When Did Counterfeit Become Cool?

Ground Picture / shutterstock

Once upon a time, counterfeit luxury goods were considered a fashion faux pas. If you had a fake Birkin bag or Gucci belt, the point was for people to believe it was real—you certainly weren’t bragging about the money you saved or sharing the source of the counterfeit item.

Unfortunately for high-end retailers, times have changed. There seems to be a growing comfort with—even preference for—counterfeit luxury goods. According to the US Patent and Trademark Office, counterfeiting is the largest criminal enterprise in the world, with domestic and international estimated sales of counterfeit and pirated goods totaling between $1.7 and $4.5 trillion a year.

Charles Olschanski, CFE, CFI

“It’s becoming more and more socially acceptable to have replicas,” said Charles Olschanski, CFE, CFI, senior director of global protection for the Americas and global brand protection for Tiffany & Co. “It’s become a trendy thing.”

One reason for this, Olschanski said, is the popularity of online selling—consumers no longer have to rely on shady street vendors. In fact, they don’t even have to go to online marketplaces like eBay. Many stumble upon fakes simply by searching hashtags like #Chanel or #Gucci on Instagram and TikTok.

A study by the World Economic Forum, “Social Media and Luxury Goods Counterfeit,” shows that close to a fifth of all items tagged as luxury goods on Instagram are actually fakes. Of the around 150,000 posts tagged with luxury good brand names that were examined by researchers, 20 percent came from accounts based in China, Russia, and Malaysia. Looking into 20,000 counterfeit good accounts, researchers discovered that these accounts had posted more than 140,000 images within a three-day span.

The posts typically feature an image of the counterfeit good along with contact information so buyers can contact sellers through encrypted messaging apps like WhatsApp or WeChat, making these operations incredibly hard to track or shut down.

Many of these counterfeit items are classified as ‘super fakes’ which are so similar to the originals that it is nearly impossible to tell them apart. The manufacturers of  ‘super fake’ handbags source the same materials as the original designers for the bag, lining, and stitches. These fakes are then priced at only 5 percent of what their legitimate counterparts are being sold for, making them hard to resist—especially in a world where finding a good ‘dupe’ has become trendy.

Mazza Angelo

“The quality of the counterfeits has improved over the years as certain technologies become more available and cheaper to use,” said Angelo Mazza, partner at NYC-based law firm Gibney, Anthony, and Flaherty, LLP. “The internet and the boost from the pandemic significantly improved the ability of sellers to reach and sell to consumers directly.”

The Thrill of the Hunt

One way consumers are finding counterfeit luxury goods is through online communities like Reddit. One subreddit, r/RepLadies, which described itself as a happy place for discussions about replicas and “fashion at any level,” boasted more than 200K subscribers and many more visitors at its height. And its fans aren’t simply looking for a cheap bag—they’re passionate about the hunt. According to a self-reported survey the group released, subscribers spent more than $3 million on replicas in 2021, and its members included chief executives, venture capitalists, a diplomat, and a Big Tech ethics adviser.

“Consumers have shifted from possessing counterfeits as an embarrassment to having them as a social status symbol,” Mazza said. “There is all the talk about various types of super dupes across many product lines. But what buyers forget is that these products are made in the same disreputable, unsafe factories that exploit low-wage workers or children to make products. Seeing so many posts or videos of products on sites creates a sense of normalization and acceptance of the fakes, and people ask, ‘How can it be bad if it is so pervasive?’ There has definitely been a change in attitudes over the years.”

In 2022, one story by The Cut, “The Rich New York Women Who Love Their Fake Birkins,” shocked many but likely led quite a few to embrace counterfeit goods themselves.

The story followed Lisa, a 38-year-old woman living in Manhattan, who has a “super rich friend” with a massive Birkin collection, a $10 million house in the Hamptons, and a private jet. But while this friend clearly has the means to purchase authentic Birkin bags, she prefers to purchase fakes at parties similar to those that used to peddle Tupperware to housewives.

