state of the fake annual report
2023
state of the fake annual report
2022
Annual report 2024 edition  

A Letter
from our CEO

vidyuth srinivasan

With this new edition of the State of the Fake report, we are again sharing our proprietary data along with the rare insights we garner from hundreds of thousands of AI-driven evaluations performed on products from around the world with the goals of building awareness about the murky world of counterfeits and what Entrupy, along with the industry, is doing to combat it.

In 2023, Entrupy authenticated over $1.4B worth of products and the counterfeit problem only seems to be getting worse in specific business segments. Just under 9% of all items that Entrupy authenticated were not certified as Authentic (referred throughout this report as “Unidentified”). This represents an increase in the Unidentified rate of 0.8% since 2022, and is a sign that the quality and quantity of counterfeits are increasing and filtering into legitimate businesses.

With our expansion into authenticating high-end sneakers, we are discovering a different and curious culture where there is lower trust in the need for authentications, but higher value assigned to authenticated sneakers. We have spent a considerable amount of time collecting data on fake sneakers and it is shocking how good the counterfeits are. Sneaker counterfeiters even tend to have post-sale support where they ask for feedback on the quality of the counterfeits, which, curiously, the trademark owners seldom do.

Globally, with the explosion of live-shopping, large-scale digital marketplaces and more efficient trans-national wholesaling, we are seeing an increase in counterfeits specifically among pawn networks, with their unidentified rates going up an alarming 2%. However, the numbers across have been stable and even reducing reasonably among all other business types, validating the work we're doing as an industry to deter counterfeit sales.

While the acceptability of dupes might be on the rise, having an on-demand, on-premise authentication solution is a huge deterrent for most consumers looking to hoodwink someone. And I'd like to believe that we play a part in that. Our work now includes expanding our distribution globally and enabling support for more products and categories at large. As we scale, our core mission of providing the most accurate result in the quickest way possible doesn't change. We thank our customers and partners for keeping us focused, honest and competent. Thank you!

Vidyuth Srinivasan
Chief Executive Officer, Entrupy Inc.

Entrupy is a New York-headquartered tech company with AI authentication solutions that scale to protect inventory and supply chains—for businesses of all sizes

$ 5B

worth of inventory authenticated

99.1%

almost perfect accuracy

90

countries authenticating with Entrupy

50M

reference images training the smartest AI

current trends

in counterfeiting

Counterfeiting is a global problem with high costs to the environment, businesses, economies, and quality of life.

Counterfeit goods, now 3.3% of global trade, are just one part of the IP theft problem that costs the global economy…

latest global luxury scandals

Globalization has strengthened counterfeit markets. 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.

united states

The RealReal still under fire from Chanel

Ongoing Legal Battles: 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.

france

Intellectual property trial not in the bag for Hermès's Birkin

Legal Disputes: 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. 

italy

Quiet luxury label Loro Piana plagued by counterfeits

Quiet Luxury at Risk: The Italian 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.

Russia

Putin weaponizes counterfeit luxury goods amid Ukraine war

Geopolitical Use: 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.

china

Credible fakes pose real problems for Hermès

Hermès Issues: 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.

South Korea

Farfetch faces growing scrutiny over counterfeit goods

Growing Concerns: The 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. 

EUROPEAN CITIZENS AND INTELLECTUAL PROPERTY: STUDY ON PERCEPTION, AWARENESS, AND BEHAVIOR 2023

In total, 25824 interviews were conducted between 30 January 2023 and 15 February 2023 with residents aged 15 and above, in all EU Member States.

EUIPO
83%

say that they have a rather good or very good understanding of the concept of intellectual property.

39%

have wondered whether something they have bought is a genuine product or a counterfeit.

80%

of Europeans believe counterfeit goods are a threat to health and safety & to the environment.

79%

of Europeans believe buying counterfeit goods ruins businesses and jobs.

83%

of Europeans believe counterfeit goods support criminal organisations.

71%

find it acceptable to buy counterfeit goods when the price of the original product is too high.

54%

agree that it is acceptable to buy counterfeit goods because everybody does it.

26%

of consumers aged between 15 & 24 have intentionally purchased counterfeit products in the past 12 months.

24%

Bulgaria has the highest rate of self-reported counterfeit purchases in the entire EU.

