COUNTERFEITING: the next fashion challenge?

A SteffyB; guide to exploring this phenomenon
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Owning a Chanel or Louis Vuitton bag might have been a dream for many, but a few thousand pounds for what is just a “branded bag” is not something that many can afford or repute worth spending (or not valuable enough). But as a simple bag can represent a statement piece or a social status, people would do everything to get their own portable “branded dream”…even buying a replica of it… As they said “Fake it til You make it!”, right? Might be a shame if it is not real, but in the end “who’s gonna find out?

The phenomenon of homologation and belonging to a certain group, showing off a specific status, is intrinsic in today worlds with the risk of fraud as well as the spread of fakes. We have become much more influenced by society and what is believed to be cool and trendy than what we are, what we like and what we need. Great opportunities for big brands, but also risks if the marketing and selling process is not managed in a sensible and with a forward-thinking strategy. At the centre, there is always the client, not the one that has to buy but the one who need the best. This is the philosophy of brands not much the philosophy of counterfeiters.

What is considered Counterfeiting?

Fashion Law agrees that a product is considered a counterfeit, whether it includes another party’s federally registered trademark or one that is “substantially indistinguishable” from the other party’s trademark. Moreover, it must be knowingly and deliberately using another party’s trademark without authorization to do so. This use is almost always paired with the counterfeiter’s intent to deceive the consumer by presenting itself as the trademark holder by way of the fake logo or fake tag. Counterfeit in fashion, refers to breaking the law against trademarked goods, such as clothing and accessories. The definition is not limited to ‘luxury’ products. Whilst luxury goods are commonly thought of as the main goods which are counterfeited – “this is one of the most highly publicised sectors where counterfeiting is rife” (Hilton et al., 2004: 346) – there are problems holding this assumption, not least consumers and enforcement agencies own differing definitions of ‘luxury’.

Fashion Law agrees that a product is considered a counterfeit, whether it includes another party’s federally registered trademark or one that is “substantially indistinguishable” from the other party’s trademark. Moreover, it must be knowingly and deliberately using another party’s trademark without authorization to do so. This use is almost always paired with the counterfeiter’s intent to deceive the consumer by presenting itself as the trademark holder by way of the fake logo, fake tag, etc. (Fashion Law, 2018). 

Counterfeit in fashion, refers to breaking the law against trademarked goods, such as clothing and accessories. The definition is not limited to ‘luxury’ products. Whilst luxury goods are commonly thought of as the main goods which are counterfeited – “this is one of the most highly publicised sectors where counterfeiting is rife” (Hilton et al., 2004: 346) – there are problems holding this assumption, not least consumers and enforcement agencies own differing definitions of ‘luxury’. The counterfeit industry is planning to grow year by year. If in the past the counterfeit business was mainly a one-to-one sales, nowadays It has moved in the digital landscape. Reports show how counterfeit fashion accounts, are mostly focused on knocking off luxury fashion and they are extremely active on social media. As mentioned before, Instagram seems to be the new channel for fake luxury goods. Taking advantage of his direct tool to share stories that won’t last for more than a day, and as well for its algorithm function based on the hashtag search: whether you are looking for a dress or a restaurant, all you need is a simple #. According to Ghost Data latest report, The most counterfeited fashion brands on Instagram are Louis Vuitton, Chanel, Gucci, Nike, Fendi, and Balenciaga.  So far, luxury fashion brands lose about $30.3 billion worth of sales to fakes online alone. Following the life-changing motto “fake it till you make it, Amazon allows anyone to easily become a re-seller, and it is often misleading and difficult to interpret their identity; from a consumer standpoint, it is hard to decipher from whom the purchase is being made (Fast Company, 2019). The only solution for the firm was to invest over $400 million in personnel and tools built on machine learning and data science to protect customers from fraud and abuse in their online stores

An Online business worth $$trillions

If in the past the counterfeit business was mainly a one-to-one sales, nowadays It has moved in the digital landscape: counterfeit fashion accounts, are mostly focused on knocking off luxury fashion and they are extremely active on social media. Vox reported how the counterfeit industry nets a global $1.2 trillion every year and Instagram has become the best place online where to sell them: according to the 2018 Global Brand Counterfeiting Report,.Counterfeiters frequently post to Stories because the content disappears in 24 hours.

LV-Check
Example of Instagram accounts selling fake luxury goods: Ghost Data

The most counterfeited fashion brands on Instagram are Louis Vuitton, Chanel, Gucci, Nike, Fendi, and Balenciaga.  So far, luxury fashion brands lose about $30.3 billion worth of sales to fakes online alone. Another ease access to the fake market has been provided by Amazon, where anyone can easily become a re-seller, and it is often misleading and difficult to interpret their identity; from a consumer standpoint, it is hard to decipher from whom the purchase is being made. To stem the problem, Amazon had to invest over $400 million in personnel and tools built on machine learning and data science to protect customers from fraud and abuse in their online stores.

