The POCA, fraud offences, product safety and liability, consumer protection and reputation management
Other means of redress
In addition to the provisions outlined in tab 3 of this guide, other offences will often have been committed alongside counterfeiting and the illegal parallel import of products into the UK. Some of the key offences are covered in this section, alongside reputation management issues.
Proceeds of crime
The Proceeds of Crime Act 2002 (POCA) enables the confiscation or recovery of assets obtained through criminal activities, including counterfeiting, in the previous six years. Proceedings under POCA can be initiated in the criminal courts for a confiscation order or the civil courts for a civil recovery order – see Proceeds of crime | The Crown Prosecution Service.
Actions under POCA can be brought by various enforcement authorities (such as Trading Standards), as well as by rights holders. The threat of such an action can be important in helping to secure a settlement in cases of significant counterfeiting/piracy or illegal parallel importation.
Fraud offences
Counterfeiting can often also amount to an offence under The Fraud Act 2006. This Act provides a legislative framework that makes it a criminal offence to make a false representation with the intention of causing loss to another and to possess or supply goods in connection with fraud.
Types of fraud considered under this framework include:
Document fraud like the use of fake packaging, fake logos, documentation (eg copyright certificates, customs documents etc) and certifications to copy authentic goods.
Online fraud like the sale of counterfeits via online marketplaces.
VAT and customs import fraud including evasion of customs duties, VAT and other taxes through unlawful trade networks.
Excise fraud, namely unlawful diversion of goods subject to excise duty.
Penalties can range from 12 months to 10 years' imprisonment or an unlimited fine.
Product safety and liability
Counterfeit products also give rise to claims under product safety and liability legislation.
Product safety: In the UK, product safety is governed by stringent legislation requiring compliance assessments and product labelling/marking. This includes various product-specific legislation, alongside general consumer products legislation. Counterfeit manufacturers often disregard these regulations, posing heightened safety risks. Consumers harmed by counterfeit goods may report the matter to authorities like the Office for Product Safety Standards or Trading Standards, potentially triggering investigations.
Product liability: Counterfeit goods can also lead to legal claims under the UK's Consumer Protection Act 1987's strict liability regime or in negligence if harm results from defective products.
While these can be useful tools against counterfeiters, there is also a risk of enforcement against the genuine rights holders. This may arise where consumers unknowingly purchase counterfeit items which lead to physical injury or property damage (like electrical fires, choking on toys and damage from cosmetics with banned substances).
Genuine manufacturers, unable to prove that the goods concerned are counterfeits, could face enforcement sanctions including product withdrawals, fines and reputational damage due to adverse media coverage. To mitigate these risks, genuine manufacturers should implement processes to identify counterfeit products and maintain up-to-date product safety documentation ready for inspection.
Consumer protection
In the UK, the Digital Markets, Competition and Consumers Act 2024 (which replaced the Protection from Unfair Trading Regulations 2008 (CPUT)) provides a statutory framework designed to protect consumers, which includes protecting consumers from the sale of counterfeit goods.
Breach of the Act can result in civil and criminal sanctions. However, only designated authorities (such as the Competition and Markets Authority (CMA) and Trading Standards) can enforce the criminal provisions; private criminal prosecutions cannot be brought.
Likewise, the civil wrongs cannot be enforced by rights holders. Nonetheless, the Act remains a useful tool for the authorities and for consumers to rely on. This is particularly so as the CMA now has the power to directly enforce the provisions (without having to go to court) including having the ability to issue fines of up to GBP300,000 or 10% of an offending business' annual global turnover, if higher.
Reputation management
Counterfeits and related enforcement expose a brand to reputational risks.
Potential examples include false allegations about product safety or quality (amplified by social media or mainstream media coverage) causing confusion among customers, or brand enforcement actions being perceived badly by the public due to misunderstanding or a narrative of a brand being ‘heavy handed’ against smaller parties. Indeed, in the past 10 years, there has been a particular spike in ‘David vs Goliath’ press style reporting. Proactive measures and a coherent strategy are essential to mitigate these risks.
An outline of key strategies to consider during a reputational crisis caused by counterfeiting is set out below.
- Expert advice: It is key to seek advice from reputational management experts, involving lawyers to advise on the claims/enforcement available to you and PR professionals to help manage public statements and communications (including social media strategy).
- Social media: Where false allegations are spreading on social media, the first step is to search for and identify all accounts involved – keeping relevant records. Once identified, instruct lawyers to address key influencers repeating the false claims with explanatory letters. The tone of any approach will be key as correspondence may become public.
- Legal action: If needed, consider legal action against key disseminators of false claims. In parallel, collaborate with PR advisers to release a statement to clarify your position publicly and (to the extent possible) take control of the narrative.
- Print/Broadcast: Use this as an opportunity for positive press attention and seek PR advice at the outset of any dispute. You should seek to formulate a clear public message and anticipate any negative PR strategies from opposing parties.
Throughout proceedings/investigations, monitor media reporting for accuracy and request corrections as necessary. You should also identify what information might become public and take steps to secure confidentiality (with legal advice on options) where possible.