New niche for counterfeiters in smartphone app

As authorities have increased efforts to crack down on sales of counterfeit designer goods over the Internet, illegal sellers have started turning to an alternate business platform: KakaoTalk, the country’s largest instant-messaging smartphone application.

KakaoStory, the sister application of KakaoTalk where users can upload photos and post comments, is also gaining popularity among underground merchants - particularly because gaining access to the mobile phone application is relatively simple.

Potential customers can find the KaKao ID of illegal sellers through a quick search on Naver, a major Korean portal site.

When the JoongAng Ilbo acquired the Kakao ID of a counterfeit vendor and added it to the messaging application, a photograph of a 6.5 million won ($6,150) Chanel handbag appeared in the profile.

On KakaoStory, that same ID prompted more than a thousand photos displaying fake luxury goods.

When asked about purchasing a Dsquared cap, the vendor said he would sell it for 40,000 won - cash only, to avoid a paper trail.

So far, no arrests have been made for selling counterfeit items on the application, according to a special investigation team at the Korean Intellectual Property Office.

“We have yet to fully grasp the size of the illegal market [on Kakao],” said Kang Hyung-ho, an official at the property office. “That said, we are about to launch a special crackdown on illegal business transactions there. Those charged with selling fake designer products could be sentenced to seven years in prison and ordered to pay 100 million won in fines.”

According to the Korea Customs Service, nearly 1.5 trillion won worth of counterfeit items illegally imported from overseas and produced domestically were confiscated in 2011.

And the number of items that get by inspection and are sold far exceeds the number of confiscated goods, officials say.

One of the main reasons Kakao has become so popular with illegal business is because it is not a public domain like a standard website. To purchase wares over Kakao, a buyer must have the seller’s ID to gain access, which makes it easier for sellers to avoid government persecution.

“Kakao is an individual service that provides personal space on a smartphone,” said Lee Su-jin, a public relations manager at KakaoTalk, which has gained 50 million subscribers since its launch in March 2010. “It is virtually impossible for us to monitor such private activities on such a platform.”

And the market for fake luxury items on the messenger program has only expanded in recent months, according to one counterfeit vendor, with more than 100 shops now operating in the shadows.

“I sometimes purchase imitation items from sellers in bulk on Kakao,” said the seller, surnamed Kim, who has been selling counterfeit products in Daegu for about 20 years.

“Now it has become much more difficult for me to get my hands on imitation items since state enforcement has started cracking down,” he added.

BY KIM YOON-HO [jkkang2@joongang.co.kr]