Fashion fakes is something that has always been prevalent in the space and shows no signs of slowing down. We thought we'd make a comprehensive piece on the industry as whole to show you its size, whats being done and industry reactions to it.
So How Much Is This Industry Worth?
The fake fashion industry is making an estimated $450 to $1.8 billion dollars a year!
This results in an annual loss of $30.8 billion to fashion brands. With these daunting numbers, it shows no sign of slowing down as solutions to stop counterfeits are almost inevitable.
So Do People Know If they Are Buying Fakes?
It was found that 60% of counterfeit fashion purchases in the UK, were made on purpose. This is contrary to the idea of the purchases being accidents.
This demand seems to stem from consumers wanting to save money on trendy and popular fashion pieces. They argue that buying counterfeit fashion pieces does not affect sales for the authentic fashion brands.
However fashion brands have their own argument against this…
Fashion brands are aware of the consequences that counterfeits pose. They argue that it can affect them in 2 ways: their brand image and reputation. But more importantly the “health risks” associated with inauthentic pieces.
Chanel stated that studies have shown that counterfeit makeup typically can contain toxic chemicals that can irritate your skin or cause permanent scarring. This issue, obviously, extends beyond the scope of handbags, shoes and fashion.
The risks develop even further than this…
Inauthentic goods can often be caught up with other illegal goods and crimes. These include trafficking of drugs, firearms, and people, according to the United Nations Office on Drug and Crime. This is due to criminal networks manufacturing, trafficking and selling goods.
The Full Chanel Statement.
Chanel stated that – “Fighting against counterfeit means more than simply protecting our brand image, It also means protecting our creativity, our know-how, and the quality of our products, as well as helping to protect consumers from products that may pose health risks.” – this was on the french labels website which has a whole section dedicated to warn shoppers against counterfeit goods.
Counterfeiters Caught Red Handed…
On New York City’s Canal Street, you’ll find shops and tables lined up selling counterfeit designer bags. But it gets more serious, as there has been many cases of counterfeit clothing being seized by authorities.
In 2019, US customs seized up to $3.4M USD in fake designer pieces at Los Angeles International Airport (LAX). With the highest amount of fake goods being 1,242 counterfeit Gucci belts, 678 pairs of counterfeit Nike shoes and 531 counterfeit Louis Vuitton handbags.
The pieces included: clothing and accessories from Gucci, Nike, Louis Vuitton, Hermès, Fendi and more.
Goods were seized again in 2018, in which 33,810 shipments of fake products were found. They were estimated to be worth about $1.4 billion USD at the suggested retail price by the manufacturer. It included clothing, accessories, jewellery, handbags, wallets and watches all totalling in over $800 million USD worth of goods.
The Effects Of Counterfeit Fashion…
A report found that about 10% of all fashion-related products in Europe, are counterfeit. This means that the original designers miss out on about a total of $28.5 billion USD per year of profits.
The counterfeit fashion industry also affects jobs. A report suggested an estimate of 363,000 to 520,000 job losses due to the effects of fake fashion.
Fake fashion sales affect Italy particularly. The country’s losses amounts to around $4.9 billion USD per year and 50,000 jobs.
Furthermore, this also affects the EU. If you accumulated all knock-on effects on other industries as well as lost government revenue, the economic impact adds up further to a total of about $47.6 billion USD in losses to the EU.
The Big companies Involved In Counterfeit Fashion…
Anyone can create fake pieces due to the wide range of resources we have access to online. However, well known businesses have also faced accusations of selling counterfeit products.
Online Commerce company, Alibaba have had a fair mix with counterfeit fashion. They faced accusations that their platform is a ‘haven for counterfeiters’ facing lawsuits from Gucci and YSL.
Another big business who has been involved in Counterfeit fashion is, designer stockist, The RealReal. But not in the way you’d think.
The RealReal denied allegations that it sells counterfeits suggesting that “there are no fakes” on their site.
They countered this by sending an email to customers. The email, written by Chief Executive Julie Wainwright, said The RealReal “strives for perfection, but may not be perfect every single time”. In addition to this, they explained to customers to send items back if they had issues with authenticity.
Wainwrights email to customers basically dismissed recent media coverage about counterfeits on The RealReal suggesting the media is “attempting to discredit the business [they] have proudly built.”
