Counterfeiting in the Digital Era

Apr 25, 2011

Ceci Guicciardi

Counterfeiting is a global, $600 billion a year problem. By no means limited to luxury goods, virtually every product category has been counterfeited – if you can make it, you can fake it. The problem is estimated to have grown by 10,000 per cent in the past two decades, fuelled by rocketing consumer demand.  Fraudulent luxury goods are not a new phenomenon. As soon as a limited supply of superior goods has existed, it has incited desire and led to copying. One early example dates back to A.D. 27, when Gallic wine are thought to have begun forging trademarks on wine amphorae, passing off local cheap wine as expensive Roman wine.

Nonetheless, the last decade, which has seen luxury fashion brands embrace online, has also seen a sharp rise in counterfeiters taking to the internet. The advent of the digital age has changed the rules of the game, shifting the dynamics of buying fakes and widening the frauds’ reach. This has chiefly been the result of:

  • Increased accessibility to both luxury and imitation products. As previously stated on Fashion’s Collective, the internet is fundamentally about accessibility, whereas luxury brands work on a principle of exclusivity. Many fashion houses have managed to successfully balance being online and preserving an aura of mystery. There is no doubt that embracing digital has brought luxury to a much broader audience. Desirability, coupled with the high price point has in turn created a disparity between demand-and-supply; and once the internet let luxury goods into our households, counterfeit luxury goods weren’t far behind.
  • Increased remoteness between buyer and seller. The internet creates transactional remoteness, and in practice this impacts the buyer and seller in different ways. On the one hand, transactional remoteness ensures anonymity for the buyer, meaning that he or she escapes the social and moral opprobrium that comes with buying fakes. On the other hand, it protects fraudulent sellers by making it harder for law enforcement to shut down the offending websites. This is largely due to counterfeiters operating across several nations and often out of countries that take a lax approach to IP protection.

Moreover, the social acceptability of imitation luxury goods has played a significant role in the growth of these websites. Despite countless articles exposing the high correlation between counterfeiting and organized crime or child labor, feigned luxury goods are still regarded by many as harmless, comparable to finding a bargain. Interestingly, studies in recent years have highlighted that people who buy fakes are statistically already spending more on luxury goods than non-buyers. Further, they suggest that these people benefit from personal satisfactions associated with the purchasing and consuming of counterfeit luxury goods – they feel smart about having saved money and get a kick out of fooling others and not being discovered.

 

So, what can luxury fashion brands do to fight fraud?

 

Stifling online supply is a must. Several luxury fashion brands take a proactive approach to eradicating the supply of counterfeit goods. Christian Louboutin is a brand that invests significant resources towards eliminating feigning of its own products, with particular attention to the online channel. Among other activities in anti-fraud, the company monitors internet auction websites, helping to remove listings of counterfeit merchandise. They also work closely with law enforcement and search engines to remove sites selling imitations and if necessary, shut down their web hosting service providers. The company maintains constant training and dialogue with international customs offices around the world, and most recently started monitoring ‘fake blogs’ that purport to share information about Christian Louboutin products, but in reality are just ways to lead users to fraudulent sellers’ sites.

Indeed, the company has identified over a thousand unauthorized sites selling counterfeit Louboutin shoes, including multiple instances of cyber squatting (defined by the U.S. Anti Cyber Squatting Consumer Protection Act as the “registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else.”) This has become an increasingly insidious problem. According to the latest press release from the World Intellectual Property Organization (or WIPO, the specialized agency of the United Nations whose mission statement is “the promotion of creativity through a balanced and effective international intellectual property system”), cases involving cyber squatting in 2010 increased by 28% – a new record high. While the increase of web site registrations may certainly be a contributing factor, it demonstrates how the internet can be a fertile breeding ground for counterfeiters.

Clearly, however, to successfully abolish the supply of fraudulent luxury goods, one needs to also tackle demand. Several organizations – such as the International Anti-Counterfeiting Coalition – are tackling the demand-side by raising public awareness campaigns, which are designed to educate consumers in the dangers of buying fakes. Within the luxury fashion industry, counterfeiting remains an important topic that regularly receives coverage in the fashion press. Of particular note is Harper’s Bazaar’s yearly groundbreaking investigative report into frauds and their permanence. In addition, it touts its’ online initiative Fakes Are Never In Fashion, which promotes awareness of the developments in the fight against fakes year-round, offering tips in recognizing feigned goods and providing links to useful resources in combating international counterfeiting.

Similarly, developments in online marketing could prove to be useful tools in counteracting the pervasive and harmful presence of fraudulent goods on the web. For instance, SEO techniques can at once help users find what they want and help brands ensure users find what the brands want – thus optimizing the visibility of the brands’ legitimate website and authentic merchandise. Next, a strategic approach to web content management allows luxury fashion brands to convey both the tangible as well as the intangible value of their product range, educating consumers to their superior craftsmanship, manufacturing excellence, heritage and know-how. Moreover, in creating valuable content (whether through images, copy or video) that users will organically want to share and talk about, brands can ensure their message reaches wider communities. Finally, a strong social media strategy enables brands to bridge the gap further, helping to build and nurture real relationships with their customers, thus drawing them in and further excluding the possibility of them purchasing counterfeits.

 

Author: Ceci Guicciardi

Copy Editor: Gina Conforti

Photo Credits: TheGloss.com