand owners can report the sale of counterfeit products but marketplaces are generally slow to analyse reports and take products down. Furthermore, some marketplaces refuse to act as, in most jurisdictions, they are not obliged to filter third-party content.
“It is really positive to see marketplaces taking the counterfeiting issue seriously,” explained a digital law analyst at the Brazilian Chamber of Digital Economy, “however, regulators must also take action to combat this type of fraud. Only Chile and Brazil have regulations in place regarding the notice and takedown of potentially counterfeited products.”
“It is really positive to see marketplaces taking the counterfeiting issue seriously, however, regulators must also take action to combat this type of fraud.”
Digital law analyst, Brazilian Chamber of Digital Economy
A Mercado Libre executive confirmed the initiative, “Mercado Libre already had a counterfeiting tool in place, its Brand Protection Program, but by collaborating with brands will be more effective and increase the investment in monitoring, artificial intelligence, algorithms and other tools to collaborate with the authorities.”
The Inter-American Development Bank warned that Latin America’s e-commerce market has a serious regulatory gap. The main problem lies with the lack of clarity around the laws regulating the industry which do not clearly define who is responsible for enforcing them and how. This issue is exacerbated with cross-border transactions, the lack of a regulatory superstructure and the need to update national regulation standards.
A strategic advisor for an e-commerce platform in Mexico confirmed that the regulators had a long way to catch up, “The main challenge for Mercado Libre’s alliance to succeed is the regulators’ willingness to fight the problem. Many countries in Latin America are drafting proposals but it needs to move faster. Amazon has estimated that it delivers 2 million counterfeit products but that it blocks 10 billion, this gives you some idea of the scale of the problem.”
“The main challenge for Mercado Libre’s alliance to succeed is the regulators willingness to fight the problem.”
Strategic advisor, E-commerce platform, Mexico
According to Mercado Libre the alliance will strengthen intellectual property protection by proactively monitoring suspicious listings, strengthening its cooperation with law enforcement authorities, taking joint legal action against infringers, educating sellers on good practices and buyers on the identification of counterfeit products.
The CEO of a brand selling through Mercado Libre summarised, “E-commerce has boomed as a sales channel and the platforms and regulators are still playing catchup. It’s encouraging to see brands and platforms collaborating, it is only by working together we will combat this problem. Mercado Libre’s leadership position in the market should also help create standards for others to follow and improve the whole e-commerce market.”