She explained how they stand behind both their process and authenticity guarantee. However they also admitted “that identifying a counterfeit item can be a tricky process and open to human error”.
What else they had to say…
“Our success depends on our ability to accurately and cost-effectively determine whether an item offered for consignment is an authentic product. While we have invested heavily in our authentication processes and we reject any goods we believe to be counterfeit, we cannot be certain that we will identify every counterfeit item that is consigned to us. This is a complex problem, the entire team at The RealReal works diligently seven days a week to ensure the highest standards in our authentication process. We are constantly and consistently training our teams, and evolving our technologies to ensure your items are the real thing. There is no other resale company doing more to remove fakes, and put counterfeiters out of business, than The RealReal.”
She then went on to add how her company hires and works with reputable gemologists and horologists.
Some of the fake products sold include:
a fake Prada dress
a mislabelled Loro Piana scarf
and a fake Dior bag valued at $3,600
The allegations of The RealReal selling fakes has come with consequences. Days later, The RealReal’s shares fell 8.5 percent despite receiving positive earning results in their third quarter.
Despite its growing subscriber base and its partnerships with Stella McCartney, Burberry and more, The RealReal is still making a loss.
While it calls itself the largest online marketplace for “authenticated, consigned luxury goods” boasting a whopping $711 million worth of goods sold on the site in 2018, its costs for customer acquisition, product acquisition and logistics are high.
The RealReal has also faced controversy from luxury brands such as Chanel. Chanel filed a lawsuit last year against the company, accusing The RealReal of selling counterfeit Chanel products. They argued that The RealReal does not have the authority to authenticate such goods.
The Truth about their Authentication Process…
The company’s authentication process, however, has also come under fire. While The RealReal claims that its merchandise was authenticated by experts, their employees say otherwise. In an investigation performed, it revealed that employees such as copywriters were also inspecting luxury goods.
A copywriter, at The RealReal stated “They give you a quick 5-minute presentation on what things should look like and then have you go. I should not have been authenticating a Hermes scarf, for example. All they care about is the product getting on the site.”
Another employee told said that there is so much stock coming into The Real, that “there is no way everything can be authenticated.”
So How Can We Tell Something is Counterfeit?
For something to be deemed counterfeit, there are a few key elements at play which all have to be met:
Brands Affected By Counterfeit Fashion
A wide range of fashion brands have all faced issues with counterfeit fashion being sold online. These brands include streetwear and high end fashion brands ranging from the iconic streetwear brand, Supreme all the way to Chanel.
China obtained biggest source of counterfeit goods. Whereas brands from America, Italy and France were the biggest victims of counterfeit fashion.
Reports show Supreme was gaining the most searches for fake versions with a global average of 29,000 monthly searches. Oakley, Patek Philippe, Ray Ban and Vans were also among the most searched for fake versions.
Nike is just one of the latest brands to tackle counterfeits and file lawsuits against a number of fake retailers.
In Nike’s newest lawsuit, they won the rights to 20 fake sneaker websites including “nikeairmax97.com,” “shopsnikeukoutlet.com” and “nike-trademark.com”. All the websites were registered by the same person. All of the sites that are still online and redirect to the official Nike web store.
Richemonts is one fashion house that has had a more successful legal effort at cutting down counterfeit fashion. They argued that internet providers are responsible for monitoring and preventing sites that sell fake versions of any of their brands. Various other fashion conglomerates are also expected to use this argument as well.
Supreme’s Counterfeit Fashion War…
One of the most iconic streetwear brands, Supreme, is also no stranger to facing counterfeit versions of their own pieces.
Supreme had an ongoing trademark battle with Supreme Italia. The knock off brand, eventually lost the legal fight in June.
Due to its easily reproducible boxed logo it has the largest demand in the global counterfeit market. Therefore its up against a more sophisticated type of counterfeiting.
Some of the countries involved in using Supreme’s logo and branding include Italy, Spain, China. They are able to do this by filing a trademark in a specific country before Supreme could. These are termed as “legal fakes”.
This caused the original Supreme, based in New York, to take Supreme Italia and Supreme Spain to court for the use of its name, branding and almost identical products.
What Do Designers Have To Say About This?
