Instagram wants to become the future of shopping, but it has a massive fake fashion problem

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Counterfeit selling is no longer confined to underground black markets.

• Instagram is increasingly being used as a platform to buy and sell fake designer goods, according to a report by analytics firm Ghost Data.
• The number of counterfeit accounts active on Instagram has grown by 171% since 2016, the report showed.
• Features such as Instagram Stories are helping counterfeit sellers to market products more easily without leaving a long-term trace.
• The findings come at an awkward time for Instagram which has set out plans to become the future of shopping online.
• Instagram said: "We have a strong incentive to aggressively remove counterfeit content and block the individuals responsible from our platform."
• Visit Business Insider's homepage for more stories.

Instagram has a fake fashion problem, and new data shows that it is only getting worse.

A report from analytics firm Ghost Data delves into the shady world of counterfeit fashion selling on Instagram, revealing that since 2016, sales of counterfeit fashion items on the platform have grown significantly.

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According to Ghost, the number of counterfeit accounts active on Instagram has risen by 171% in the past three years. In 2016, counterfeit accounts published a total of 14.5 million posts. In 2019, they published more than 64 million posts - a growth rate of more than 341%, according to the report.

This trend has "gained strong traction," Ghost wrote in the report. "The online sale of counterfeit products and fake luxury goods has grown to a multi-billion dollar underground economy particularly eager to exploit Instagram's success and features." Overall, the counterfeit market draws in approximately $1.2 trillion a year, and this is on the rise.

Ghost Data

Ghost pointed to examples of accounts selling fake items in its report.

The findings come at an awkward time for Instagram, which has unveiled plans to become a top destination for shopping on the internet.

The Facebook-owned company recently rolled out a new checkout button, which allows customers to easily buy products in its feed without leaving the app. A group of analysts from Deutsche Bank estimated that this new feature could draw in $10 billion in revenue in 2021 alone.

Hidden in plain sight

Instagram Stories, which enables users to post short video clips with a 24-hour lifespan, have made it easier for counterfeit fashion sellers to advertise products without leaving a permanent paper trail.

These sellers are no longer "hidden in some far-away "souks" or confined in a rough neighborhood market," the report said - they are hidden in plain sight.

An Instagram spokesman told Business Insider:

"We want our community to have great experiences with businesses on Instagram and we take IP rights, including issues around counterfeiting, very seriously.

"We have a strong incentive to aggressively remove counterfeit content and block the individuals responsible from our platform. We have devoted more resources to our global notice-and-takedown program to increase the speed with which we take action on reports from rights owners.

"We now regularly respond to reports of counterfeit content within one day, and often within a matter of hours. Additionally, we continue to proactively fight against bad content, including content that may offer counterfeit goods, with sophisticated spam detection and blocking systems."

Reads more: Our mission to buy a fake Rolex on Facebook reveals how the company is playing host to countless criminal enterprises

These problems aren't confined to Instagram. An investigation by Business Insider last year revealed that Facebook faces similar challenges on its own Marketplace platform, where users have free rein to buy and sell almost anything they want. This has given rise to the sale of fake designer goods.

Moreover, these sellers are also using other apps to communicate with customers and to request payment. According to Ghost, WhatsApp, WeChat Pay, PayPal, and Venmo were most favored for this by Instagram sellers. The vast majority then use EMS Global Delivery Network or DHL to ship items to customers.

China came out as the top country of origin for Instagram counterfeiters in the report, followed by Russia, Indonesia, Ukraine, Turkey, and Malaysia. Louis Vuitton, Chanel, Gucci, and Nike were the most counterfeited fashion brands.