Busted: Couple's $1.8m Counterfeit Empire
July 03, 25This is the story of Zhao Mou and his wife Mao, who thought they could make a quick buck selling counterfeit jewelry . . . until they were arrested.
They were struggling to make ends meet in Shanghai, China, selling unbranded trinkets through their online store, when they spotted a lucrative, but illegal opportunity.
They started buying cheap, poor quality goods - labelled as Pandora, though clearly not the genuine article - for as little as $2 to $4 each. And selling them for up to $25.
That's way below the market price, but still a huge markup. To avoid customer complaints and negative reviews, they would automatically refund payments from unhappy customers, without asking for the item to be returned.
In the six years from October 2016 to October 2022 the couple generated a revenue of almost $1.8m, according to prosecutors in the Changning District of Shanghai.
To be clear, that's not the "if genuine" value of the goods, it's the money they actually took from the nine stores they were operating on Amazon.
And then it all came crashing down. They were rumbled by Amazon, who were working together with Pandora, to stem the flow of fakes, using AI tools that scan millions of e-commerce listings to identify counterfeit products.
Amazon and Pandora tipped off law enforcement in China, who arrested the couple and seized 4,000 counterfeit Pandora items in a raid.
A court ruled they were guilty of selling counterfeit registered trademarks and sentenced Zhao to three years and seven months in prison as the main offender. Mao received a suspended sentence of a year and eight months. They were also fined $70,000 and $28,000 respectively.
And the prosecutor issued a stern warning: "Any attempt to achieve wealth through counterfeiting and selling will be severely punished, corporate intellectual property rights cannot be infringed, and the legitimate rights and interests of consumers must be protected."
But Zhao and Mao are small cogs in a big machine. Counterfeiting accounts for 2.3 per cent of global trade, according to the OECD (Organisation for Economic Co-operation and Development).
"Counterfeiting is a big challenge," Peter Ring, SVP general counsel at Pandora, told IDEX Online this week, after the company announced details of how it had uncovered and shut down the sophisticated criminal network.
"Not just for Pandora, but for design brands globally. Counterfeiters are highly organized criminal networks using social media and online retailers to push counterfeits items, making them hard to track.
"At Pandora, we have a zero-tolerance policy on intellectual property violations. That's why we've built a dedicated global brand protection team and work closely with authorities and partners.
"In 2024 alone, we took down half a million fake listings and helped seize 100,000 counterfeit items worldwide. It's an ongoing fight, but one we're fully committed to."
He said Pandora has a team of five specialists dedicated to intellectual property and brand protection. AI plays an increasing role in spotting counterfeit items online.
"But it's not just about technology," he said. "Our global brand protection team combines these tools with intelligence from law enforcement, customs, and partners like Amazon to track emerging threats."
But that's only part of the story. Pandora, and others, are also chasing the counterfeit manufacturers, as well as the distributors, using blockchain, RFID, QR codes, IoT devices and other technologies to track products from the point of manufacture through the entire supply chain, pinpointing where counterfeit goods enter the market.
"We also run training programs to help authorities and partners stop counterfeit activity at the source. It's that mix of smart technology, expert people, and strong collaboration that makes our approach so effective," said Peter Ring.