One of the biggest fashion icons in contemporary fashion, Virgil Abloh, was initially keen on counterfeits.
Abloh stated that he “loves counterfeits” as it’s “the best feedback” the “project was made to inspire kids.”
“It’s better than a great review on Vogue. If it’s working to the point in which other people can profit, that means it’s really working. You’re not taking anything away from me, you’re actually advertising more. If you think Off-White is too expensive, that’s great, you’re supposed to make your own T-shirt brand”
However, his views on counterfeits have recently worn off causing him to oppose the idea of counterfeits.
Last year, Off White sued Paige Denim for using its signature stripe design. Now it is prohibiting 161 different Wish.com merchants selling counterfeit merchandise sourced from China. They were using Off Whites stripe design, arrow designs and the trademarked Off-White name. The lawsuit argued that “the counterfeit products have not only led to lost profits but damaged the reputation of the brand”.
This led to the label is asking for $2 million in damages for every instance of counterfeited fashion. They also wish to ban accused merchants from selling on Wish.com. Wish have looked into this issue and took action by taking down all of the 161 merchants product posts.
What Is Being Done To Counter Fake Fashion?
Even though luxury and streetwear brands have tried their best to counter fake fashion, it shows no signs of stopping. Its getting harder to authenticate items meaning counterfeiters are getting more and more sophisticated in design and transport methods.
Obvious ways to spot fakes include:
examining labels to see if they are misshapen
spotting a lack of inner-embroidery
cheap material being used.
European countries, are stricter on counterfeit fashion due to laws that protect fashion designs as an “intellectual property”. This is not the case with copyright laws in the US or the UK.
One of those countries is France, with fashion goods being one of their biggest exports. France is just one of the counties to have set measures by taking a national stand against counterfeit products, making it illegal to enter or leave the country with them. However, other brands are using counterfeit fashion as a selling point.
The Creative Approach…
Some of the most regularly counterfeited brands include Off-White, Valentino, Diesel, and Gucci. Despite their frustration and legal actions, they have also chosen to respond to the issue in a creative manner.
Creative director, Alessandro Michele, made an artful and clever play on the brand’s name, mirroring the obvious spelling that can be found on counterfeits, for Gucci’s Cruise 2018 collection.
The collection included the “Guccy” logo with Greek and Roman antiquities inspiring the collection. The logo represents the medieval spelling of their name and mocks fake Gucci being sold.
Off White also took their opportunity to mock counterfeiters by setting up a pop-up counterfeit flea market, disguised as fake, outside the venue of their Spring/Summer 2017 runway show. It was a promotion stunt for their “If the Cops Come Run” bag.
Valentino and Diesel also took a similar approach.
In the summer of 2017, Valentino launched a secret campaign called “Expect the Unexpected”. Valentino went on to showcase a video that showed Londoners buying cheap and “fake” Valentino before it was revealed as real.
Founder of Diesel said “The fake products bring the brand down. So how can we use this to bring the brand up? We came up with this fantastic idea.”
Diesel went on to disguise its authentic pieces at a 2018 pop-up shop in New York, that seemed to be selling fake products. The clothes misspelled their name making out “Deisel”. Diesel then revealed that the products were real but sold at a lower price similar to its counterfeit products.
Can Tech Help Fight Counterfeit Fashion?
With technology ever developing, a tech start up called Entrupy, has created a piece of technology aimed at businesses, that may tackle the sale of counterfeits pieces. They claim it can detect inauthentic goods using a microscopic camera and a mobile app.
Entrupy said their device has 98% accuracy for detecting counterfeits, detecting fakes from brands such as Balenciaga, Louis Vuitton and Gucci and more.
Currently, the device only works on handbags, however the company is looking to expand its device. You can buy this product from their site priced at $299 USD.
Entrupy’s authentication process works like this. After the camera is held over different sections of the item, it magnifies the object by 260 times to reveal details impossible to see from eyesight. Their algorithm then reveals if the product is real or fake, through its iOS app.
Linking back to technology, a spokesperson from OECD stated that social media, specifically Instagram is a common platform where counterfeiters can showcase their fake products. Especially since there is a huge demand for it on the platform. Other social media platforms used include WeChat and Snapchat.