Under the radar: Diet Prada

Diet Prada

If the Internet is the incubator of the phenomenon, giving to fake retailers the opportunity of selling their goods anonymously, it is also true that it gives the possibility of being more exposed to recognition. Just enter Diet Prada on your keyboard. Founded at the end of 2014 by New Yorkers Tony Liu and Lindsey Schuyler, Diet Prada defines itself as an account to ‘ppl knocking each other off lol’. They rapidly increased their fame by comparing designers who seemed to have taken the idea of inspiration a bit too literally, posting side-by-side image collages, easily-understandable visual binaries of original versus imitation or calling out influencers unknowingly wearing fake Dior, but more and more, the account became a place for the darker side of fashion to be aired, an Instagram whistleblower calling out not just copying but model exploitation, sexual assault, and racism (Dazed,2019).

By operating a new form of digital vigilantism, they created a new awake for digital consumers, looking for meaningful changes in fashion, by promoting buzzwords like transparency and sustainability: every time we admire the work of a designer, especially in the luxury market and in emerging brands, we focus on design and creativity; but hardly one thinks of the problems and risks encountered in protecting the identity of an object. Especially if this is worth a lot of money!

Gucci vs Guccy: how brands are fighting counterfeiting

Gucci vs Guccy
@Gucci Cruise 18

Luxury brands, both in apparel and accessories, are the first to be imitated because of their price and the value associated with luxury and well-being, central to them. 2019 witnessed many legal battles by brands such as Versace, Gucci and Louis Vuitton to protect their brands. Versace sued fast-fashion company Fashion Nova for copying the design of the “Jungle Print” popularised by J.Lo in 2000 – Fashion Nova then responded to the claims, with 32 defences, arguing the copyright claims Versace holds over its designs should be removed as the prints are not “original”. Fashion Nova stated the referred to prints are “standard geometric figures and patterns,” which are “in the public domain,” and “widely used in the fashion/apparel industry”. Another example was reported from Gucci, recently been involved in the fight against fake luxury goods, suing more than three dozen web sites in the US, it accused of selling knock-off shoes, accessories and clothes, and of appropriating its brand name. Websites hawking counterfeit goods are registered under fake names and fictitious contact information, and as a result, when lawsuits are filed, default judgments are awarded because very few, if any, of the defendants have an incentive to actually show up in court. As a result of such court battles, legitimate trademark holders, which files these types of lawsuit quite regularly are able to obtain ownership of the domain names, many of which include the word “Gucci,” and also prevent these sites from operating on that specific domain. (The Fashion Law, 2019).

Moreover, the widespread counterfeiting on the Chinese e-commerce platforms has presented a threat for luxury firms: Kering Group dropped its lawsuit against Alibaba, launched in 2015 accusing the e-tailer of complicity in the sale and committed to working with the e-commerce giant to create a joint task force to fight counterfeits. Alibaba also claimed to have achieved “notable improvements” in its IP protection efforts after increasing the number of registered brands and rights holders on its sights and implementing faster response times to takedown requests and removal of illicit listings. Despite these and other initiatives, the e-commerce company has continued to appear on the USTR ‘notorious markets’ list. Moreover, Gucci sought a restraining order and injunctions to block the companies from selling alleged counterfeit their products.

BLOCKCHAIN: The ultimate Solution

VC funding for Blockchain tech

Big luxury players as LVMH and Kering started to use the technology to track luxury goods and prove their authenticity, as reported by the blockchain news site CoinDesk (BOF, 2019). Mainly known among our financial peers, Blockchain is the catch-all term for technology that permanently records transactions in a digital, tamper-proof database. Information is distributed across a network of computers rather than being controlled by a single entity, and is accessible to anyone in the network, but cannot be altered or deleted. Think of blockchain as an immutable database that registers all information without the ability to change them or manipulate them.

Vogue Business pointed out investment in blockchain startups has increased at a compound annual growth rate of 90 per cent over the past five years, engaging not only with companies working in fashion, but also in the jewellery field. Here’s a list of some successful collaborations: The most profitable collaborations include Brilliant Earth, with a blockchain-integrated diamonds through a partnership with London-based Everledger, to track and records every step in a gem’s lifecycle. This includes location origin, rough carat weight, customer ownership and videos of the rough diamond, all accessible through Brilliant Earth’s website. Arianee has developed a blockchain-based protocol that creates a digital identity for valuable goods, such as bags, sneakers and watches. Advisors include execs from Richemont International and Balenciaga. Depending on the brand, the originality of the good can be linked to the item through serial number, chip or QR code, accessible through an app.  

Fuchsia uses blockchain platform Provenance to share details about the workers who hand-make the brand’s shoes in Pakistan. Six months after adding the information to its e-commerce product pages, the company saw a 31 per cent increase in online conversions and a 45 per cent boost in engagement.

Provenance App
@Provenance platform provides supply chain details through in-store QR codes or e-commerce product pages (via Vogue Business).

But much more is going on in the background and the need for a universal and scalable solution for authentication of luxury items is still in progress. A solution that can track the supply chain to prove the provenance of materials, empower the manufacturers and all workers across the cycle as well as the creatives, at the same time able to offer a transparent chain for sales and markets. By browsing the web, there is a plethora of options and tutorials to spot fake goods.

Websites such as StileTribute, Entrupy are just the tip of the iceberg. Furthermore, alternative website as Real Authentication offer paid services to spot the bad goodies: a global authority in expert authentication for new & used luxury goods. Users just need to upload images to receive a determination within 12 to 24 hours. Here’s how it service works:

@Real Authentications

Would you like to know more?

Stay tuned for further news!

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