Thursday, July 14, 2011

Fight the Faux - Avoid Counterfeit Designer Goods

Fight the Faux - Avoid Counterfeit Designer Goods

Ever been invited to a "purse party"? How about spotting the vendors in large cities selling brands such as Louis Vuitton, Chanel, Christian Dior, Gucci and Coach? These vendors have made their way to local festivals and malls. They are hard to miss with tables full of expensive looking bags at low prices. This may be hard to believe, but purse parties are considered counterfeit trafficking, and the authorities are paying attention.  In addition to numerous lawsuits, counterfeit designer items are linked to terrorism, child labor and money laundering.

            "It's just a purse." is the opinion of many, and “What's the harm anyway? No one can tell!”  Wrong.  This nonchalant attitude is getting people into hot water. While most agree that buying real designer goods is too expensive, many are oblivious to what lies behind the counterfeiting. For one thing, it's illegal. It is one of the fastest growing crimes in the United States, and it is not a victimless crime.

 In a recent lawsuit Louis Vuitton won a case against eBay for $61.3 million dollars for failing to prevent the sale of fake Louis Vuitton and Christian Dior eyewear and handbags.  LVMH (the parent company of Louis Vuitton, Chanel, Gucci and other high end designer labels) stated that of the 300,000 Christian Dior items and 150,000 Louis Vuitton bags for sale on eBay during a six month period, that 90% were fakes.  Consumers have paid hundreds, if not thousands of dollars, then find out after the sale that it is a counterfeit. Some never find out and assume their item is authentic, because the auction said it was.  This is one of the many reasons why it is not a victimless crime.  Because of the amount of fake handbags, wallets and other designer merchandise on the site, it hurt the honest sellers who offered legitimate goods; the buyers were leery of paying such high prices if they were not familiar enough with the brand to tell a real item from a counterfeit one.  eBay has implemented tougher guidelines and has set up a program named Vero (Verified Rights Owner) that lets owners of trademarks report alleged abuse of their rights.  LVMH employs investigators who troll auction sites for fakes, and it regularly alerts eBay when they are found.  They also allow eBay users to police the site and file a report on items they believe to be counterfeit.  (

eBay is not the only company to fall under LVMH’s wrath.  Google was sued for letting advertisers of counterfeit goods post ads on their site.  They also sued Wal-Mart alleging that its Sams Club stores were selling fake Fendi bags.  No company, regardless of their size, is immune to their anti-counterfeiting lawsuits.  Similar lawsuits against Wal-Mart ended with Wal-Mart paying $6.4 million to Hilfiger brand t-shirts, and more than one million to Nike after being sued for counterfeiting charges. (

In France, the anti-counterfeiting laws are so tough that simply owning a fake Louis Vuitton handbag is punishable by a fine of twice the value of a genuine bag.   New York is also attempting to pass a similar law.  City Council-woman, Margaret Chin, proposed a new bill that would impose penalties of up to a year in jail or a $1000 fine for buying knockoffs.  She states that she wants visitors to come to New York for authentic goods, not to buy fake bags or electronics.  If this bill passes, it will be the first U.S. city to criminalize the purchase of counterfeit goods.  (

Coach is also dishing out its fair share of lawsuits.  Although not high end couture such as Louis Vuitton or Fendi, a genuine Coach bag typically runs a few hundred dollars and is also targeting shops for counterfeit sales.  Coach hit the Ocean City boardwalk in Ocean City, Maryland in 2010.  An investigator with Coach, Inc. bought counterfeit designer bags in 13 stores overlooking the beach.  The investigator said that the shops had dozens of counterfeit bags for sale; one shop employee even admitted to the undercover investigator that the bags were not real.  Coach also sued the municipality of Chicago for not doing enough to crack down on its street vendors.  The message here seems to be simple.  Coach is looking for counterfeiters and, once found, will sue for the maximum amount possible.  (

Detroit, Michigan was also targeted by Coach.  Somerset Mall is the place to buy authentic designer goods; however, investigators targeted smaller mom and pop type establishments on the lookout for fakes.  Sketchy gas stations and convenience stores came into their radar.  The purse cops were out, in search of purses with the signature letter “C.”  The retailers argued that they didn’t know the items were counterfeit and they never tried to dupe their customers. Across the nation, Coach is pursuing more than 430 lawsuits, including 21 trademark infringement lawsuits in Detroit alone.  All these lawsuits were filed in a span of only two years.  These types of lawsuits are what lead Coach to start something named “Operation Turnlock,” which is a zero tolerance anti-piracy initiative. The lawsuit asks for damages of up to $2 million per trademark violation. (

Chinatown in New York City has also been hit hard.  Well known for the hundreds of counterfeiters lining the strip of Canal Street, that offer up anything from designer bags to pirated DVD’s, the landlords of the buildings that house these traffickers are the ones being hit.  In a lawsuit of 18 landowners, the lawsuit claims that the owners knowingly looked the other way while their tenants sold thousands of cheap fakes.  Owners of seven of the buildings agreed to open their doors weekly to inspections for two years to confirm that no knockoffs were being sold.  Louis Vuitton is involved in a building-by-building fight against the Canal St. landlords.  U.S. customs agents seized more than 8,000 counterfeit items worth about $93.2 million dollars, but believe billions of dollars in fakes are still slipping by.  (

