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 data from the Organization for Economic Cooperation and Development (OECD), the total value of counterfeit and pirated goods was about $1 trillion in 2013 but is expected to grow close to a whopping $3 trillion in 2022.
“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 on fakes simply by searching hashtags like #Chanel or #Gucci on Instagram.
A new 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.
Rich Women and Reddit
Consumers are also finding counterfeit luxury goods through online communities like Reddit. One subreddit, r/RepLadies, describes itself as a happy place for discussions about replicas and “fashion at any level.” It boasts 200K subscribers and many more visitors, 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 last year, 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 advisor.
In April of this year, one story by The Cut, “The Rich New York Women Who Love Their Fake Birkins,” shocked many, and likely led quite a few to embracing counterfeit goods themselves.
The story followed Lisa, a 38-year-old woman living in Manhattan, who has a “superrich 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 owned a number of authentic Birkin bags. But once she learned about the fake handbag world, she sold almost all her bags, using the cash to buy counterfeit Birkins instead. Just last year, she spent around $10,000 on the fake bags.
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.”
Many rich New Yorkers are even participating in the illegal trade of these items, acting as middlemen, shipping the bags over in bulk, and hosting the “Tupperware parties.”
While these women are passionate about their online community of fellow counterfeiters, though, most are not open to the real world about the fact that their bags are fake. Increasing numbers of “dupe influencers,” however, are.
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.
A 2019 report from the International Trademark Association that polled 1,250 Gen Z Americans found that 71 percent had purchased a counterfeit good in the previous year, with the most popular types of fakes being apparel and footwear. Of those, 73 percent said the reason they bought the counterfeit items was because they could not afford the authentic items, setting them apart from the rich women of r/RepLadies.
“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.”
Research released in June of 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.
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.”
And brand protection must go far beyond the brick-and-mortar store in 2022.
“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.
But 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 don’t want to not litigate, but you want to do it in a smart way.”
Ultimately, retail companies, social media and online selling platforms, and government entities all need to work together in order 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 with 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.”
Retailers have been lobbying Congress to pass the INFORM Consumers Act, which would require online marketplaces to verify high-volume third-party sellers, curbing the sale of stolen and counterfeit products.
Unfortunately, champions of INFORM were dealt a devastating blow when it was removed from the America COMPETES Act that was passed last week.
Consumer protection groups remain hopeful, though, that the bill could still pass as a standalone item soon, since it already has bipartisan support.