November 10, 2011, 11:17 AM

The allure of tablet PCs make them a prime target for online fraud, report says

An analysis uncovered more than 23,000 suspicious marketplace listings for tablets.

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When there is a lot of consumer interest in a product, fraud is sure to follow. Criminals are finding ways to profit on the growing popularity of tablet PCs like the iPad by selling cloned and counterfeit tablets online, or, in some instances, reselling legitimate tablet PCs for more than list price.

A one-day analysis of 23 online marketplaces conducted during the third quarter by brand protection firm MarkMonitor uncovered more than 23,000 listings for cloned tablet computers, which resemble a branded tablet but have no trademarks or logos because they are actually counterfeit, or gray market tablet computers. The gray market is defined as a seemingly legitimate product sold by unauthorized sellers, often at a higher price to buyers in geographic markets where the product is not otherwise available.  MarkMonitor searched the 23 business-to-business and consumer-facing marketplaces for advertisements for five types of tablet PCs. The vendor did not disclose which marketplaces or which tablets it studied.

It found listings by 766 sellers of counterfeit tablets, largely in the business-to-business marketplaces; 2,914 gray market sellers, all in the consumer marketplaces; and 4,301 sellers of cloned tablet PCs, which were evenly split between business-to-business and consumer marketplaces. The sellers of counterfeit tablets priced their tablets at an average of $300, which MarkMonitor says is about 50% less than the average retail price for the tablets reviewed in the study. Grey market sellers marked up the price of tablets about 15% from their list prices to an average of $692. Cloned tablet computers were listed for an average of $185, or about 69% less than the average retail price of legitimate tablets. About 75% of the cloned tablets for sale appeared to originate in Asia and nearly half (45%) of sales listings appeared in online marketplaces targeted to Europeans. 29% appeared in online marketplaces targeting the Asia-Pacific market and 26% were aimed at consumers in North and South America.

Many sellers of counterfeit or cloned tablets try to associate their products with the real thing, such as using wallpapers associated with the real brand in their product photos, or by showing copyrighted images from the legitimate brand in their listings. MarkMonitor says consumers shopping online for tablets should beware of such illegitimate listings. “As consumers increasingly depend on the Internet for researching purposes as well as buying goods—especially as we head into the busy holiday shopping season—these types of hidden competitors can cause customer confusion and weaken brand equity,” the company says in its analysis. It recommends that brand manufacturers take extra steps to protect their assets, such as actively monitoring brand activity online so it can spot unauthorized uses of the brand name or marketing assets quickly and take measures to stop that abuse.

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