Entrupy Insights:

Counterfeiting in the Luxury Resale Market

OVERVIEW OF ENTRUPY AUTHENTICATIONS IN 2023

Dollar value* of Authentic and Unidentified items, 2017 - 2023

Authentic vs. Unidentified items, 2023

ENTRUPY INSIGHTS

luxury BRANDS WITH MOST AUTHENTICATIONS IN 2023

By total number of Entrupy authentications performed

Click the chart to explore more about brands.

Louis Vuitton

2023 value

$399 Million

2022 value

$346 Million

MOST AUTHENTICATED MATERIAL

Monogram Canvas

MOST AUTHENTICATED STYLE

Speedy

AVERAGE RESALE PRICE

$1,700

chanel

2023 value

$385 Million

2022 value

$304 Million

MOST AUTHENTICATED MATERIAL

calfskin/lambskin leather

MOST AUTHENTICATED STYLE

Classic Flap

AVERAGE RESALE PRICE

$7,460

GUCCI

2023 value

$102 Million

2022 value

$80 Million

MOST AUTHENTICATED MATERIAL

GG Supreme Canvas

MOST AUTHENTICATED STYLE

GG Marmont Shoulder Flap Bag

AVERAGE RESALE PRICE

$1,800

prada

2023 value

$64 Million

2022 value

$61 Million

MOST AUTHENTICATED MATERIAL

Nylon

MOST AUTHENTICATED STYLE

Re-edition 2000

AVERAGE RESALE PRICE

$950

coach

2023 value

$9 Million

2022 value

$9 Million

MOST AUTHENTICATED MATERIAL

Leather

MOST AUTHENTICATED STYLE

City Tote

AVERAGE RESALE PRICE

$300

luxury BRAND RANKINGS

MOST AUTHENTICATIONS FROM 2017-2023

By total number of Entrupy authentications performed in each year

Louis Vuitton
Coach
Gucci
Chanel
Prada
Burberry
Fendi
Saint Laurent
Dior
Hermes
Céline
Chloé
Balenciaga
Bottega Veneta
Goyard
MCM
Valentino
Givenchy
Salvatore Ferragamo
Loewe

luxury BRANDS WITH highest unidentified rates IN 2023

By proportion of Entrupy authentications with unidentified results

2023 UNIDENTIFIED %

22.8%

2022 UNIDENTIFIED %

21.4%

MOST unidentified MATERIAL

Goyardine Canvas

MOST UNIDENTIFIED STYLE

St. Louis Tote

AVERAGE RESALE PRICE

$2,400

2023 UNIDENTIFIED %

14.3%

2022 UNIDENTIFIED %

12.9%

MOST unidentified MATERIAL

nylon

MOST UNIDENTIFIED STYLE

Re-edition 2000

AVERAGE RESALE PRICE

$950

2023 UNIDENTIFIED %

12.2%

2022 UNIDENTIFIED %

10.2%

MOST unidentified MATERIAL

Other

MOST UNIDENTIFIED STYLE

Triomphe Classique

AVERAGE RESALE PRICE

$1,600

2023 UNIDENTIFIED %

11.9%

2022 UNIDENTIFIED %

8.8%

MOST unidentified MATERIAL

Clemence Leather

MOST UNIDENTIFIED STYLE

Birkin

AVERAGE RESALE PRICE

$15,000

2023 UNIDENTIFIED %

11.3%

2022 UNIDENTIFIED %

9.9%

MOST unidentified MATERIAL

leather

MOST UNIDENTIFIED STYLE

Puzzle Bag

AVERAGE RESALE PRICE

$1,500

EXPLORE LUXURY AUTHENTICITY RATES AROUND THE GLOBE

The Americas
Asia-Pacific
Europe / Middle East

8.4%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Gucci Dior
Chanel Prada
ENTRUPY INSIGHTS

9.2%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Prada Prada
Chanel MCM
ENTRUPY INSIGHTS

8.8%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Chanel Celine
Gucci Loewe
ENTRUPY INSIGHTS

Explore Luxury Authenticity rates by Country

asia-pacific

europe & middle east

8.8%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Gucci Dior
Chanel Loewe
ENTRUPY INSIGHTS

5.2%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Chanel Hermes
Gucci MCM
ENTRUPY INSIGHTS

