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Counterfeiting and cybercrime causing retailers a Christmas headache

Retailers are facing a battle to fend off the counterfeiters this Christmas, according to new research by KPMG.

The business advisory firm commissioned a group of secret shoppers to track down counterfeit Christmas goods in 20 countries, setting them the task of finding 12 popular Christmas gifts including smartphones, high-end branded watches and branded jeans.

The study found that the proliferation of imitation goods sold via the internet has reached such a level that all 12 items were traced online in Shanghai, Mexico City and Sydney. A search of UK websites revealed that five of the dozen counterfeit products were easily found, although no imitation goods were located in Prague, Istanbul, Dubai or Johannesburg.

David Eastwood, global and UK head of KPMG's intellectual property practice, said: "In places such as Cologne, Dubai and Prague there is tight regulation around selling counterfeit products online and clearly this regulation has been successful."

Looking at the UK retail scene, he added: "Saving 94% on a so-called designer handbag from a local UK site in London may seem like an opportunity that is too good to be true. The sad reality is that it almost always is. 

"They make the goods look genuine, the sites look genuine and as a result the offer looks genuine too. The end result is, of course, disappointment when poor quality goods arrive and the option to return them doesn't exist."

Cybercrime at Christmas

While counterfeiting evidently remains a problem in a number of markets around the world, a recent study claims that one in four UK consumers have had their online accounts hacked amid the Christmas shopping rush.

A survey of 2,012 people conducted by Populus on behalf of security solutions vendor CertiVox indicated that of those who had been hacked 25% of the incidents involved Hotmail, 21% involved Facebook and 11% involved Yahoo!, Yahoo! Mail or Y! Mail accounts.

Judging by the European Union Agency for Network and Information Security's (ENISA) annual report, which was released on 11 December, businesses are not yet doing enough to protect themselves from cyber-security threats.

The Europe-wide threat landscape report highlights the need for greater coordination of information collection, analysis, assessment and validation of data, and the importance of increasing the speed of threat assessment and dissemination.

Ross Brewer, vice president and managing director of international markets at security solutions provider LogRhythm, said every organisation should be educating its employees on IT security best practices – and that is a message aimed at retailers, as much as any other industry.

"Too many organisations are still over-reliant on traditional security tools, such as anti-virus, but it is a proven fact that these cannot combat the myriad of techniques being constantly developed by hackers," he argued.

"Instead, businesses should be making a point of actively protecting their networks as after all, it's them that will suffer the consequences of a successful data breach – both financial and reputational. 

"What is more, as ENISA points out, far more knowledge sharing is required if we are going to be successful at beating cyber criminals, as only once all the pieces of information are combined and put into context can we gain true intelligence."

Government involvement

The UK government has dedicated more resources to fighting cybercrime in recent years, with the launch of a Cyber Security Strategy in 2011 that aims to bring businesses and authorities together to tackle what is becoming a growing problem for consumers and businesses as technology evolves and becomes an increasingly central part of everyone's lives.

On 12 December, Francis Maude, the minister responsible for driving the strategy, announced in Parliament that the UK "is in a much better place than it was two years ago" with regard to e-crime and cyber threats.

Through a number of initiatives such as the launch of a National Cyber Crime Unit and the establishment of 11 UK universities as academic centres of excellence on cybercrime, the government is aiming to address the root cause of the problem. At the start of 2014 a major cyber security campaign will be launched for the general public and small businesses, which it is hoped will raise awareness on a national level.

"It is being supported by a broad range of organisations, including Facebook, BT, a number of anti-virus companies such as Sophos, banks and financial organisations as well as community and trade organisations," Maude explained.

"These organisations are providing financial and in-kind benefits worth around £2.3 million, which will extend the breadth and reach of the campaign and help to improve our nation's cyber health."

Retailers faced with the rising cost of cybercrime will hope to see more positive initiatives in the months ahead.