Lisa has a household income of $3 million a year and already owns a number of authentic Birkin bags. But once she learned about the fake handbag world, she sold almost all her authentic bags, using the cash to buy counterfeit Birkins instead. She spent around $10,000 on the fake bags in just one year.

Another woman interviewed for The Cut’s story claimed to own hundreds, probably thousands, of counterfeit luxury items including nearly a hundred bags and a fake Bulgari necklace that cost more than $10,000. “It’s all about the atavistic thrill of the hunt—the feeling of getting a bargain,” explained the former real estate developer who retired at the age of 30. “I don’t just want a thing; I want to feel like I’ve gotten it for a deal.”

After all the attention The Cut’s story garnered, the subreddit went private “due to safety concerns.” When you try to go to the thread now, a message appears saying they will not be adding any approved users at this time and will not respond to messages. Now, only previously approved members can view and take part in its discussions.

This caused pandemonium among fans of the subreddit, though alternatives were promptly born (r/LuxuryReps, r/Reppies, and r/FashionReps are just a few).

Many members of these threads are even participating in the illegal trade of items, acting as middlemen, shipping the bags over in bulk, and hosting the “Tupperware parties” where they can sell the bags to friends and family. And while they are passionate about their online community of fellow counterfeiters, most are not open to the real world about the fact that their bags are fake. Increasing numbers of “dupe influencers,” are, however.

Generation Z and Dupe Influencers

According to a June 2022 report by Sydney Fenton in the Chicago-Kent College of Law’s Journal of Intellectual Property, “dupe influencers are influencers who use their social media accounts to promote fakes of sought-after designer products.”

These influencers generate millions of likes, views, and shares by advertising counterfeit products on Instagram, YouTube, and TikTok. Videos about where to find fake luxury goods have even become an entire genre on TikTok, the social media platform of choice for most belonging to Generation Z.

According to Entrupy’s 2023 State of the Fake report, roughly half (50.7 percent) of Generation Z is “indifferent” or “not concerned” about buying counterfeit merchandise. 52 percent of shoppers aged 15-24 said they had purchased a counterfeit product online in the last year, and 37 percent admitted to doing so intentionally. One in three said they either found it hard to tell a genuine item from a fake or simply didn’t care enough to try. A vast majority (nearly 73 percent) are “satisfied” with the fakes they own.

Entrupy’s report also showed that Gen Z is starting to buy luxury products at age 15—three years younger than millennials—and is projected to constitute one-third of the luxury market by 2030. A 2019 study from the International Trademark Association that polled 1,250 Gen Z Americans found that 73 percent purchased counterfeit items because they could not afford the authentic items.

“While it used to be cool to wear expensive brands, it is now cool to wear dupes,” Fenton wrote. “Gen Z is more interested in being smart by getting the look of an expensive brand for a fraction of the price. It is a new phenomenon where the sellers and influencers are open about counterfeiting, ignoring its illegality and, in fact, bragging about it. Unfortunately, it likely has only gotten worse since the 2019 report with the growth of TikTok and the rise of dupe influencers.”

When social media influencers endorse a product, 35 percent of consumers believe the influencer has personally evaluated the product, and 30 percent believe it must be safe to use, according to a new study from the University of Portsmouth. A survey of 2,000 people in the UK shows that young consumers are more likely to fall prey to dupe influencers, with those aged 16-33 being three times as likely to purchase endorsed counterfeits compared to older adults. Males account for 70 percent of all buyers due to their “risk tolerance and susceptibility to influencers.”

“Without a doubt, the counterfeiters have learned the secret sauce to the algorithms and the best way to conceal the sales within the platform structures,” Mazza said. “And then creating the content begets more content which then drives the eventual trends that lead to sales.”

