You’re hooked!

A new cyber scam is targeting top brands’ websites to sell fake dealerships and franchise offers. While the courts are helping by making such offences cognisable and non-bailable, brand owners must up the ante lest their valuable clients take the bait, write Harsh Aggarwal and Roma Arora

The previous decade has given birth to many new age technology-based business models that have created highly recognised and valued brands in a short period of time. But even though certain brands have developed very quickly in industries like fintech, edutech, foodtech, logistech or service-tech, building brands remains a not-so-easy task.

Companies invest a lot of effort into developing a brand and bringing it to heights where people desire to make it a part of their personal lives in a way that is much more than mere consumption of goods or services.

In sync with this, the relationship between a brand’s popularity and its infringement is proportional. While brand managers are busy figuring out how to make their brands more attractive, ingenious infringers are simultaneously inventing new ways of piggybacking on the company’s reputation to make easy money.

The means of infringement and passing-off of trademarks have become very innovative and high-tech. Long gone are the days of selling counterfeits and passing-off of allied/cognate goods or products not related to the business of brand owners.

The latest trend is that miscreants cash in on the goodwill in intangibles through aspirational marketing of the brand, by offering fake jobs and franchisee/dealerships against hefty amounts.

And it’s not just minnows being caught up in these webs of online deception. Brands including Amul, Voltas, Flipkart, Godrej, Reliance Jio, Tata, ITC, Patanjali and Haldiram, Dabur, and Himalaya among others have been targeted.

Even the authors’ good company has witnessed the damage these perpetrators are keen to inflict for their own ill-gotten gains. In this instance, within a span of 10 days, the authors’ legal team was approached by at least six victims who had been conned by people operating domain names such as www.havellsfranchisee.com, www.havells-distributorship.live, www.havelledealership.com, www.havellsdealershipapply.in.

Still, the pendulum may be beginning to swing back. Until recently, offences under section 63 of the Copyright Act had provided little deterrence for infringers. But a Supreme Court decision changed all that in a move that makes such offences cognisable and non-bailable, with stiff penalties. Police are now empowered to move quickly on these cases and even make arrests without a warrant, changing the game very much back in favour of the victims.

SCAMS IN VOGUE

Since the pandemic, there has been a spurt of instances where cyber frauds are centred around infringing domains. Knowing that there is no legal bar or prohibition for anyone to register a domain name of a popular brand, either prefixed or suffixed with other words, miscreants register domain names like “…dealership.com”, “…franchisee.com, “…distributorship.com with the brand’s name. These domains are then used to trap gullible investors on the pretext of offering them franchises or dealerships.

The miscreants try to exploit the entrepreneurial spirit of others by creating their own phony investment opportunities and target unsuspecting, inexperienced investors. Scammers pose as large prominent corporations, and provide fake opportunities and deceive trusting victims while damaging the good business’s reputation.