We all know about fake products: Watches, Purses, that kind of stuff. To most of us this are an infrequent and minimal issue; something one would have to seek out to be able to buy and only something affecting a few industries. Reality is anything but that.

Reality is that there’s a counterfeit issue online. But this is a reality many brands, including those being copied, are not willing to admit to in public. Without a push from business there’s only a handful of media coverage on the subject about the problem like the one Wired Magazine ran early this year. Without exposure the problem has been allowed to fester, hidden in a back corner, with most consumers remaining completely unaware of the issue.

The truth, a truth which until two years ago I was completely ignorant of myself, is that counterfeit products are everywhere online. The same concepts that make the internet great, that have allowed huge names to spring up from humble starts in garages, have also made it extremely easy and profitable for people to get in the business of selling fakes knowingly and unknowingly. No longer is this an issue limited to the “Canal Streets” of the world, no longer is it about containers of product being sent from far off countries that could be inspected for and stopped, this is now about one package, one order and one ripped off consumer with some of the world’s largest ecommerce sites sitting squarely in the middle.

In the past two years I’ve learned lots about this issue from the legal & brand protection experts at Monster Cable (Dave Tognotti, Camilla Herron) as well as from seminars with law enforcement and other brand owners and the biggest “takeaway” that every expert seems to agree on is that us business people are afraid to talk about the realities of counterfeiting. While many of these realities that exist outside of the control of marketer’s world [like the fact that 80% of counterfeit products are coming from China and that nearly any mass-produced, profitable product we make in our modern economy can, and likely will, be faked] most of the problem pertains to exactly what we marketers do. From SEO optimization of copycat websites to a plethora of auction and classified listings, and even social media campaigns to share “great deals”, counterfeiters are out in the open using our marketing tactics against us and as Frederick Felman of MarkMonitor points out to ClickZ, they’re doing online marketing better than we are [helpful tip: see Google's improved counterfeit takedown program for AdWords].

Ecommerce has made it easy for anyone to open a shop and sell, well anything. Throw in trusted names with open marketplaces like eBay, Amazon, Buy.com, Craigslist and many, many others and you have the perfect storm for creating confusion. There’s a reason eBay has created an entire educational center on counterfeits — the issue is growing and all marketplace sites all face the same two realities:  they don’t see goods or sellers to know what’s real or fake and, like it or not, counterfeits sell — selling is what makes them money.

Without getting too far down the rabbit-hole it’s very apparent from the numbers that counterfeiting is impacting business and consumers. Online counterfeit sales will cost businesses $135 billion in 2011 according to brand protection service MarkMonitor.

Of course these are not all benign knockoffs either: a fake heart medication won’t help prevent a heart attack, a copycat surge protector may explode when tripped in a storm and even a fake video game that falls apart has a very real implication as consumers lose real money. Regardless of the issue, all of these fakes are costing brands customers. When a product fails today we flock online to review it and the fake products get reviewed just the same as the real ones.

We as marketers, ecommerce experts, social strategists, or whatever your specific function may be, get the openness of the internet but the hundreds of millions of people don’t. They don’t get that no one is reviewing every site; that the Visa/MasterCard/PayPal logos can be downloaded by anyone; that the web is essentially the Wild West and that while it’s great to be free, freedom in this case comes with the ability to deceive. People aren’t going out seeking fakes, they’re looking for deals and getting sucked in by a problem they don’t even know exists. A simple Google search shows the thousands of forum posts, yahoo answer questions and pleas for help that have sprung up when our customers find this out the hard way.

The bottom line reality is that fakes have moved away from the shadowed world they were sold in for hundreds of years and become so prevalent, so easy to find that the odds you, the reader of this post, have purchased a fake item are extremely high and I doubt you know about it. We’ve got a counterfeit problem.

So now that the stage is set on what the issue is, it’s time to talk about the marketing and consumer approach that needs to be taken to solve it. And for that I’ll transition you over to part 2 of this post.

Questions? Totally Disagree? Or have a real world stories you’re willing to share? Please post them here or email me. Everything will remain as anonymous as you want.