Online Fraud Has Become the Latest Enemy of Luxury Brands

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Online Fraud Brands

Luxury brands such as Gucci, Chanel and Louis Vuitton have always had to fight valiantly against the fraudsters who set up stalls in markets and fly-by-night shops in urban centers selling knock-offs and faux versions of their goods. But these brands and plenty of others are finding it’s a game of Whack-A-Mole trying to clamp down on the online version of those folding tables loaded with fraudulent products.

Large luxury brand companies are “stepping up efforts to combat Web sales of counterfeit and grey-market goods,” Bloomberg reports. Frontier Economics predicts $82 billion of sales will be lost this year to intellectual property breaches. Part of the issue is that consumers now buy via social media, where nine out of 10 suspect links involving brands appear, according to French software startup Data & Data.

“The Internet has become a place where people will buy £5,000 ($7,800) watches and £2,000 handbags,” said Charlie Abrahams, SVP of worldwide sales at anti-counterfeit technology provider MarkMonitor, to Bloomberg. “The challenge is that on the Internet, it’s very difficult for the consumer to tell if they’re buying the real thing.”

These products often come with real packaging and guarantee cards, as Tara Loader Wilkinson, editor-in-chief of Wealth-X, wrote in an op-ed column for The Hindu Business Line. “The business has become a scale enterprise where a single retailer can gross millions of dollars, whereas before, it was difficult for counterfeiters to accumulate scale without being caught.”

Part of the way consumers figure out if they are buying the real thing or not is the size of the price tag, Bloomberg notes. But those committing fraud have had this realization, too, in recent years. “A $50 Louis Vuitton handbag used to be the poster child for counterfeit goods,” said Louise Nash, managing partner at law firm Covington & Burling LLP in London. “In the past few years, pirates have realized they can make thousands of bucks a pop producing something close to a Mulberry bag.”

Brands are fighting back with software that scans the online world to find faux goods and then forcing sites to shut down. Other manufacturers are maintaining good relations with Chinese e-tailer Alibaba to help facilitate the removal of unofficial goods. But it’s still an uphill battle, of course.

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