An allegedly counterfeit Chanel bag, as seen in court documents.

While the counterfeit market has become a booming business worth hundreds of billions of dollars, the effort to combat the scourge appears to be turning into its own industry.

Case in point: Red Points, a Barcelona, Spain, and New York-based tech company that finds and banishes online fakes, has piqued the interest of investors, most recently through its $38 million Series C funding, revealed Wednesday.

Counterfeit products may be an age-old problem for retail, from luxury apparel, jewelry and bags to electronics, but modern technology seems to have heightened the amplitude. The same digital transformation that has upended shopping and created the behemoth of digital commerce has also added rocket fuel to the fakes business, primarily in online marketplaces, everywhere from Amazon to social networks.

Amazon recently — and rather notably — acknowledged the preponderance of phony goods in its marketplace and rolled out a tool that lets brands directly take down suspicious listings. But, of course, it only works on its own platform. For brands that regularly see illicit copies of their goods across the Internet, in places like eBay or Instagram, they must adhere to the policies and processes that vary from one site to the next.

This is exactly the challenge Red Points targets.

“While Project Zero will undoubtedly have utility for businesses trying to protect their brand value and sales on Amazon, we know that counterfeiting is a systemic problem across e-commerce and is almost never confined to one marketplace,” Laura Urquizu, Red Points’ chief executive officer, told WWD. “For example, in 2018, Amazon only accounted for 1.6 percent of all intellectual property infringements of our sportswear clients; the majority were found on other marketplaces and social media.”

She cites a statistic from The International Chamber of Commerce, which projects that counterfeiting and piracy could reach $4.2 trillion by 2022. The figure seems alarming, but also motivating for companies like Urquizu’s.

Indeed, Red Points sees itself as “brand protector” that operates across the web — particularly for the luxury and retail sector, which accounts for 30 percent of its business. It’s the single largest industry for the company, followed by homeware and sports.

Protecting them across the vast reaches of the Internet can be a heady challenge, one that goes beyond human capacity. And so the premise puts Red Points’ effort firmly in the wheelhouse of artificial intelligence.

Indeed, the company uses artificial intelligence to provide “comprehensive visibility into the different types of infringements negatively impacting a company’s reputation across black, gray and white markets, offering a more complete, real-time protection for a company’s IP [intellectual property] assets,” Urquizu added.

In other words, Red Points crawls the web, sniffing out infringing product listings, then automatically takes steps for their removal, according to the policies of the marketplaces and sites. Then a monitoring bot kicks in, to make sure the item has been removed, and reports the results back to the client.

Allowing machines to do the legwork has obvious benefits, in terms of upfront effort. The mechanism also yields data that allows the system to learn from the information it collects.

“Our system gathers publicly available data from our customers and gets smarter and faster as they learn from new cases, meaning it can offer actionable data to help improve companies’ IP strategy and zero in on brand abusers,” explained Urquizu, who claims that her tools’ efficiency rate is 96 percent. “This means that for every infringing listing we detect, we reach an average removal rate of 96 percent.”

Red Points serves more than 550 brands, including Mvmt, Dope and Bang & Olufsen, and according to its numbers, its software removes hundreds of thousands of incidents of illegal online products and content monthly, spanning more than 100 marketplaces and social networks.

With the latest funding round, which was led by Summit Partners, Urquizu plans to use the influx of cash to boost the system’s powers, with more investment in its tech development and expansion of its global footprint.

“Ultimately, maintaining brand value is much more than controlling one platform,” the ceo said. “It requires the involvement of various stakeholders such as distributors and online sellers, the control of images and content, and obviously the removal of counterfeits.

“While Amazon Project Zero brings businesses one step closer to protecting their online assets, it only scratches the surface of the complex online-brand-protection crisis,” she added.

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