#DHgate, a Chinese business-to-business marketplace and destination for designer knockoffs, boasts 3 billion views on TikTok of people flaunting their counterfeit purchases. Research released in 2021 by Money.co.uk identified Gucci as the most counterfeited luxury brand on TikTok with more than 13.6 million views of hashtags such as #fakegucci, #guccifake, and #fauxgucci in a single 24‑hour period. Rolex came in a close second with 11.7 million views, followed by Louis Vuitton with 2 million, and Dior at 280,000.

Victoria Chudinova / shutterstock

“We started working in the online space back in the late 90’s,” Mazza added. “In the early days, eBay was the major problem and there were not very many options for online purchases. Now, we see constant change as platforms jockey to be the most followed and influential. Even within a year, the rankings shown in the number of takedowns reflect social media dominance. The ability of counterfeiters to monetize and exploit social media as a sales tool to sell goods to both the knowing and the unwitting has increased. The role of influencers to promote counterfeits via hidden links and deceptive promotions is all too common.”

What Can Retailers Do?

As the problem of counterfeiting grows larger for luxury brands, loss prevention and asset protection teams are often being tasked with solving it. Charles Olschanski has had this responsibility for years and has witnessed firsthand how the counterfeit market has evolved and grown.

Crucial when managing brand protection is keeping an open line of communication with senior leaders and the marketing team to remain aware of what’s going on with the company, and how that may impact the counterfeit market.

“When you introduce a new product line, you have to anticipate that [counterfeit versions of that line will start popping up] ahead of time, and dedicate time and resources to that,” Olschanski said. “If they’re planning on a large marketing campaign, you have to prepare for that.”

Kasparse Grinvalds / shutterstock

And brand protection must go far beyond the brick‑and‑mortar store in 2024.

“Every brand has had to pivot to the online selling environment—it’s nothing new, it’s been heading that way for over a decade, so one of our main goals is to keep that space clean,” Olschanski continued. “So, we search around the internet for counterfeit Tiffany products. We want to ensure the first few pages of internet searches for Tiffany are clear of any counterfeit products. And if we see any counterfeiting activity, we try to jump on that and eliminate that as soon as possible.”

Traditional LP investigators often struggle with identifying modern counterfeiters, so teams must take unique approaches. Tiffany & Co has even hired social media-savvy college students as investigators, Olschanski said.

Gibney, Anthony, & Flaherty LLP’s IP Group works to help companies protect their intellectual property in both the brick-and-mortar and online spaces. “We focus on offering customized enforcement services based on specific issues facing a brand,” Mazza explained. “Whether it be through social media or tracking down physical locations, we develop leads and work with our partners to mitigate those issues, including supporting criminal and civil solutions.”

This effort starts with the group’s in-house team of researchers and brand protection specialists and continues with attorneys and investigators who work toward obtaining criminal or civil remedies.

With all of this experience, Mazza has some sage advice for retailers: “You have to look at enforcement as a layered process. No one action will resolve the problem. However, if you are able to distinguish where the problems are and how limited resources may be maximized in each area, it is a start. Think about Customs’ role, and local law enforcement as a possible resource once goods are in the country. Develop a strong network of trusted investigators with deep contacts with law enforcement and be ready to stand behind your enforcement efforts with any assistance they may request. And when the right opportunity occurs, do not be afraid to initiate a civil suit to send a message to counterfeiters and your customer base.”

prostock-studio / shutterstock

Mazza added that while retailers have historically been afraid of publicizing counterfeit issues with their brand, social media provides a great opportunity to engage with customers across platforms as a part of brand protection efforts.

“There is an opportunity for savvy brands to take advantage of the reach and interest of consumers by using the platforms themselves to get messages out that address the harms and issues associated with counterfeit goods,” he said. “Brand engagement cannot be limited; it has to adapt as consumers evolve.”

Prosecuting Counterfeiters

While finding counterfeiters is hard enough, prosecuting them is even harder.

