Mercado Libre: Using AI to fight the fakes

World Anti-Counterfeiting Day, this year held on June 10, is an opportunity for all those affected to raise awareness to the damages counterfeit products can cause and to highlight proactive measures to reduce these issues.

E-commerce platforms sit at the heart of efforts to reduce the worldwide trade in fakes. In recent years, the world’s largest online retailers have increased their outreach to brands, accelerated the rate of takedowns, and applied technology to rid their listings of illicit products.

Argentina-based  Mercardo Libre is an online marketplace dedicated to e-commerce. The product variation is vast, including categories such as technology, health, sports, and household products.

The company operates in 18 countries including Brazil, Argentina, Chile, Columbia, Mexico, and Peru. During the first quarter of 2023, Mercado Libre generated revenue of $3 billion.

“Counterfeiting is a global challenge for every brand. It goes hand in hand with the increase in e-commerce. As e-commerce grows, online counterfeit also grows,” says the company’s head of legal central, Federico Deya, who oversees the company’s anti-counterfeiting efforts.

Recognising this challenge, Mercado Libre has been working to enhance its efforts in mitigating the risk. However, it acknowledges that it is a complex and ongoing effort.

The ecommerce site advocates for a collaborative approach with brands and law enforcement, as “isolated initiatives alone cannot produce magical results,” says Deya.

WIPR caught up with Deya to find out more.

WIPR: What does Mercado Libre do to prevent counterfeits from appearing on its platform?

Federico Deya: Mercado Libre has two programmes aimed at tackling the issue of counterfeit products on its platform. With a strong focus on brand protection, the company aims to provide a secure and trustworthy online shopping experience for its users while safeguarding the intellectual property rights of brand owners.

The first initiative, known as the  Brand Protection Program (BBP), was initiated back in 2000, coinciding with Mercado Libre’s launch.

Under this programme, every IP holder can monitor our sites for any infringing content related to their IP rights. Once the IP owner identifies the infringement, we have a notice and takedown system that removes the listings immediately, we notify the seller and provide them with the possibility to appeal the notice. When takedowns are confirmed by the IP holder (in our system they have the final decision on removals after notices) we then take additional action against repeat offenders.

Mercado Libre’s most recent transparency report for July-December 2022 shows that there are 54,446 rights enrolled in the BBP. It has 9,175 members who have reported 536,217 listings. The report also shows there were 27,662 user information requests and Mercado Libre responded to 26,758 (96%) of them.

During the last year, we received, under the BBP, more than 1 million notices from IP rights holders. The members actively use the tool, send us these reports, and help us improve our capabilities to proactively detect infringing content.

What is the other programme?

Building on the BBP, Mercado Libre introduced the Mercado Libre  Anti-Counterfeiting Alliance in 2021.

This collaborative initiative involves partnering with prominent brands to combat counterfeiting and piracy not only within the platform but also on a global scale.

We partner with top brands and currently, we have 16 brands under the programme. We have two pillars under the programme.

On one side, we improve our proactive monitoring of infringing listings. And on the other side, we pursue criminal actions against repeat offenders. And this is a totally collaborative initiative between brands and Mercado Libre.

Direct insights from brands that are partners of the initiative resulted in an increase in proactive removals. By the end of H2 2022, for brands participating in the Mercado Libre Anti-Counterfeit Alliance removals increased by 90% based on semantic detections, and 50% based on logo detection compared to the H1 results of the same year.

We work very closely with criminal courts and law enforcement agencies across the 18 countries we operate in.

We already have 16 partners in the alliance that are top-of-mind brands, predominantly from the apparel industry and have performed more than 50 internal investigations in collaboration with these brands.

From these 50 investigations, a dozen have progressed to become active court cases. Among the investigations, five were launched in Brazil, two in Chile, and five in Colombia.

Where are the main counterfeiting hotspots?

The Anti-Counterfeiting Alliance focuses on the main targets, which are Brazil, Mexico, Chile, Columbia and Argentina, but remains open to other countries where we operate.

Twelve criminal complaints have been filed against bad actors in different countries, namely, Brazil, Chile and Colombia, involving counterfeit apparel, sportswear and electronic products, as well as piracy associated with streaming services.

According to the transparency report, the number of listings detected in breach of their terms of conditions was 1,474,525 in Brazil, 514,259 in Mexico, and 266,184 in Argentina, with Chile and Columbia following closely behind.

The main category of infringement for Brazil was associated with videogames, for Columbia and Chile it was misclassed adult products, for Argentina it was event tickets, and for Mexico it was software.

The geographic focus of the programme depends on the interests and priorities of the brand owners and partners involved. Collaboratively, Mercado Libre and brand owners conduct online and offline investigations to build a strong legal case. We then jointly approach the courts to submit our case in order to file criminal charges against repeat offenders. This aims to discourage illicit activities within the Mercado Libre ecosystem. Mercado Libre has had 1,910,937 (86%) proactive removals based on IP infringements.

Does the company use AI and machine learning?

Proactive removals are powered by the use of AI and machine learning technologies. Mercado Libre developed technology that analyses and classifies large volumes of data in product titles and descriptions, technology that recognises the use of logos and that reads text directly from product images. Therefore, if a brand name appears anywhere in the product image, the technology will detect it.

Once Mercado Libre receives the report from the IP rights holder we not only remove the listings and initiate the procedure, the notice and takedown procedure between the IP rights holder and the seller, but we also after the notice is confirmed by the IP rights holder, we train our machine learning models with those reports to identify infringing trends.

So the more reports we have, the more our machine learning system is trained in order to tackle these more practically. That’s why having these types of reports is very useful for us, not only to detect infringing content, but also to train our models.

That model training is also part of what we do with the brands, we have seen significant improvements in proactively detecting infringing content for the brands that are part of the alliance.

We have seen, for instance, an improvement in image detection for alliance members of about 50% in only six months. So the results are impactful. We are very keen on continuing to evolve our internal tools and everything we do in order to minimise the risk of counterfeits.

This has led to more than 90% of infringing listings being correctly detected. A trend noticed within the region is the intentional blurring of logos, aiming to hinder the detection of subtle infringements. To address this challenge, Mercado Libre has collaborated with alliance members placing an emphasis on enhancing their tools effectively to identify these cases.

What are the long-term goals for preventing and reducing counterfeits?

The biggest opportunity is how to better train all our machine learning models. Because the better those models work, the fewer offerings of counterfeit products will exist at Mercado Libre.

Among the two pillars of the alliance, namely the detection of infringing content and the submission of criminal actions, we will try to focus on the preventative pillar.

Mercado Libre aims to expand its brand portfolio beyond the apparel industry by recognising the potential in sectors such as consumer electronics and gaming.

We see a huge opportunity there and we are seeking brands that would like to join in order to do the same work we are doing in the apparel industry.

It has been a milestone moving from a reactive position to a proactive position in pursuing repeated offenders, particularly for counterfeiting and piracy. The ultimate goal remains user experience, striving towards the cleanest site possible.