6.3%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Hermes
Gucci Celine
Chanel Goyard
ENTRUPY INSIGHTS

4.2%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Loewe
Gucci Dior
Chanel Saint Laurent
ENTRUPY INSIGHTS

7.4%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Loewe
Chanel Goyard
Gucci Dior
ENTRUPY INSIGHTS

11%

2023 Unidentified

Most Authenticated Highest Unidentified
Prada Goyard
Louis Vuitton Prada
Balenciaga Dior
ENTRUPY INSIGHTS

11.1%

2023 Unidentified

Most Authenticated Highest Unidentified
Chanel Coach
Louis Vuitton Goyard
Dior Loewe
ENTRUPY INSIGHTS

6.2%

2023 Unidentified

Most Authenticated Highest Unidentified
Coach Goyard
Louis Vuitton Givenchy
Gucci MCM
ENTRUPY INSIGHTS

18.2%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Chloe
Chanel Loewe
Gucci Celine
ENTRUPY INSIGHTS

8.3%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Chanel Celine
Gucci Saint Laurent
ENTRUPY INSIGHTS

6.7%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Chanel Loewe
Gucci Celine
ENTRUPY INSIGHTS

6.2%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Chanel Saint Laurent
Gucci Balenciaga
ENTRUPY INSIGHTS

15.3%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Chanel Loewe
Gucci Hermes
ENTRUPY INSIGHTS

18.4%

2023 Unidentified

Most Authenticated Highest Unidentified
Chanel Valentino
Louis Vuitton Dior
Gucci Goyard
ENTRUPY INSIGHTS

7.2%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Loewe
Chanel Goyard
Hermes Chloe
ENTRUPY INSIGHTS

7.3%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Gucci Chloe
Chanel Balenciaga
ENTRUPY INSIGHTS

10.6%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Gucci Dior
Coach Loewe
ENTRUPY INSIGHTS

12.5%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Gucci Prada
Chanel Dior
ENTRUPY INSIGHTS

9.3%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Balenciaga
Gucci Goyard
Chanel Hermes
ENTRUPY INSIGHTS

2.4%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Givenchy
Gucci Loewe
Chanel Burberry
ENTRUPY INSIGHTS

5.3%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Gucci Dior
Chanel Loewe
ENTRUPY INSIGHTS

9.4%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Loewe
Gucci Goyard
Chanel Coach
ENTRUPY INSIGHTS

5.4%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Goyard
Chanel Prada
Gucci Saint Laurent
ENTRUPY INSIGHTS

8.5%

2023 Unidentified

Most Authenticated Highest Unidentified
Coach Dior
Louis Vuitton Goyard
Gucci Prada
ENTRUPY INSIGHTS

9.6%

2023 Unidentified

Most Authenticated Highest Unidentified
Louis Vuitton Loewe
Gucci Bottega Veneta
Chanel Dior
ENTRUPY INSIGHTS

Luxury industry insights

eco-friendly logistics 

Luxury brands have heard consumers loud and clear—almost every luxury brand incorporated more sustainable practices. They are committed to product circularity and ethical supply chains.

Luxe brands fight back

The big names aren't losing profits to the counterfeit market without a fight. More than ever before, luxury brands are supporting counterfeit raids, using protective tech, and educating consumers on savoir faire.

All the nostalgia 

Buyers are searching for iconic styles from another time—especially the 90s and early 00s. The best place to find those vintage pieces is the resale market.

Future of luxury 

Brands seem happy to give consumers what they want: more inclusive products that live beyond the trends of the season. Luxury is a better world with you in it. 

Entrupy Sneaker Authentication Evolves

We kicked off summer 2023 with the launch of the Entrupy Sneakers App — offering authentication support for Nike & Adidas brands. Since then, we’ve collected millions of data points & can pinpoint industry authentication trends on a global scale! This summer we’ve expanded sneaker support for some of the hottest luxury sneaker brands: Dior, Christian Louboutin, Louis Vuitton, and more. This luxury sneaker dataset will tell its own unique story about counterfeits & trends in the market.

