Authenticating Luxury in the Age of Superfakes

Is it really possible you’ve bought a fake by mistake?

Sure, consciously buying fakes might be tempting to some;

Getting that “it” bag without making it an investment?

A “Rolex” that looks like the legitimate status symbol?

Fine jewelry copies for a fraction of the real Bling?

Let’s leave the many moral and ethical aspects of this for another time. What’s important to examine here is whether it’s really possible for investors wanting a genuine luxury item to get duped? The bad news is yes, all too possible. Welcome to the world of the “Superfakes”…….

Why you should question authenticity

Superfakes look like the real thing to the untrained eye (often to the trained too), and have made their way into official distribution channels. You might even have one yourself and just not know it, bought perhaps at a prominent luxury retail chain or boutique, and “reliable” online sources (particularly in the second-hand market). No more the trip across to the Southern Chinese border town of Shenzen in search of “Shanzhai”, the Chinese word for counterfeit goods. Translated as “mountain stronghold”, the term refers to the stockades of regional warlords and bandits out of sight from official controls. They’re called pirated goods for a reason. Counterfeit luxury goods have come a long way from the back alley and dodgy market.

The proliferation of “Superfakes”

Experts claim it’s evident that these higher-quality fakes are made in the same factories as the authentic luxury brand products. This is plausible as more brands base production in places like China and India. Outsourcing has contributed to relaxed controls over supply chain, design and manufacturing, and factories are known to produce a surplus on the run order for their own clandestine circulation.

The International Trademark Association says that $460 billion worth of counterfeit goods were traded last year, with most sales happening online.

That number is expected to hit – wait for it$2.3 trillion by 2022!

(source :OECD and EU’s IP office).

63% originate from China. Massive online marketplaces like Ebay, Amazon and China-based Alibaba have become infamous resources for these luxury imposters. There are also standalone websites specifically designed to impersonate authentic retailers, deceiving shoppers with photos of the real deal, but shipping fakes. That’s not to say these counterfeits aren’t made with much greater care and effort than those of old, and that’s because there are far greater margins to be made when buyers believe them to be genuine. Now that you can find knockoffs made with the same materials as the real thing, with far less perceivable inconsistencies, authentication is an even greater challenge.

For years, the luxury industry has been battling this plague, investing heavily in tech solutions in an effort to authenticate, and lobbying governments to extend the powers of enforcement bodies’ to seize and destroy fake goods, prosecute buyers and dealers, and block access to websites that sell such goods. Not to mention the lawyers. LVMH alone employs at least 60 lawyers and spends $17 million annually on anti-counterfeiting legal action. But these efforts haven’t been getting results.

Verification and Provenance : or how to buy with confidence, pull support from the world of fakes, and preserve value

Enter a new tool for battle against this massive predator on the Luxury retail landscape. LVMH has announced that its joined forces with global tech companies ConsenSys and Microsoft to launch “Aura”, a blockchain powered platform for consumer verification of authenticity. “Aura makes it possible for consumers to access the product history and proof of authenticity of luxury goods – from raw materials to p-o-s, all the way to the second hand markets”, claims the press release from last week (May 16th). Focused on “powerful tracking and tracing”, the technology stores unique information about every product on a shared ledger. Customers then use an official app to obtain a certificate offering provenance details. The intention is that the industry consolidate their efforts to work as a united front and that “Aura” becomes the standard for the Luxury brand industry as a whole.

And finally….

May this be the end of trapping the unsuspecting buyer, and ultimately for this cannibalistic parallel industry to the world of Luxury Goods. Luxury retail creations are in fact works of art. Can this form of art theft now finally bite the dust?

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