“It’s a tough situation with many elements that play into it,” Olschanski explained. “On the criminal side, it’s difficult for law enforcement to buy into this. They’re getting better, but they have so much going on, and their focus and targets are on some very serious crimes. It’s hard to get them to understand this is a crime sometimes, so there is the education side of things, because there are ties that go back to organized retail crime, terrorism, and human trafficking. We find that, in a lot of cases, drug traffickers have their hands in counterfeiting because of a lack of punishment. So, we have to keep pushing the legislative side of things for states, because each state has different laws on the books.”

He added, “On the civil side, it’s expensive to enforce, so you have to be very targeted and strategic. You can’t just sue anyone under the sun—in fact, suing doesn’t really work. So, you have to be very targeted and strategic. You want to litigate, but you want to do it in a smart way.”

“There are many jurisdictions in the US where law enforcement is willing to take on counterfeiters and bring all these efforts to fruition,” Mazza insisted. “In the hierarchy of crimes counterfeiting may be, unfortunately, viewed as victimless or less important than other crimes. There is always an effort to raise the profile of counterfeiting as a crime and its impact on the economy and communities.”

Often, prosecuting counterfeiters is a long-term effort, and success requires patience and persistence.

“Many of these cases may take a year or two or more (depending on jurisdiction) to make their way through the system,” Mazza said. “Patience and commitment are key aspects of the process. It is also important that you treat the takedowns or removals as possible future cases. For this, evidence is key. When dealing with an online presence you need to preserve the listing and site with all of the images and links that exist—your case will depend on this. It goes without saying, but this will require some resources. Sometimes, they are available, and other times, you have to come up with creative options. In the end, a good criminal case will lead to jail time but also asset forfeiture for law enforcement and possible restitution for the brand. Civil cases are an option but do your research first and determine if the suit is meant to be a deterrent or seeks significant (and attainable) monetary damages.”

Ultimately, retail companies, social media and online selling platforms, and government entities all need to work together to curb this growing market.

Homeland Security Investigations (HSI) is one group working to fight counterfeiting—a crime they also notice has grown in scale as consumers have become more dissociated from its dangers.

“Contrary to popular belief, counterfeiting is not a victimless crime,” said Special Agent in Charge Mark Dawson of HSI Houston. “It significantly impacts small businesses that do things the right way, harms consumers who unknowingly purchase substandard items, violates the rights of the trademark holder, and in some cases the illicit proceeds are used to fund transnational criminal activity such as human trafficking and drug trafficking.”

Intellectual property theft costs the American economy as much as $600 billion a year, according to the FBI. After extensive lobbying, Congress finally passed the INFORM Consumers Act, which requires online marketplaces to verify high-volume third-party sellers, hopefully curbing the sale of stolen and counterfeit products.

Still, there is much work to be done before retailers can rest easy.

“Laws and regulations are only as good as the enforcement mechanisms that drive compliance,” Mazza said. “INFORM may put some of the low hanging fruit‑type sellers out of business. However, the bigger sellers are far too savvy to be impeded by being asked to provide data.”

Now the SHOP SAFE Act is being pushed as another solution to making platforms more accountable for the sale of counterfeit goods. “The final Act needs to have both enforcement teeth, and as few carve-outs as possible that would prevent it from making a significant difference in the counterfeit trade,” Mazza explained. “We are at a point where the technology and capabilities of the platforms are much better than they were a few years ago. That expertise and technology has to be brought to all platforms to actually impact the volume of sales and goods entering the country.”

In the meantime, collaboration and conversation is crucial for retailers.

“For any brand, it’s important to speak with peers and share best practices,” Mazza concluded. “No sense in reinventing the wheel when resources are scarce. Many brands have faced the same or similar issues and developed a game plan. Learn from what is being done and develop from that your best course of action. Counterfeiting will not go away or disappear, not so long as there is a demand for the products. However, you can work to make it more difficult to access those goods on popular platforms or to pay for the goods by addressing the payment processor part of the transaction. The counterfeiters are always adapting their business model to stay a step ahead. Be in tune to the changes and ready to pivot to address those changes.”

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