7.8%

2023 UNIDENTIFIED % (BRAND)

MOST POPULAR SERIES

Nike Dunk Low
Retro White
Black Panda
Jordan 11
Retro Cherry/
Cool Grey
Nike Air Force
1 Low '07 White

2023 UNIDENTIFIED % (SERIES)

20.6%18.6%2.7%

AVERAGE RESALE PRICE (VIA ARBIT)

$147$274$85

9.3%

2023 UNIDENTIFIED % (BRAND)

MOST POPULAR SERIES

Adidas Yeezy
Boost 350 V2
Onyx/Cream
Adidas Yeezy
Slide Onyx
(2022/2023)
Adidas Yeezy
Boost 700
Wave Runner

2023 UNIDENTIFIED % (SERIES)

5.3%9.7%28.8%

AVERAGE RESALE PRICE (VIA ARBIT)

$290$176$399

sneaker % authentic vs. unidentified 2021-2023

2021

2022

2023

explore sneaker authenticity rates around the globe

the americas
asia-pacific
EUROPE & MIDDLE EAST

8.1%

2023 UNIDENTIFIED % (BRAND)

Most popular brand

NIKE

MOST POPULAR SERIES

Nike Dunk Low Retro
White Black Panda
Jordan 11 Retro
Cherry (2022)

average resale price (via arbit)

$147$274

17.7%

2023 UNIDENTIFIED % (BRAND)

Most popular brand

NIKE

MOST POPULAR SERIES

Jordan 1 Retro Low
OG SP Travis Scott
Black Phantom
Jordan 11 Retro
Win Like 96

average resale price (via arbit)

$669$309

5.9%

2023 UNIDENTIFIED % (BRAND)

Most popular brand

Adidas

MOST POPULAR SERIES

adidas Yeezy Boost
350 V2 Cream
adidas Yeezy Boost
350 V2 Onyx
(2022/2023)

average resale price (via arbit)

$394$290

explore sneaker authenticity rates by country

united states
canada
united arab emirates

7.6%

2023 UNIDENTIFIED % (BRAND)

Most popular brand

NIKE

MOST POPULAR SERIES

Nike Dunk Low Retro
White Black Panda
Jordan 11 Retro
Cherry (2022)

average resale price (via arbit)

$147$274

28%

2023 UNIDENTIFIED % (BRAND)

Most popular brand

NIKE

MOST POPULAR SERIES

Jordan 1 Retro High
Dark Mocha
Jordan 1 Retro High
OG SP Travis Scott

average resale price (via arbit)

$490$1,471

6%

2023 UNIDENTIFIED % (BRAND)

Most popular brand

Adidas

MOST POPULAR SERIES

adidas Yeezy Boost
350 V2 Cream
adidas Yeezy Boost
350 V2 Bone

average resale price (via arbit)

$394$241

2.9%

2023 Unidentified

Most popular brand

Nike

4.6%

2023 Unidentified

Most popular brand

Nike

11.9%

2023 Unidentified

Most popular brand

Nike

9.5%

2023 Unidentified

Most popular brand

Nike

8.2%

2023 Unidentified

Most popular brand

Nike

10.2%

2023 Unidentified

Most popular brand

Nike

3.5%

2023 Unidentified

Most popular brand

Nike

10.2%

2023 Unidentified

Most popular brand

Nike

12.2%

2023 Unidentified

Most popular brand

Nike

0.4%

2023 Unidentified

Most popular brand

Nike

sneaker styles WITH highest unidentified rates IN 2023

55.3%

2023 UNIDENTIFIED %

BRAND

Nike

Average resale price (via arbit)

$1,450

53.5%

2023 UNIDENTIFIED %

BRAND

Nike

Average resale price (via arbit)

$1,471

40.5%

2023 UNIDENTIFIED %

BRAND

Nike

Average resale price (via arbit)

$958

28.8%

2023 UNIDENTIFIED %

BRAND

adidas

Average resale price (via arbit)

$399

23.9%

2023 UNIDENTIFIED %

BRAND

adidas

Average resale price (via arbit)

$366

20.4%

2023 UNIDENTIFIED %

BRAND

adidas

Average resale price (via arbit)

$277

sneaker industry insights

Luxe brands enter the sneaker market 

Brands that have strong ties to streetwear such as Balenciaga & Gucci continue to have a strong impact and increased presence in the market. These collaborations boosted resale value in 2023 and further blurred the line between streetwear and luxury fashion.

Sneakers FOR EVERY body

Nike expanded its partnerships to include dance and announced the creation of shoes specifically designed for breakdancers competing in the Paris 2024 Olympics. In the growing sneaker industry, we will see more brands initiate strategic partnerships for expanded reach & impact.

