Online sales of counterfeit goods are soaring, and apparel and accessories companies are fighting back.
An estimated $87 billion worth of counterfeit and gray market goods of all kinds were sold online in 2005, said Andrew Horton, director of product management for MarkMonitor, an online brand protection company based in San Francisco.
About 6 percent of world trade is counterfeit, and roughly 14 percent of the fake goods is sold on the Web, according to a study by the Gieschen Consultancy. Online counterfeit sales had been believed to represent a smaller portion of illegal trade. In 2003, the International Chamber of Commerce estimated that 10 percent of all sales of counterfeit goods were made via the Internet, Horton said.
The most successful and well-known companies, from high-end designers Louis Vuitton and Hermès to hot brands Ugg boots and The North Face, are the most affected. But there is software that helps automate the process of finding and stopping fraudulent sales.
It's easier to fool customers online because they can't examine the goods in person. Often, sellers will use a photo of the real thing (without permission from the company), then send a fake. It's also easier for criminals to hide online, and easier for them to reach a big market.
However, software can help ferret out lawbreakers by automatically tracking Internet domain names and registered owners to help identify counterfeit sites that are related to one another. And eBay recently added more protections to guard against sales of fake goods, including prohibiting sales from China on its U.S. site.
But sellers can get around that by setting up an agent in the U.S.
"If the creativity people use to manufacture counterfeit goods were funneled into more lawful and respectful enterprises, it would be a whole different world out there," said Angelo Mazza, a partner at the New York law firm Gibney, Anthony and Flaherty, who oversees the company's Internet researchers.
Counterfeit apparel and accessories are sold on eBay, other auction sites, classified ad sites such as Craigslist, business-to-business and wholesale sites, in online retail stores and on fly-by-night sites that lure buyers with spam. The problem has worsened because of a wider acceptance of online shopping and a growing appetite for designer branded goods, said Susan Scafidi, an author and law professor at Southern Methodist University who specializes in copyright and intellectual property rights. She also writes the popular blog Counterfeit Chic.
Hermès is launching a Laundromat pop-up shop in NYC - dubbed Hermèsmatic - where customers can bring their old scarves to be dip-dyed by an expert. Get all the details on WWD.com. #wwdnews (📷: @donstahl)