By Andy Vrabel, GM of Payment Ecosystem Solutions at LegitScript
Consumers are spending more money and more time online. E-commerce is steadily commanding an ever-greater share of total retail sales, with 2025 expected to see a 7% increase over this year. Likewise, video streaming is estimated to grow more than 14% in 2025, reaching an estimated $776.07 billion. It’s good news for payments companies and e-commerce marketplaces who have invested heavily in the online space.
However, wherever consumers go, counterfeiters and fraudsters are sure to follow. Intellectual property infringement continues to be one of the most challenging problems in e-commerce due to the complexities of identifying and stopping infringing products and services. Further, merchants engaged in the sale of illicit IP can now operate more anonymously online and more easily create a website or storefront than they could in the past because of technological advancements. Payment service providers and others who work with merchants can take measures to identify and prevent these illegal activities if they clearly understand the risks and trends in illicit IP.
Halting the Deluge of Illicit Streaming
As of September 2024, more than 60% of Americans have moved away from traditional cable or satellite TV to streaming-only services, also called IPTV. Streaming’s rapid growth, popularity, and ease of access have made illicit streaming sales a popular business. Take for example the world’s largest piracy network, which until a recent large scale takedown, was serving 22 million users and generating over 250 million euros in revenue per month.
Events like high-profile sports matches—such as the highly-anticipated fight between Jake Paul and Mike Tyson or the recent Super Bowl—are prime targets for pirated streaming services, though no type of streaming entertainment is immune: movies, TV shows, cable TV, music, audio books, and more.
In Q4, I’ve seen around 18% of merchants flagged for card network violations were identified due to offering illicit streaming services. In addition to being in scope for fines from card networks, illicit streaming draws the scrutiny of rights holders, who are aggressively fighting back against piracy. Card networks like Mastercard and Visa prohibit transactions involving copyright infringement and often work with rights holders to investigate infringing activity.
Illicit streaming providers typically present themselves as legitimate, which can make it difficult for both payments companies and consumers to distinguish them from legitimate services. However, there are key indicators that suggest an IPTV subscription may be operating illegally. These include offering an unusually large number of channels for a relatively low monthly fee, providing access to premium channels like HBO as part of a flat-rate structure, and including pay-per-view content within the subscription package.
Additionally, such services often grant access to a wide range of international channels and promote their ability to help consumers eliminate their cable bills. Lastly, it’s important to watch out for merchants selling physical devices that are pre-loaded with infringing content or with applications specifically intended for infringing activity.
Finally, even for payments companies that don’t work with streaming TV merchants, illicit streaming providers commonly use transaction laundering to hide their activity, which puts anyone processing payments at risk.
Counterfeit Red Flags for 2025
Counterfeit sales are a multi-trillion-dollar business that is difficult to stop in part because many consumers are complicit in their purchases of these illicit products. A recent study by Michigan State’s Center for Anti-Counterfeiting and Product Protection found that more than half of consumers knowingly bought counterfeit goods online. These sales happen on social media, through e-commerce marketplaces, and on merchant websites.
Regardless of financial losses for businesses, the sale of counterfeits is a threat to consumers as well. In early 2024, the U.S. Trade Representative (USTR) released its most recent report on the state of counterfeits and piracy, highlighting the dangers of unvetted and untested versions of products that can harm consumers. Among its findings were counterfeit toys that were untested for child safety; counterfeit car parts like brakes and airbags that may not function as intended; counterfeit electronics that can malfunction and catch fire; and personal products that were found to contain dangerous chemicals, bacteria, and even animal waste.
Websites engaged in IP infringement are far more likely to engage in phishing and malware attacks. Consumers risk having their personal information and credit card details compromised and used by criminals for other fraudulent scams.
How can payment service providers spot a merchant selling counterfeit goods? Below are some red flags to watch out for:
- Be wary of merchants offering brand name goods at highly discounted prices.
- Be suspicious of websites or seller listings with abundant grammar and/or spelling mistakes.
- Watch out for marketing language such as “genuine,” “replica,” or “original.”
- Search for complaints on third-party forums, review websites, and scam-reporting websites.
- Check the company’s social media pages to see if they are more explicitly marketing their products as knockoffs.
Among the most frequently counterfeited products are luxury accessories such as Louis Vuitton and Gucci purses; sporting goods such as Nike and Adidas shoes; toys from Disney and LEGO; and popular electronics such as Apple Airpods. When in doubt, ask for a merchant’s licensing agreement.
Mitigating Risk and Financial Impact on Payment Providers
The financial implications of IP infringement extend far beyond lost revenue. Payment service providers that help to facilitate transactions for illicit services can face regulatory penalties, legal liabilities, and damage to their reputations. Additionally, payments companies that fail to stop IP-infringing merchants may find themselves spending more time dealing with chargebacks and disputed claims.
Successfully mitigating risk requires finding the right balance between identifying IP-infringing businesses and maintaining efficient operations and services for legitimate merchants. To successfully mitigate IP infringement risks, payment companies can prioritize the following strategies:
- Invest in Continuous Monitoring
Solutions that monitor merchants and products are essential for identifying and addressing IP infringement risks. Tools that combine big data, AI-powered intelligence, and human expertise can uncover hidden patterns in merchant activity and help businesses flag high-risk transactions at scale.
- Strengthen Regulatory Compliance
Counterfeiters are often part of international criminal organizations engaged in other illicit activity. Payment providers should conduct regular audits to ensure adherence to copyright laws and anti-money laundering (AML) rules.
- Educate Stakeholders
Consumers often dismiss the risks of buying IP-infringing products and services. Companies should take a proactive approach to education, highlighting the dangers of counterfeits and promoting secure payment practices. Building trust through transparency and consumer education can differentiate providers in a competitive market.
As IP-infringing activity continues to flourish in 2025, preparation is the best defense in the face of uncertainty. By investing in advanced tools, adapting to regulatory changes, and fostering consumer awareness, payment providers can meet the challenges head-on and protect their businesses and customers from the fallout of IP violations.
Guest article written by: 
Andy Vrabel is the General Manager of Payment Ecosystem Solutions at LegitScript, where he is responsible for ensuring the success of their payments-related products. Andy oversees the delivery of meaningful and actionable merchant risk intelligence to clients, sets the strategic path for payment ecosystems solutions within the company, and ensures the team of expert analysts and staff supporting the organization can deliver on LegitScript’s mission of making the internet and payment ecosystems safer and more transparent. Andy holds a bachelor’s degree in criminal justice and a master’s degree in management and leadership. He is a certified anti-money laundering specialist (CAMS).