Quiet luxury REIGNs 

Shows like Succession brought on an obsession for “quiet luxury” & “old money” aesthetics. Sneaker and streetwear trends were influenced drastically.

Community is everything 

The Adidas Confirmed App expanded its features in 2023 to include more engagement with the resale community. These features make it easier to connect with sneakerheads who are active in both primary and secondary markets—providing a platform for exclusive releases that would later see high resale value.

BUSINESS TYPES WITH HIGHEST UNIDENTIFIED RATES IN 2023

BUSINESS TYPE inventory source TYPICAL RISK PROFILE 2023 UNIDENTIFIED % 2022 UNIDENTIFIED %
C2C MARKETPLACE

Items often come from an individual's personal collection, which may have been purchased from other resellers and/or thrift stores to be "flipped" for profit.

Marketplaces are implementing more aggressive Anti-Counterfeit enforcement measures that are dramatically reducing fakes across their channels.

5%
4.5%
PAWN

Items are purchased from individuals at the point of sale.

High: Merchandise coming from individual consumers with untrained salespeople at intake significantly increases the risk of counterfeits.

15%
13%
OFFLINE RESELLER

Items are often purchased outright from individual consumers who may or may not have an established reputation.

Medium: Merchandise coming directly from consumers and nonexpert sales people increase the risk of counterfeits entering the supply chain.

10.1%
10.1%
ONLINE RESELLER

Items often come from a stable and reliable sources such as consignors and other resale companies, with whom the reseller has a history of transacting.

Low: Unreliable sources are generally eliminated from the supply chain before they can exert negative impact.

7.7%
7.7%
WHOLESALER

These specialized players have strict rules for intake and sourcing, items usually come from reputable sources that may include other businesses, auctions and marketplaces.

Very Low: High levels of expertise & experience keep "bad actors" from penetrating the supply chain.

1.4%
1.6%

Combating the

counterfeiting
problem

COLLABORATIVE APPROACHES ACROSS INDUSTRIES ARE REQUIRED TO COMBAT THE COUNTERFEITING PROBLEM

Key problems

1.

Economic Loss: Brands lose revenues from the diversion of genuine sales to counterfeit channels.

2.

Reputational Damage: The widespread distribution of counterfeits can dilute a brand's value in the eyes of consumers.

3.

Difficulty Enforcing IP Rights: Tracking and prosecuting counterfeiters across multiple jurisdictions is challenging and costly for brands

4.

Reducing Customer Base: Counterfeits often lead to negative consumer experiences and eroding consumer trust.

5.

Innovation Threat: Counterfeiting discourages innovation by stealing intellectual property and reducing the incentive for brands to invest in R&D.

Common solutions

Comprehensive Product Traceability Solutions
  • These solutions offer full traceability of products throughout their entire lifecycle, both physically and digitally, enhancing visibility, information flow, and the detection of unauthorized or counterfeit goods across the supply chain.
  • Extending these traceability tools to consumers allows brands to empower customers to verify a product's authenticity and identity at the point of sale, during consumption, or even in the aftermarket.
Close Collaboration with Law Enforcement and Legal Action
  • Brands often partner with governments and law enforcement agencies to aid in investigations of counterfeit activities, supplying critical evidence that leads to the prosecution of counterfeiters, their distributors, and buyers.

Examples in action

Luxury watchmaker Panerai chose Fashion Month to announce the new blockchain technology initiative it is taking against counterfeiting by implementing a digital passport system for all its watches.

LVMH-owned Patou is launching an AI-based verification system called Authentique Verify.

In 2023, Bulgari sued several online stores for selling ‘Bvlgari’ products. The suit says the defendants sell counterfeit merchandise at e-commerce stores that are difficult to distinguish from the company’s official online presence.

Key problems

1.

Return Fraud: Retailers struggle with consumers returning fake products after purchasing real ones.

2.

Supply Chain Infiltration: Counterfeit goods can enter legitimate supply chains, leading to unintentional sales of fake products.

3.

Customer Complaints: Retailers face an increase in returns and customer complaints due to counterfeit products, harming their reputation and customer loyalty.

4.

Legal Risks: Retailers can be held liable for selling counterfeit goods, leading to potential legal and financial penalties.

