Move over counterfeits. The latest war being waged by luxury brands involves the distribution of…authentic goods. This is not to say that the fight against counterfeits is not always in play — brand owners are also facing counterfeiters’ attempts to dodge e-commerce sites’ fake-flagging technologies by utilizing creative spellings to hawk fakes.
Meanwhile, a new lawsuit against Forever 21 adds to the looming trend of false advertising and deceptive pricing practices allegedly being utilized by the market’s biggest retailers.
The Fight Over…Authentic Goods
The fight between high fashion and luxury brands and the web — particularly e-commerce and marketplace sites — is alive and well in the European Union. This time it is over the sale of authentic goods, as opposed to counterfeit ones.
In the latest development in a decade or so-long battle, Coty has secured a non-binding but favorable decision from an adviser to Europe’s top court, the European Union’s Court of Justice. According to the decision, case law in the European Union does not prevent Coty from legally blocking a German retailer from selling its beauty products via online marketplaces.
Coty, which owns the fragrance licenses for Calvin Klein, Balenciaga, Marc Jacobs and Miu Miu, among others, initially filed suit against German company Parfümerie Akzente, one of its authorized retailers, asking the court to order Akzente to cease sales of Coty products on Amazon. Coty argued that brands should be able to choose what retailers sell their products and where they sell them in order to preserve their high fashion brand image. And Advocate General Nils Wahl said luxury brands may require the implementation of a selective distribution system for that exact reason.
While Wahl’s decision on the matter is not binding on Coty or Akzente, it suggests that the court — which is slated to rule on the matter in the coming months — may, in fact, hand Coty a victory, as the judges of the Court of Justice tend to follow their advisers’ written opinions in such cases on most occasions.
Burbry bags and Disel Jeans
And when brands are not fighting for control over the distribution of authentic goods, they are fighting fakes. One relatively new trend that has arisen — and is gaining significant steam — amongst counterfeiters is the use of creative spellings to outsmart the technology being used on marketplace sites, such as eBay, Amazon and Alibaba’s TaoBao and AliExpress, to flag and remove fake goods.
Counterfeit sellers are using these alternative spellings or codes — such as Burbry for Burberry, Disel for Diesel, GG for Gucci and Role for Rolex — and also swapping in descriptive terms, such as “luxury handbag” instead of the brand name.
The result is twofold. On one hand, this coding system stands to make it more difficult for out-of-the-loop consumers seeking out fakes — a good thing. On the other, it makes it even harder for trademark owners, such as Burberry, Diesel, Gucci and Rolex, as well as the marketplace site operators themselves, to actively cut down on fakes. Still yet, given that the counterfeiters consistently update their spellings of choice to further avoid their products listings being flagged and removed from such sites, brands must consistently be on the lookout for alternative spellings to the alternative ones.
Adding to a looming trend in fashion involving retailers allegedly misleading consumers regarding pricing and taxes, Forever 21 has been slapped with a potential class-action lawsuit in New York federal court, which alleges the Los Angeles-based fast-fashion giant is illegally charging sales tax for e-commerce shoppers on purchases that should otherwise be tax exempt — namely, those in which individual items cost less than $110.
New York-based Laura Togut claims her lawsuit arises from Forever 21’s practice of “charging and retaining spurious and unlawful retail sales taxes on purchases by New York-based customers taking delivery of such purchases in New York City, an exempt jurisdiction, where no such taxes exist.”
The suit comes on the heels of Zara being slapped with a suit for allegedly utilizing deceptive pricing practices, thereby causing consumers to overpay for its garments and accessories. According to the since-settled lawsuit, which was filed in August 2016, Zara “has been engaged in fraudulent pricing practices across the U.S. On average, consumers are being charged $5 to $50 more than the lowest tag price in euros” due to Zara’s practice of “surreptitiously imposing an arbitrary markup [on the price when converting from euros to dollars] without making an appropriate, or any, disclosure to the consumer.”
Still yet, these suits join a larger collective of lawsuits being filed by consumers against retailers, such as J.C. Penney, Sears, Kohl’s, Kate Spade, Burberry and Macy’s, among others, for allegedly misleading outlet shoppers into believing they were buying items at more significant markdowns than they actually did. In these instances, the retailers allegedly used misleading price tags at its outlet stores in an attempt to confuse consumers by making it appear as though the outlet prices were lower that what the item initially sold for.
Turns out, misleading pricing and advertising is just as much a trend as redone denim.
Julie Zerbo is the founder of The Fashion Law