Designer Handbag & Purse Chat.. The Bag Forum - View Single Post - Why counterfeit bags are BAD

JessLR · July 22nd, 2008, 04:08 PM

Quote:

The fake trade: counterfeiting is a business worth $600 billion a year--and growing. B
ut, as Dana Thomas discovers, raising awareness is the first step in stopping this not-so-victimless crime.

Publication: Harper's Bazaar

Publication Date: 01-JAN-08
Author: Thomas, Dana

COPYRIGHT 2008 Hearst Communications, reprinted with permission of Hearst.

On a cool August evening, my family and I visited the preppy town of Mill Valley, California, outside San Francisco. In the town square was an all-American sight: a couple of kids behind a card table selling homemade lemonade. My six-year-old wanted some, so I gave her a quarter and sent her over to the booth. After a few minutes, I joined the kids and noticed that one, a cute eight- or nine-year-old girl with a blonde blunt cut, had a little Murakami pouch slung over her shoulder.

"Nice handbag," I said to her.

"It's Louis Vuitton," she responded proudly.

"No," I thought to myself as I gave it a good look-over. "It's a counterfeit Louis Vuitton. And it was probably made by a Chinese kid the same age as you in a slum halfway around the world."

Though the fashion business has muscled up its fight against counterfeiting, with many brands investing millions of dollars each year, the battle is ongoing. Since 1982, the global trade in counterfeit and pirated goods has grown from an estimated $5.5 billion to approximately $600 billion annually. Experts believe that counterfeiting costs American businesses $200 billion to $250 billion annually and is directly responsible for the loss of more than 750,000 jobs in the United States.

What's counterfeited? Everything. A couple of years ago, a counterfeit investigator discovered a workshop in the Thai countryside that produced fake versions of the classic Ferrari P4. Ferrari itself originally made only three P4s back in 1967. The Food and Drug Administration has said that counterfeit medicine could account for upwards of 10 percent of all drugs worldwide. Unknowingly taking a fake version of your medicine could have horrific effects on your health. European Union officials have seen a dramatic rise in the seizure of counterfeit personal-care items such as creams, toothpastes, and razor blades. The television series Law & Order: Criminal Intent recently highlighted this problem in an episode in which several children died after ingesting counterfeit mouthwash that had been made with a poisonous chemical found in antifreeze. "There have been counterfeit perfumes tested by laboratories that have found that a major component was feline urine," says Heather McDonald, a partner at the law firm Baker Hostetler in New York who specializes in anticounterfeiting litigation. Counterfeit automotive brakes made with compressed grass and wood have been found in U.S. stores.

One of the primary reasons counterfeiting keeps flourishing is that, as the little girl in Mill Valley proved, people keep happily buying fakes. According to a study published last year by the British law firm Davenport Lyons, almost two thirds of U.K. consumers are "proud to tell their family and friends that they bought fake luxury [fashion items]." And according to a 2003 survey carried out by Market & Opinion Research International in Great Britain, around a third of those questioned would consider buying counterfeits. Why? Because we still think of counterfeiting as a "victimless crime." Buying a counterfeit Vuitton bag surely doesn't affect the company, we reason. The parents of that Mill Valley girl probably wouldn't have invested in a real Vuitton Murakami for her, so it wasn't a loss of sales for the company.

But the reality is that we're all victims of counterfeiting, whether from the loss of jobs or of tax revenue that could fund our schools and our roads, or because by buying counterfeit goods, we are financing international crime syndicates that deal in money laundering, human trafficking, and child labor. Each time I read the horrid tales about counterfeiting from my book, Deluxe: How Luxury Lost Its Luster--like the raid I went on in a clandestine factory in the industrial city of Guangzhou, China, where we found children making fake Dunhill and Versace handbags--audience members or radio listeners tell me they had no idea it was such a dark and dangerous world and that by purchasing these goods they were contributing personally to it. Then they invariably swear that they will never knowingly buy another fake good.

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Brands as well as law enforcement have cracked down on the counterfeit business severely in the past few years, here in the U.S. and abroad. I saw a difference in Hong Kong, for example: A decade ago, you could buy a fake Vuitton handbag or Burberry knapsack for a couple of bucks from a vendor in the subway; today you can't even find them on the street. There are still dealers, but now they lurk in doorways, whispering, "Rolex? Chanel?" and you hurry down dark streets to armored hideaways to close the deal. To say it's scary is an understatement. "If you can keep the stuff out of the public eye, you are halfway to winning the battle," McDonald says. "The brands that are doing aggressive enforcement are hidden in back alleys and not on the street corners."

As long as there is a demand, however, there will be a supply. Traditionally, the supply chain worked like this: An order of 10,000 handbags would be divided into 10 groups of 1,000 to be made--often by children--in hidden workshops in Guangzhou. Once completed, the items would be wrapped up and deposited in a neutral place, like the courtyard of a local school, where they were picked up by a local transporter, often simply a guy on a bike with a cart. The transporter delivered the pack-age to the wholesaler, who would take it to another neutral place to be picked up by the international shipping agent and put in a shipping container. The goods were often packed in shipments of foodstuffs or legitimately manufactured clothing to escape detection by receiving customs officials. Each time the goods changed hands, the prices doubled. All transactions were done in cash.