5.

Consumer safety risks: Counterfeit products, especially in categories like electronics and cosmetics, can pose health and safety risks to consumers.

Common solutions

Advanced Authentication Technology for Product Verification
  • Traditionally, first- and second-hand retailers have relied on internal expertise and subjective methods to authenticate goods, often facing challenges in sourcing, maintaining, and scaling the necessary expertise.
  • Retailers are increasingly adopting sophisticated product authentication technologies, like those offered by Entrupy, to ensure a more reliable and efficient verification process.
Enhanced Information Sharing Between Brands and Retail Partners
  • Stronger collaboration between brands and retailers is now crucial for maintaining tight controls over the sourcing and distribution of authorized goods.
  • For retailers, expanding the scope of product security information shared by brand suppliers enhances their ability to detect and combat counterfeit products at the retail level.
Enhanced Return Processes and Policies
  • Strengthen return policies to address counterfeit-related complaints swiftly, offering quick refunds or replacements to uphold customer trust and loyalty.
  • Implement advanced tech solutions like Entrupy’s Fingerprinting to prevent fraud during returns and safeguard against counterfeit activities.

Examples in action

Loro Piana, Louis Vuitton and Maison Margiela have launched services built on the Aura consortium’s blockchain that allow customers to verify that their item isn’t a knockoff.

Luxury conglomerate Richemont, which owns brands like Cartier, Piaget, Van Cleef & Arpels etc. launches Enquirus, a neutral, digital platform designed to help the global luxury industry address watch and jewellery theft worldwide.

Key problems

1.

Platform Integrity: Online marketplaces are often used by counterfeiters to distribute fake goods, which can undermine trust in the platform.

2.

Regulatory Pressure: Marketplaces face increasing pressure from governments and regulators to crack down on counterfeit goods, requiring them to invest in better detection and prevention technologies.

3.

Seller Verification Challenges: Ensuring that sellers on their platforms are legitimate remains a significant challenge, requiring ongoing monitoring and enforcement.

4.

Listings Takedown: Forms of listing policing can be challenging for online marketplaces, due to the scale and diversity of listings, and anonymity of buyers and sellers.

5.

Impersonation Risks: Sellers who unknowingly purchase counterfeit goods from wholesalers risk immediate account suspension on marketplaces, even if the mistake was unintentional.

Common solutions

Proactive Online Monitoring and Takedown Solutions
  • Online monitoring tools systematically scan search engines and websites to identify potential counterfeit listings and brand infringements.
  • Major online marketplaces often run self-monitoring programs, collaborating with brands and industry groups to swiftly detect and remove counterfeit listings from their platforms.
Mandatory Authentication Processes
  • Complementing online monitoring efforts, many marketplaces now incorporate product authentication as a crucial step in the transaction process.
  • Products must be authenticated—either by human experts or through advanced solutions like Entrupy—before they are delivered to the end buyer.
Comprehensive Seller Onboarding Process
  • Implement a rigorous seller onboarding process that includes identity verification, background checks, and validation of business credentials. This helps ensure that only legitimate sellers are allowed to list products on the platform.
  • Develop a reputation scoring system for sellers based on their history, customer feedback, and product authenticity. Additionally, regularly audit sellers to verify their compliance with marketplace standards.

Examples in action

Unreal Campaign Challenge

Amazon partnered with the International Trademark Association (INTA) and DECA to launch the Unreal Campaign Challenge. The challenge asked students to produce a 60-second video as a public service announcement about the dangers of purchasing counterfeits. The campaign reached more than 177,000 global DECA members and recognized the winners at DECA's annual International Career Development Conference in front of 22,000 students.

In 2023, Amazon identified and removed seven million counterfeit items from the supply chain.

In 2023, Amazon collaborated with brands and Chinese law enforcement, which led to more than 50 successful raid actions against manufacturers, suppliers, or upstream distributors of counterfeit products. This collaboration resulted in numerous criminal convictions.

eBay purchased 3PM Shield, a provider of AI marketplace tools, to enhance its ability to address suspicious or harmful seller behavior, and potentially problematic items

The sneaker resale platform StockX stopped nearly $30 million of fake sneakers from trading on the platform via the use of Machine learning.

