Online Seller Enforcement

Online Seller Enforcement

Cutting edge strategies combining law, investigations, and technology to protect businesses’ online distribution channels

Gibson to Lead Upcoming Live Webinar on Stopping Unauthorized Sales on the Internet

Posted in Product Diversion, Unauthorized

Whitney Gibson, who leads Vorys’ online seller enforcement group, is presenting an upcoming webinar: “Efficient and Effective Strategies for Addressing Unauthorized Sellers Online.” This webinar, hosted by Lorman, will take place on Friday, Oct. 14, from 1:00 to 2:30 p.m. ET.

Whitney Gibson - Stop Unauthorized Online SalesGibson will discuss how to integrate technology, investigation and legal tactics to identify, remove and stop unauthorized online sellers. A full course description, agenda and registration information for the webinar can be found on Lorman’s website.

The webinar is intended primarily for attorneys. Information about CLE credit is also available on the hyperlinked webpage.

Gibson has spoken on stopping unauthorized sales and related topics throughout this year, including at June’s Direct Selling Association 2016 Annual Meeting and in September at both Channel IQ’s Compass 2016 conference and Retail Global’s e-commerce conference.

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Communications With Distributors, Customers Key to Enforcement Program

Posted in Unauthorized

As stated in a recent post, we recommend that companies adopt a three-step approach to tackle unauthorized online sales.

Communications with customers and authorized distributorsStep one is to revise company policies, procedures and agreements. Step two is to implement a graduated enforcement system designed to actually crack down on and stop the unauthorized sales.

Finally, step three—the focus of this post—is to create and implement a communications strategy targeting both authorized distributors and customers.

Communications with authorized distributors

For companies actively working to stop unauthorized online sales, it is generally beneficial to be candid with their authorized distributors about their enforcement efforts.

Obviously one of the main issues with unauthorized sellers is that they cut into authorized distributors’ sales. However, they can also upset the authorized distributors such that the authorized sellers might try to negotiate lower prices and/or ignore MAP policies.

Thus, it is likely in the best interests of a company to communicate to its authorized distributors that (and how) the company is actively working to protect them.

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Combatting IP Infringement, Unauthorized Sales on Shopping Apps

Posted in Product Diversion, Unauthorized

Now-popular online marketplaces like eBay have made consumer-to-consumer e-commerce possible. Today, it is getting even easier through “flea market” and consignment shop-style apps, which pride themselves on the ease with which people can Infringement, Unauthorized Sales on Shopping Appsshop for and sell products.

Leading fashion marketplace apps include Mercari and Poshmark. Each offers fun and easy ways to shop for and sell items through mobile devices and tablets.

As with other more traditional online marketplaces, however, a small percentage of bad actors can exploit these platforms and their users by using the apps to engage in the unauthorized sale of others’ products.

Mercari

For those unfamiliar with Mercari, the app is in good company among other free iPhone apps.

According to Apple Inc. data for the week ending Aug. 21, 2016, as published by SFGate, the top 10 free iPhone apps that week were the Bitmoji Keyboard, Snapchat, Messenger (for Facebook), Instagram, Google Maps, Facebook, Pokémon GO, YouTube, Uber and Mercari.

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Minimum Advertised Pricing (MAP) Policy Enforcement

Posted in Product Diversion, Unauthorized

Manufacturers implement minimum advertised price (MAP) policies to control the prices at which retailers can advertise their products.

MAP Policy EnforcementMAP policies are often thought of as memorializing agreements between manufacturers and authorized retailers regarding the lowest prices at which the retailers are permitted to advertise the manufacturers’ products.  However, they are merely policies, not actual agreements.

Nonetheless, MAP policies are often necessary for companies, as shoppers generally look for the lowest-priced goods, including for e-retail sales. And many e-commerce websites display products from lowest-to-highest price.

Of course, MAP policies are not binding on unauthorized retailers. Thus, unauthorized sellers are more likely to violate MAP policies than authorized retailers.

In fact, a recent study revealed 53 percent of unauthorized retailers violate MAP policies. This is in contrast to 15 percent of authorized retailers.

Ayelet Israeli (now a Harvard Business School assistant professor of business administration) and Eric Anderson and Anne Coughlan (Kellogg School of Management marketing professors) also noted that authorized retailers are less likely to violate MAP policies because they have the most to gain by complying with manufacturers’ pricing.

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Serving Subpoenas to Identify Unauthorized Online Sellers on eBay

Posted in Unauthorized

We have published various posts on our blog about implementing an effective enforcement system to stop unauthorized sales, including our recent post featuring a video about our online seller enforcement program.  As mentioned in numerous posts, an ideal enforcement program combines technology, legal and investigation tactics.

“Investigation tactics” frequently refers to the techniques utilized by skilled cyber investigators. It also encompasses subpoenas – a legal mechanism of identifying (in this context) targeted unauthorized sellers of products on eBay and other sales platforms.

As a brief refresher, our recommended graduated enforcement system features the following steps:

  1. Identifying diverted products; Identifying unauthorized sellers
  2. targeting sellers via electronic cease and desist letters sent through the specific websites (e.g. eBay)
  3. conducting investigations or serving subpoenas to obtain the actual identities of any sellers who fail to comply with the electronic cease and desist letters;
  4. sending physical cease and desist letters to the noncompliant sellers’ physical addresses, based on the information identified through step three; and
  5. if necessary, pursuing any sellers who ignore the letters through escalated enforcement actions.