These customers tend to be of a young age ranging from teenagers to adults in their early thirties. Its a common age group found on social media platforms.
The spokesperson, reckons that people who grew up illegally downloading and streaming movies or music, are more likely to buy fake designer pieces. Regardless of the efforts from brands and anti-counterfeit organisations to deter customers from purchasing fakes, it seems like a huge roadblock is the actual high demand consumers have for counterfeit fashion pieces.
The Long Shots…
A longer approach that can help limit counterfeit fashion is trademarking original designs of items from brands. Some examples would include Christian Louboutin’s red soles or Burberry’s plaid pattern. Unfortunately this may only protect bigger and more established brands as smaller brands may not be able to afford it.
Another approach authorities are taking to prevent the imports of counterfeit pieces is to educate US customs and border patrol on how to differentiate between real and fake pieces. This can only be after brands and owners of copyrighted or trademarked register their products with customs.
One method authorities will have to counter is when importers of counterfeited products, ship in products labelled as holding other types of goods and then stick on the logo after they’ve entered the country.
This was the instance in a case that’s still pending with Nike. Nike sued a customs broker and shippers who had brought in packages listed as holding ceramic tiles. But it actually held tens of thousands of knockoff Nike shoes. Brands can also have the option to hire certified experts such as gemologists and horologists .
Amazon Vs Counterfeit Fashion…
Alibaba, Amazon, eBay have implemented policies banning counterfeiting. They want to make sure that customers and themselves are only buying inventory directly from brand owners.
However this may not have worked that much in Amazon’s favour. It explained that fighting counterfeits was a reason for its sudden and unexplained purge of thousands of vendors.
Amazon maintaining relationships with brands who complain about counterfeit products being sold on their marketplace has been a challenge the eCommerce giant has faced. Counterfeiters take advantage of Amazon’s system which lets merchants post products quickly and easily after setting up accounts.
“We regularly review our selling partner relationships and may make changes when we see an opportunity to provide customers with improved selection, value and convenience.” stated a spokeswoman from Amazon.
Amazon then selectively reinstated some accounts, apologising for “any inconvenience” caused by the “temporary pause” in orders and encouraged those reinstated to enrol in “brand registry”. This tool is to helps brands take counterfeit products off the platform.
China Vs Counterfeit Fashion…
With China ranking 25th from 50 countries, in commitment to protecting innovation through legal rights, it has been highly praised by executives and fashion brand representatives some of which stated that China has helped create a“much improved environment for brands” compared with a decade ago and that China are doing “much more than some other countries”.
This praise came after government crackdowns on sophisticated counterfeiting rings in Southern China’s Guangdong province that prevented exports of fake Louis Vuitton bags to Dubai.
The praise also came as a result of Chinese police tracking down and arresting 32 members of a group. They sold up to $14.9 million (or 100 million yuan) worth of counterfeit luxury goods from brands including Nike and Louis Vuitton.
Chinese police made further arrests in January, closing two assembly lines used to make the counterfeits. They seized more than 4,000 bags, clothes and accessories, each costing 200 yuan to make according to the group.
The only thing holding China back on higher ranks, is their insufficient legal safeguards and high levels of infringement.
“Are the people who buy fakes for a tenner really depriving the companies that sell goods for hundreds or even thousands of pounds?” the BBC questions.
In conclusion, the fake fashion industry is much bigger than we thought. A large reason to its is due to increasing demand which was also bigger than I thought.
As expected, this demand largely accounts from a younger demographic. It most likely comes from the social pressures the younger generations face. Nowadays, the younger generation are very concerned with their appearance and looks. The “herd instinct” results in them wanting to be part of something, in this case owning designer clothing. This results in buying fake versions of designer pieces in an attempt to save money as younger people aren’t as well off as their older counterparts.
Even though fake fashion shows no sign of stopping, we do think there will be more done to counter it. Maybe not by respected fashion brands or organisations but by countries and governments instead.
By government cracking down and becoming stricter on counterfeit product imports and consequences of selling these, fake fashion can be reduced. With all that being said brands using counterfeit fashion as a selling point and in a creative manner is also a good way to go about it.
In the long run, counterfeit fashion not only affects revenues and business for fashion brands, I do think that the perceived value and image/reputation of designer pieces is affected.