But as fashion companies grew wise to the process and went after the sources in China, leading to raids on workshops and busts at ports, the counterfeit-crime rings came up with new routes to supply fake goods: produce them, or at least finish them, in the destination country. Law enforcement witnessed this firsthand during a big bust this past October. The New York Police Department raided a commercial building in Queens, arrested 13, and seized around $4 million in counterfeit apparel that carried the logos of major brands including Polo, Lacoste, Rocawear, the North Face, and 7 for All Mankind. Officers also found a stash of fake labels and buttons for Tommy Hilfiger, Nike, and Adidas as well as embroidery machines. Investigators believe that the site was a finishing facility. Workers took generic items that may have been imported legally and sewed on fake logos and labels, turning the items into counterfeit branded goods.

Another trick is to import counterfeit items that are hiding under a legitimate face. "Some of the counterfeiters put a whole separate coating on the bag, and you peel it off like contact paper to see the logo fabric underneath," McDonald tells me. "We seized a load of Lacoste men's dress shirts, and on the left breast pocket, where the alligator should be, there was a little generic label that read, 'Metro.' When you pulled out the threads and removed the Metro label, you found the alligator."

There's another method that is catching on rapidly: counterfeiters who will take a legitimate logo, tinker with it slightly, apply for a trademark for the new design, then import those items under a false pretense of legality, showing the official application paperwork as their defense. For example, a company takes the Ralph Lauren polo-horse-and-rider logo and puts the polo mallet down instead of up in the air. The counterfeiter files a trademark application with the U.S. Patent and Trademark Office and gets a document that states the application is pending. "It's a legitimate document fraudulently secured, and the application will probably be rejected in six months," the intellectual-property counsel for a luxury brand explains to me. "But between now and then, the customs agents will approve the importation of the items--believing, incorrectly, that the pending application proves the importer must have a legitimate right to the trademark."

By the time the brand realizes what's going on, the lawyer says, thousands of items will have been imported and the counterfeiter will have "made millions" and fled. Luxury companies discovered one operation using this technique about two years ago, and now several more have popped up. "We must be doing a good job, since counterfeiters are looking for such complicated ways to get in," the lawyer says.

People often ask me, "How do you know it's fake?"

Well, if it's being sold at a fold-up table on a sidewalk corner or on the back of a peddler on the beach, chances are it's fake. Or if it's at a flea market. Or a church fundraiser. Or in Wal-Mart or Sam's Club or other discount mass retailers. In June 2006, Fendi filed suit in a U.S. district court against Wal-Mart Stores, Inc., asserting that the world's largest retailer was selling counterfeit Fendi handbags and wallets in its Sam's Club stores. For example, one bag was offered for $295; the legitimate Fendi handbag of the same design normally retailed for $925. In the suit, Fendi stated that Wal-Mart has never purchased Fendi products and never checked with Fendi to see if the items were real. The case was settled out of court last summer after Sam's Club agreed to pay Fendi an undisclosed sum.

If you want to guarantee that your luxury-brand purchases are legitimate, don't shop in wholesale markets like those in Chinatown in Manhattan or Santee Alley in Los Angeles. "We'll go on raids on Chinatown wholesalers, and we'll find five or six suburban women standing there--customers," New York security expert Andrew Oberfeldt has told me. "We'll say to these women, 'The dealers take you down dark corridors, through locked doors. The police say, "Open up!" The lights are turned out and everyone is told to be quiet. At what point did you realize that something was amiss here?'"

If you find an item for sale on the Internet for a price so low that it seems too good to be true, it probably is too good to be true. Last fall, the U.K.-based Authentics Foundation, an international nonprofit organization devoted to raising public awareness about counterfeiting, launched myauthentics.com, a Web site that helps Internet shoppers determine if the products they are eyeing on the Web are real. It includes blogs and forums, news, myths, and tips on how to spot fakes; eBay now has links to the site. EBay also works with brands in its VeRO (Verified Rights Owner) program to find out if the items for offer on the site are genuine. If the brand deems a particular item to be counterfeit, the sale will be shut down. However, not all online sales sites have such verification processes in place. Besides, counterfeiters are known to post photos of genuine items to sell fakes. So as the old saying goes, buyer beware.

Of course, the best way to know if you are buying a genuine product is to buy it from the brand, either in directly operated boutiques or in a company's shop in a department store. If you are curious about the authenticity of a used Vuitton item you purchased at a vintage shop or online, you can always contact one of the brand's boutiques.

Most important, we need to spread the word on the devastating effects counterfeiting has on society today. I didn't tell the girl in Mill Valley that her bag was fake. It wasn't her fault her family had given it to her. But if I had met her parents, I would have said something. Awareness is key. Counterfeiting will never go away--it's been around since the dawn of time--but we can surely cut it down to size if we just stop buying the stuff. Without the demand, the supply will shrink. It's up to us.

RELATED ARTICLE: How not to buy a fake

* Don't buy a luxury bag from a discount store like Wal-Mart or Sam's Club.

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* Don't shop wholesale markets like those in Chinatown in Manhattan.

* Don't buy online for prices that are significantly lower than normal.

* The best way to guarantee that you are not buying a fake is to purchase directly from the brand.

Thanks bRs!