Could counterfeit goods actually lead consumers to purchase the real deal?

This story first appeared in the January 6, 2010 issue of WWD. Subscribe Today.

While M.I.T. Sloan School of Management professor Renee Richardson Gosline does not condone the illegal activity in any way, she said more than 40 percent of participants in a recent study eventually purchased authentic merchandise, due partially to the inferiority of fakes. Aside from determining counterfeit goods are not substitutes for the real thing, she said the fakes are sometimes viewed as “low-risk trial” purchases but, once compared with the actual branded product, consumers realize they do not measure up.

People originally think the counterfeit will be a substitute for the real thing but they find out the real thing is better,” Gosline said of her two-and-a-half-year survey, “Rethinking Brand Contamination: How Consumers Maintain Distinction When Symbolic Boundaries Are Breached.”

But Gosline said one of the greatest risks of counterfeit goods is their potential to alienate legitimate consumers.

Executives at Chanel and Versace declined to comment on Gosline’s survey. More at Burberry and Tiffany & Co. were unavailable for comment. Prada and Louis Vuitton did not respond with comment.

While Gosline has not been contacted by any luxury brands about her research, she has spoken with a few organizations and groups that specialize in curbing counterfeiting. Luxury brands, she believes, would be wise to join forces and share information so they don’t feel they are fighting counterfeiting on their own. They could also offer specialized expertise about their brand’s authentic traits to consumers at the point of purchase, she said.

It would also be in their best interest to leverage social media to their advantage. Shoppers are often swayed by their friends’ opinions, whether they are buying authentic goods or fakes, she said. “Online vigilante consumer groups” also carry a lot of weight with shoppers, she said. They are quick to make fun of people who wear fake designer merchandise, citing the Facebook group “Darling I Can Tell by the Rest of Your Outfit Your Louis Vuitton is Fake.”

Study participants who were shown images of real and counterfeit good against a blank backdrop were less confident in guessing the item’s authenticity than those who were shown real and fake goods on an actual person, the difference being that the wearer’s entire outfit helped study participants determine whose designer products were actually real, Gosline said. “They judge not by the logo but by how the brand fits into the whole look,” she said. “If you have a look that fits, you might be able to get away with having something counterfeit.”

Gosline said she came up with the idea for her study after being invited to a “purse party,” a Tupperware-type gathering where counterfeit handbags are sold. She was struck by how brazen people were in bragging about their fake goods, which seemed to defeat the purpose for buying it in the first place.

“Why would you tell everybody in your social network — your friends, neighbors, colleagues? I was astounded these fakes weren’t [seen as] substitutes for the real thing,” she said.

In the last fiscal year, there were 14,841 intellectual property rights seizures with a domestic value of $260.7 million, according to the U.S. Department of Homeland Security, U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement. China was the leading trading partner for IPR seizures, accounting for 79 percent of the total value seized.

In November, New York City Mayor Michael Bloomberg’s Office of Special Enforcement closed 31 stores on Canal Street in Chinatown for selling counterfeit designer goods posing as Gucci, Tiffany, Chanel, Coach, Juicy Couture and others.

Tavis Johnson, vice president and director of legal affairs and policy for the International Anticounterfeiting Coalition, said counterfeiting has become so encompassing that even razor blades, toothpaste and shampoo are knocked off. “The product sector has exploded in the past five to 10 years,” he said. “It used to be a problem limited to high-end, luxury goods.”

Having not yet read Gosline’s study, he nonetheless said of the idea that consumers who bought counterfeits eventually acquired the real product, “I would definitely find it a bit suspect.”

Counterfeiters are becoming increasingly quick to copy items worn by celebrities on the red carpet or around Hollywood, he said. Clothing has become more of a problem with counterfeiting. “It used to be it was only the very exclusive labels with high dollar values. Now it’s everything.” Johnson said.

Louis Vuitton, Chanel and Gucci are among the luxury labels that continue to be victimized by street-front vendors who set up collapsible tables with fake merchandise, he said.

While some people contend “the only thing worse than counterfeiting is not being counterfeited,” Johnson remains stalwart in his anticounterfeiting strategies. He pointed to an public service campaign that first bowed in New York last fall and warns consumers of the perils of counterfeiting. Government officials have said there are links between counterfeiting and other major crimes, as well as proof that money generated by the sale of counterfeit goods have been used to fund terrorism.

After being briefed about the recent study, Joseph Gioconda, whose New York law firm has fought counterfeiting cases on behalf of Hermès, Hugo Boss and other well-known companies, said, “My experience has been that consumers who have purchased counterfeit goods, whether knowingly or unknowingly, always ultimately realized the inferiority of the counterfeit product. However, in doing so, they may have put themselves at an unnecessary risk. For example, counterfeit pharmaceuticals, electronics, sunglasses, shoes and sporting goods can put the consumer in real physical danger.


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