In December 2010, Gucci, Prada, Chanel, Burberry and Louis Vuitton won a surprising victory in a lawsuit filed in China against the owner of a Beijing mall that trafficked almost exclusively in counterfeits.  This was such a rare outcome because the lawsuit was held in a country that produces a majority of the world’s counterfeit goods.  The judge ordered the building’s owner to pay damages and to stop vendors from selling fakes.  (

Kate Spade’s attorneys are going after a little known crime….house parties.  A six month undercover investigation found that the hottest trend in home parties may have serious consequences.  A news investigator had no idea when she went undercover for the story, that it would take such a serious twist.  She doubts the women who made these house parties chic, have any idea what kinds of violence the sale of these fake bags might be funding.  The homes are lined with purses everywhere, the living room, dining room, kitchen, family room.  They offer everything from Kate Spade to Louis Vuitton, and at a fraction of the original retail price.  While a real Kate Spade bag would typically run $150-$300, a purse party fake will cost only $30-$60.  Cash only please.  At those prices, the bags and bag ladies fly out the door faster than they can restock them.  According to Kate Spade’s attorney, purse parties are the company’s number one problem.  While buying a fake bag is not illegal, at least for now, the selling of it is.  The designer label and trademark is protected by federal and state law.  Hustling counterfeit handbags could cost federal time.  One of Kate Spade’s attorneys said that most purse party ladies get their supply from New York’s Chinatown or in the Los Angeles garment district.  Women across the country come to buy in bulk.  (

Where the cash goes is the dirty little secret that no one likes to talk about, or really knows about.  Federal investigators traced the proceeds from the Chinatown counterfeits to a dangerous underground economy – an economy that is thriving on sales from purse parties.  They are supporting organized crime, terrorism and hurting the economy.  Two years ago, federal prosecutors indicted more than 70 members of New York’s Genovese crime family for a number of racketeering offenses, counterfeit handbags was among them.  U.S. Customs Service continues to warn that counterfeit designer bags may finance terror and it should be taken seriously.  The purse party sellers likely have no idea where the money might have gone. Federal officials and anti-counterfeit investigators continue to link the sale of fake goods to organized crime.  Counterfeiting had been a pretty low police priority, but in this era of homeland security, things appear to be changing.  ( 

The 500 billion global counterfeit market is also linked to terrorism and child labor. In an FBI report there is strong evidence that the terrorists who bombed the World Trade Center in 1993, financed their activities with counterfeit T-shirt sales.  According to the International AntiCounterfeiting Coaltion, profits from counterfeiting are one of the three main sources supporting international terrorism. (

 Children are also the victims of counterfeiting. It is reported that children between the ages of 13 and 15, who come from single parent families in China, are forced to send the children into the cities in order to survive, should the parent become ill. There are also children that are orphans or separated from their parents, and put together goods night and day in sweatshops producing fake Gucci and Burberry bags (to name a few).  The only education they receive are the skills needed for the assembly line.  They eat what they are given, which is usually plain rice.  They also live in squalor, sleeping on rotten wooden floors.  The young, the vulnerable, the oppressed, the exploited, are the humble foot soldiers to counterfeiting.  However, China is not the only place exploiting children.  Raids carried out in New York’s Brooklyn suburb have found similar conditions.  They found illegal workers hiding in filthy cellars serving as counterfeiting sweatshops.  Sometimes the workers are even locked in so that they cannot escape, even in the event of a fire.    These sweatshops are run by organized crime rings.  (

Some counterfeit operations go to extreme lengths to keep the children working.  It has been testified that children in counterfeiting factories in China have had their legs broken and improperly reset so that they cannot leave or go out to play.  Counterfeit watch makers particularly prize child laborers because of their small hands.  This makes it easier to assemble the tiny watch parts.  Many children in different parts of the world have two choices - starvation or exploitation.  There is some light at the end of this dark tunnel.  A organization called “Teach of Ten Thousand Generations” was set up to help homeless children, many of whom worked in the counterfeiting industry.  Their aim is to take children out of a life of slave labor and give them an education so that they can use their talents for a better life.  (

The International Labor Organization (ILO) estimated that 61 percent of the 250 million children between the ages of five and fourteen that work in developing countries are from Asia.  Sweatshop workers are paid less than their daily expenses; they are trapped in a never ending cycle, never being able to save for their futures.  An official from the Chinese Ministry of Labor confessed that child labor was extremely serious in China.  Children are being used to make everything from garments and textiles (including counterfeit merchandise) to fireworks and toys.  In locations such as Fujian and Guangdong, there are reportedly four to five million child laborers under the age of 16.  In some other cities, child laborers under the age of 12 are found.  The children work 10 to 14 hours per day (in other areas, they are forced to work up to 16 hours per day) and get paid half the wages that an adult makes.  (

Imports of apparel and textiles from China to the U.S. market exceed $4.5 billion dollars each year.  Enforcement of child labor laws is sometimes made difficult because of counterfeit identification cards.  16 is the legal working age in China, however, the children have admitted to being three to four years younger than stated on their identification cards. (

So exactly what is the "real" price of buying a fake? Counterfeit merchandise will never hold value or be as well made as the original.  They will fall apart or break, usually within months of purchase.  To ensure merchandise authenticity, only purchase from major department stores like Macy's, Saks Fifth Avenue, and Bloomingdales or directly from the designer stores themselves. eBay can be a great source with the new policies, and there are many websites that can help spot a fake.  A website called “The Purse Forum,” can help with authenticity before making a purchase of most any designer brand, and it’s free. There are also websites that for a reasonable fee will help with the authenticity of an item.  Educated consumers are the best buyers.

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