Globalization has strengthened counterfeit markets according the latest Entrupty report. Connecting a supply chain on one continent with another supply chain across the globe is now easier than ever before. Networks trafficking fakes between Paris, Hong Kong, Ankara, and Moscow are becoming more organized. Not only are operations advancing, the quality of counterfeit luxury goods is improving. Even trained experts have a hard time distinguishing real from fake.
In China, Hermès faces challenges from “credible fakes” that are nearly indistinguishable from real products. Counterfeiters are using high-quality materials and craftsmanship, complicating the brand’s efforts to protect its intellectual property. In South Korea, luxury resale platform Farfetch is facing increasing scrutiny over the authenticity of goods sold on its site, as counterfeit concerns continue to escalate in the global luxury market.
In the United States, the luxury resale platform The RealReal continues to face legal scrutiny from Chanel over allegations of selling counterfeit items. This ongoing litigation underscores the complexities of the second-hand luxury market. In France, Hermès is embroiled in an intellectual property trial concerning its iconic Birkin bag. The case highlights ongoing challenges in defending the brand against sophisticated counterfeit operations
In Italy, luxury label Loro Piana is experiencing a surge in counterfeits, particularly on major resale platforms. The brand’s understated design philosophy makes it a target for counterfeiters seeking to exploit its reputation. In Russia, amid the Ukraine war, reports indicate that Russian authorities are using counterfeit luxury goods as a tool to undermine Western brands and economies, leveraging the trade of fake products to fund operations and evade sanctions.
With image recognition being more widely available, many counterfeiters opt to avoid using brands’ own product images in their listings, as they are so easily found and used to verify the product as fake. Even brands’ logos and trademarks can be detected using AI, which further restricts the images available to savvy sellers – to counter this, counterfeiters will often take their own photos of the products for sale, while obscuring the logo to make it harder for AI to find it.
Counterfeiters are constantly adapting their strategies to evade detection, using increasingly sophisticated methods to reach consumers:
Mobile-Only Counterfeit Shops
Counterfeiters create e-shops that are only accessible through mobile networks, making them harder to detect. These sites may display harmless content on desktops but show counterfeit goods when accessed via mobile devices.
Hidden Listings
Counterfeit goods are often hidden within generic listings, with the actual products revealed through social media or private messages. This tactic allows counterfeiters to bypass detection systems and makes it difficult for consumers to verify the authenticity of the products they are purchasing.
Cross-Channel Distribution
Sellers often use social media platforms to promote counterfeit goods, directing consumers to marketplaces or standalone websites for transactions. This approach creates a complex web of activity that is difficult to trace and disrupt.
Sellers of counterfeits work with popular creators and create eye-catching content to promote and sell fake items.
The influence of these sellers has become so significant that it has led to the creation of the hashtag #RepTok, which stands for Replica-Tok. Despite violating TikTok’s policy on counterfeit goods, the hashtag has amassed over 120 million views. The videos aim to generate substantial interest, directing viewers to intermediary platforms such as public spreadsheets and private messaging apps like Discord, Snapchat, and WhatsApp. These intermediaries then help users navigate listings on online marketplaces like DHgate and Pandabuy, where the listings are intentionally vague to evade detection.
AI-Generated
Tools like Midjourney and DALL-E enable counterfeiters to produce convincing fake product images, posing a growing threat to brands. While current free versions have limitations, advancements are expected to lead to widespread use of these images.
Virtual influencers
Digitally created personas, such as Lu do Magalu, are gaining popularity and can mislead consumers, especially Gen Z. This trend emphasizes the need for brands to adapt their protection strategies and educate consumers about potential deceptions.
Shopee’s Notorious Market
US Notorious Market Listing: Shopee has been flagged as a ‘notorious market’ for counterfeiting and piracy by the U.S. government. This designation indicates ongoing concerns about the sale of fake goods on the platform.
Response to Counterfeiting: In response to being listed, Shopee has stated that it prohibits the sale of infringing goods and is taking steps to enhance its monitoring and enforcement efforts against counterfeit products.
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