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August, 2018

AI helps Hong Kong foil online counterfeiters

Original article: The South China Morning Post

Hong Kong authorities say that artificial intelligence has helped them boost seizure of counterfeit goods sold online by 33% year-on-year through June. In total, Hong Kong customs officials confiscated HK$1.96 million (US$247,000) in fake goods sold online in the first six months of the year, up from HK$1.47 million during the same period a year ago. 

Analysis:

Hong Kong has long been a key link in the counterfeit-goods supply chain. Fake goods made in mainland China sometimes end up in the former British crown colony - one of the world's busiest ports - en route to a third destination. A 2017 Europol report found that Hong Kong and mainland China together "were the provenance" of 86% of counterfeiting globally, equivalent to $396.5 billion billion in fake goods. 


There is also a thriving consumer market for fake goods in Hong Kong itself. A 2013 report by the European Chamber of Commerce, KPMG, law firm Mayer Brown JSM and market research firm TNS found that 73% of Hong Kong and Macau residents had purchased fake goods, but did not feel guilty about it. 


To stymie the trafficking of fake goods in Hong Kong, the city's Customs and Excise Authority launched a big-data analytics system eight months ago, The South China Morning Post reports. The system is equipped with a supercomputer that searches targeted websites for fake goods 24 hours a day. A Hong Kong Customs official said that the system learns about trends in online counterfeiting. Law enforcement uses that information to stay abreast of the latest tactics employed by counterfeiters. 


Accurately detecting counterfeits online "requires a robust AI-powered image and text analysis engine which can sense minute variations between a variety of images and spot suspicious product descriptions," wrote Karthik Bettadapura, CEO of the business-intelligence firm DataWeave, in a July Forbes commentary. "This unique approach enables addressing the issue of counterfeits at massive scale by covering any number of online marketplaces at once - a huge leap forward compared to the current hit and miss method followed by brands."


Compared to manually checking websites for fake goods - a dull and repetitive task for a person - Hong Kong Customs' analytics system is much faster without sacrificing accuracy, a spokesperson told The South China Morning Post. But people are needed during all the next steps of the process: conducting test buys, contacting trademark owners, follow-up investigations, and enforcement. 


Meanwhile, experts say that Hong Kong could also reduce counterfeiting with new legislation criminalizing purchase of fake goods. Under current law, it is illegal to sell counterfeits but not to buy them. A person in Hong Kong convicted of importing or exporting counterfeit goods could be fined up to HK$500,000 (US$64,000) and sentenced to a maximum of five years in prison. 

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