Etsy shared their 2022 Transparency report, wherein they launched the Etsy Reporting Portal dedicated to protecting the rights of creators and brands, both big and small.

Key problems

1.

Inefficiencies in Inspection and Scalability: Customs and border patrol agencies are often hampered by manual inspection processes that are based on human judgement, which are inefficient and difficult to scale.

2.

Enforcement Limitation: Global enforcement activities have become more challenging with the increasing sophistication of counterfeiting production and distribution practices.

3.

Tax Revenue losses: Counterfeiting leads to significant losses in tax revenue as counterfeit goods are often sold without proper taxation.

4.

Organized crime links: Counterfeiting is often tied to other illicit activities like human trafficking and money laundering.

5.

Economic Impact: The broader economy suffers as counterfeiting undermines legitimate businesses, leading to job losses and reduced economic growth.

Common solutions

Domestic Enforcement Strategies
  • Counterfeiting is tackled on multiple fronts through domestic efforts, including customs inspections, border control, raids, and investigations targeting suspected counterfeit distributors. These actions are often coordinated across various government and law enforcement agencies.
Multilateral Cooperation Among International Agencies
  • Bilateral and multilateral collaboration between government agencies is essential for the effective exchange of information on intellectual property enforcement, sharing best practices, and coordinating joint enforcement actions.
Public education campaigns
  • Industry bodies representing brands and other government professionals work to curtail counterfeiting and protect the interests of their customers globally.
  • They are mandated to inform the general public of the dangers of counterfeiting.

Examples in action

United States - Largest Seizure of Counterfeit Goods

Action: In November 2023, U.S. authorities arrested two individuals in New York in connection with the largest seizure of counterfeit goods in U.S. history, valued at over $1 billion.

Details: The operation involved the confiscation of approximately 219,000 counterfeit handbags, clothes, shoes, and other luxury merchandise from storage facilities in Manhattan. This seizure highlights the government's commitment to tackling counterfeit trafficking.

Austrian Customs Seizures

Action: Austrian customs reported a significant increase in the seizure of counterfeit goods, with 7,072 seizures made in 2023, representing a 77% increase compared to the previous year.

Results: The total value of confiscated goods reached €36 million, indicating a strong commitment to combating product piracy and protecting consumers and the economy.

In March 2023, the Federal Trade Commission (FTC) issued orders to eight major global social media and video streaming platforms, including Meta, YouTube, TikTok, and Twitter, regarding their efforts to combat the surge in advertising for fraudulent products and scams.

US Customs and Border Patrol (CBP) conducted a counterfeit awareness campaign at Atlanta's Hartsfield-Jackson International Airport as part of the CBP's "Guard Against Counterfeits" Campaign.

Key problems

1.

Coordinating anti-counterfeiting efforts: Industry groups struggle to align brands, retailers, and governments on anti-counterfeiting strategies.

2.

Educating consumers: Raising awareness about the dangers of counterfeit goods remains an ongoing challenge.

3.

Lobbying for stronger laws: Associations push for tougher penalties and enforcement against counterfeiting

4.

Environmental Concerns: Current disposal methods for counterfeit products, such as incineration and landfill, negatively impact air quality and ecosystem health.

5.

Standards and Regulations: Industries must continually update standards and regulations to combat counterfeiting, requiring ongoing investment and adaptation.

Common solutions

Lobbying for Stronger Laws
  • Work with lawmakers to draft and pass stricter anti-counterfeiting legislation with increased penalties.
  • Participate in policy dialogues and public consultations to push for stronger enforcement mechanisms.
  • Advocating for increased customs enforcement and border controls to seize fake goods
Agile Standards Development
  • Establishing industry-wide working groups to continually review and update product authentication and supply chain security standards - Leveraging emerging technologies like blockchain and AI to enhance traceability and automate compliance monitoring
  • Providing training and resources to help brands and retailers implement new standards rapidly and cost-effectively
International Coalitions
  • Industry groups frequently engage in advocacy with international governments to advance their members' interests in combating counterfeiting.
  • They actively promote thought leadership and influence public opinion to shape and implement policies that protect stakeholders from counterfeit threats.

Examples in action

Australia - New Intellectual Property Laws

Action: The Australian government introduced new legislation in 2023 aimed at strengthening intellectual property rights and enhancing enforcement measures against counterfeit goods.

