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BD-BrandProtect Perspective:
Protecting the Integrity of Your Brand from Online Risk Exposure

Brand Integrity at Risk: A Call to Action

This migration of commerce to the Internet has not been lost on the criminal elements of our society. As much as the Internet has opened up new areas of opportunity for business enterprises, it has delivered an equal bonanza for fraud artists, organized crime and a cornucopia of scam artists who find new and effective ways to bring harm to those who have, through legitimate means, built their business.

According to security firm McAfee, criminal gangs have gone so far as to hire students and plant them inside of companies, charging them with the tasks of writing computer viruses, committing identity theft and laundering money.(1) Due to criminal activities like these, as well as similar security breaches, the U.S. Federal Trade Commission estimates that more than 52 million account records were placed in jeopardy in 2005 alone.

There are numerous forms of identity theft and brand abuse that currently take place over the Internet. One of the most familiar is called “phishing”, a practice in which scammers hijack well-recognized brands in an attempt to dupe consumers into disclosing personal or financial information. Although phishing attacks were historically limited to financial services organizations, they have begun to spread to other retail-based brands. For instance, this year phishers misappropriated such well-known brands as Coca-Cola and McDonald’s by using their trusted logos to lure consumers into divulging secure information through bogus promotions and sweepstakes offers. In fact, according to recent estimates, a record 14,191 phishing Web sites were created in July 2006, mimicking an eye-popping 154 brands.

Yet, phishing is not the only form of brand abuse that takes place online. As criminals continue to recognize the value of high profile brands, the scale of online infractions becomes increasingly diverse. Some typical online infractions include:

• Counterfeiting: The World Customs Organization estimates that counterfeit goods account for $512 billion in annual sales. The scale of counterfeiting operations is so vast that it accounts for 7% of world trade, and would be the world’s biggest business if it were named a business.(2) While much of this activity takes place offline, the Internet has made it increasingly easy for cyber-criminals to sell fake goods to consumers around the world. The potential damage to profits is so severe that fashion designers Louis Vuitton and Christian Dior actually filed a lawsuit against eBay in France claiming the online auction site does not appropriately monitor sales of counterfeit goods.(3)
• Web Traffic Diversion: In this type of attack, scammers misappropriate the source code of a website, such as its domain name or meta data. Although invisible to the eye, this information can be used to “trick” search engines intobelieving that a bogus website is, in fact, related to a legitimate brand. This enables unauthorized third parties to divert Internet traffic from the legitimate website to a mirror site, which may sell competing products or may even be entirely unrelated to your brand.
• Unauthorized Associations: These infractions occur when your company is inappropriately associated with questionable organizations or activities. For instance, an international entertainment company recently had its well-known cartoon characters recreated and featured on a range of online pornography sites. In addition to potentially exposing highly offensive material to young children, this infraction may have resulted in negative publicity and a loss of consumer trust. In another well-known incident, an Internet rumor pegged designer and urban outfitter Tommy Hilfilger as a racist – a false rumor that still prompted some groups to threaten to boycott Hilfiger products.
• Third-Party Compliance Issues: Many of the infractions that take place on the Web are not criminal activities at all, but are committed inadvertently by authorized resellers, dealers and agents. Despite being unwitting, these infractions often bear a serious cost to organizations. For instance, in one case, authorized resellers of a global automobile manufacturer were featuring famous songs on their websites, without a proper license, to promote corporate products. This lack of compliance from its own channel saw the company presented with a demand for significant royalty payments.
• Web Linking Infractions: These infractions occur when a link appears on a third-party page, implying that a formal relationship exists between the two parties mentioned. These infractions are often more insidious than they appear, as was evidenced by one organization that began to receive hundreds of angry phone calls when its brand was inappropriately linked to a Neo-Nazi website.
• False Job Postings: In this type of attack, fraudsters post unauthorized employment listings that misrepresent a brand and create false job notices for the purpose of capturing personal information such as names, addresses, phone numbers and SSN information. In addition to compromising the ability of Human Resources departments interested in posting legitimate employment notices, this practice creates the risk of brand deterioration and puts consumers at risk of becoming the victims of fraud or identity theft.
• Cybersquatting: In this form of online extortion, scammers buy and register a domain name with the intent of profiting by reselling it to a person or trademark owner at an inflated price.
• Typosquatting: This infraction refers to the practice of intentionally misspelling a trademark, using a variation of that trademark or using that trademark in conjunction with other content in the hope of confusing consumers and diverting them away from a legitimate website. This form of brand misrepresentation is illegal and can be mitigated.

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