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Gibson to Co-Present Free Webinar With Market Track on Strategy for Stopping Unauthorized Online Sellers

Posted in Product Diversion, Unauthorized

On Thursday, August 11 at 12:30 ET, Whitney Gibson—leader of Vorys’ illegal online seller enforcement group—will co-present an online webinar entitled “A New, Comprehensive Approach for Stopping Third-Party Unauthorized Sellers Online.”

Whitney Gibson - Stop Unauthorized Online Sales WebinarGibson will join Chris Barnes, Market Track’s Senior Vice President of e-Commerce Solutions, for this free live webinar. Market Track is a leading provider of e-commerce channel management solutions. The company recently acquired Channel IQ, a leader in minimum advertised price (MAP) monitoring.

This webinar will cover Vorys and Market Track’s joint strategy for efficiently and effectively addressing unauthorized online sales on websites like eBay – a two-step program centered on implementing a graduated enforcement system that integrates technology, investigation, brand enforcement tactics and legal techniques to stop unauthorized sellers.

Gibson will discuss how companies can create a foundation for legal claims against the third-party unauthorized sellers. He and Barnes will then walk attendees through the different steps of the recommended graduated enforcement system (see graphic below).

People interested in attending this webinar should click the above hyperlink and claim their spot online.  Space is limited.

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Sources of Unauthorized Online Sales: The Five Most Common Types of Unauthorized Sellers on eBay and Other Third-Party Websites

Posted in Product Diversion, Unauthorized

Given the focus of our blog and the services that we provide to clients, we are obviously routinely publishing content about the unauthorized sales problem and strategies for overcoming the actions of unauthorized sellers.

Sources of Unauthorized Online SalesHowever, we have spent little time discussing who the actual unauthorized sellers are and how they are gaining access to the products that they are diverting and selling on websites like eBay.

There are a number of different sources of unauthorized online sales that companies should be aware of, and here are the five most common: 1) authorized distributors; 2) professional resellers; 3) one-off sellers; 4) professional schemers; and 5) sellers who use stolen credit cards to purchase, and distribute, products.

A brief overview of each follows:

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Video: Vorys’ Online Seller Enforcement Program

Posted in Product Diversion, Unauthorized

As regular readers of our blog are aware, our online seller enforcement practice group has developed a program that combines technology, the expertise of cyber investigators and legal tactics to help stop unauthorized sellers.

While working with some of our clients several years ago, we realized that countless companies from across a number of industries are facing the many issues related to their products being unlawfully sold online, including on websites like eBay.  This includes, but is not limited to, disrupting companies’ minimum advertised price (or, MAP) policies; shrinking profit margins; and tarnishing their reputations and overall brands.

To further highlight these problems and explain our systematic process for combatting unauthorized sales and product diversion for our clients, we created the following video:

For more information, contact Vorys’ Illegal Online Seller Enforcement team at  877.545.6905. Read more about the practice at http://www.vorys.com/services-648.html and follow Whitney on Twitter (@WhitneyCGibson).

Three-Step Approach to Stopping Unauthorized Online Sales on eBay

Posted in Unauthorized

Unauthorized sales of products on third-party websites like eBay is significantly impacting many businesses.

In short, we recommend a three-stepStop Unauthorized Sellers on eBay and Amazon program for addressing these unauthorized sellers as follows, with more details listed below.

First, a company should revise its policies, procedures and agreements to: 1) support legal claims against third-party unauthorized sellers, and 2) differentiate its products from those sold by unauthorized sellers.

Second, a company should implement a graduated enforcement system. The purpose of this system is to eliminate authorized sellers through the integration of monitoring technology, investigation, and enforcement tactics.

Third, we recommend implementing a communications strategy that: 1) demonstrates to authorized distributors that the company is protecting them (providing measureable results from the enforcement system); and 2) demonstrates that products sold by unauthorized sellers are unreliable and often do not come with certain services and benefits or do not have the quality controls that the company has established.

Creating a foundation for legal claims against third-party unauthorized sellers

Our recommended first step for companies is working with counsel to review existing distributor agreements, procedures and practices.  The goal is to provide the best support possible for the enforcement program, described in step two.

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How to Prevent Grey Market and Diverted Goods From Undercutting Your Prices on eBay

Posted in Grey Market, Product Diversion

Let’s say your company sells products on eBay.com.  To monitor your products for sale, you frequently check eBay and notice that there are regularly many products being listed on the website for substantially less than your price.

Prevent Grey Market and Diverted Goods From Undercutting Your Prices on Amazon, eBayGiven that eBay displays the cheapest prices, people are naturally going to be drawn to the lower-priced products – the cheaper products not being sold by your company and that are, most likely, diverted products, grey market goods, stolen goods or some other type of illegitimate sale.

Unfortunately, there is no magic solution to fix this problem.  Instead, it is strongly recommended that companies implement integrated enforcement systems to thwart unauthorized online sales.

Regardless of the actual volume sold or being listed online, a company concerned with its products being impermissibly sold on the internet should utilize a monitoring software that can find sellers and list them based on price, volume and location.

By identifying the offending parties (even just by user name or email address, for instance), this is a good starting point for implementing a graduated enforcement system.  Using such a system requires a commitment to stopping the unauthorized sales and is efficient and cost effective.  A company does not want to waste unnecessary resources – especially if there is a large volume of sellers and/or products.

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