Vietnam - Anti-Counterfeiting and Consumer Protection Plan

Action: On March 29, 2023, the Vietnamese government approved a comprehensive Anti-Counterfeiting and Consumer Protection Plan aimed at strengthening national standards and technical regulations regarding product quality.

Italian Anti-Counterfeiting Measures

Action: Italy introduced new anti-counterfeiting measures aimed at protecting ""Made in Italy"" products. These measures include broadening the scope of offenses related to the sale of misleadingly marked products and enhancing the tools available for investigating authorities.

Details: These measures aim to enhance enforcement against counterfeit goods and protect the integrity of Italian brands.

European Union - Europol Operations

Action: Europol supported multiple operations in 2023 aimed at disrupting organized crime groups involved in counterfeiting. Notable operations included the In Our Sites operation, which shut down nearly 1,000 websites selling counterfeit goods.

Collaboration: This operation involved law enforcement agencies from various countries, showcasing a collaborative effort to combat the online sale of counterfeit products.

Key problems

1.

Fake accounts and listings: Social media is a prime channel for counterfeiters to reach consumers.

2.

Lack of proactive monitoring: Platforms are criticized for not doing enough to detect and remove counterfeit content.

3.

Liability concerns: There are debates around platforms' responsibility for counterfeit goods sold via their channels.

4.

Complexity of Enforcement: The global nature of social media complicates enforcement actions, as counterfeiters can operate from jurisdictions with lax laws regarding intellectual property.

5.

Evolving Tactics: Counterfeiters continuously adapt their tactics to evade detection, making it a constant challenge for platforms to keep up with new methods of operation.

Common solutions

Platforms Establishing Guidelines and Dedicated Reseller Sections
  • Social networks are enhancing control over resale activities by implementing specific guidelines and creating dedicated sections for resellers/businesses on their platforms to voice their concerns.
Legislation on Social Reselling
  • While legislation on social reselling is still emerging, lawmakers are increasingly incorporating social resellers into anti-counterfeit measures and regulations.
Verification and Authentication
  • Implementing robust verification processes for new accounts, such as requiring government-issued ID, phone numbers, or credit card information
  • Using AI and machine learning to detect suspicious account creation patterns and behavior indicative of bots or fake accounts
  • Providing clear visual indicators (like verified checkmarks) for authentic brand accounts to help consumers distinguish them from imposters
Collaboration with Brands and Law Enforcement
  • Establishing clear reporting and escalation processes for brands to notify platforms of fake accounts and counterfeit goods
  • Cooperating with law enforcement on investigations and providing account information to aid prosecutions of counterfeiters

Examples in action

Meta adds Brand Rights Protection to combat trademark, counterfeit, copyright infringement

The additional capabilities are designed to help brands prevent scams, improve trust, and report intellectual property infringement.

Pinterest's Proactive Screening

Action: Pinterest implemented proactive screening measures to detect and remove counterfeit product listings from its platform in 2023.

Details: The platform uses machine learning algorithms to identify and flag potential counterfeit goods, enabling faster removal of illicit items.

Entrupy Becomes an Official TikTok Shop Authenticator

The AI-powered technology will authenticate pre-owned luxury handbags for TikTok shop in the U.S and protect businesses, buyers and sellers from transactions with counterfeit and fraudulent items

Meta and Christian Louboutin filed a joint lawsuit against an individual running a counterfeiting operation from Mexico. The defendant was using digital platforms, including Facebook and Instagram, to promote the sale of counterfeit Christian Louboutin products.

How TO FIGHT THE GLOBAL COUNTERFEITING PROBLEM

Beyond the Bargain: True Drivers of Counterfeit purchases

decoding Consumer Behavior

We believe that while many consumers are drawn to counterfeit products for financial savings, the desire for pleasure and an enhanced shopping experience is an even stronger motivator. This insight challenges the usual focus on economic reasons alone. To effectively combat counterfeit purchasing, strategies must address these hedonic motivations. By highlighting the psychological rewards of avoiding counterfeits—such as superior quality, craftsmanship, and the satisfaction of owning a genuine product, we can shift consumer behavior and help reduce counterfeit purchases by making the counterfeit shopping experience less appealing.

taking down counterfeit Listings

Busting fakes online

Handling counterfeit listings effectively is crucial in 2024, as the proliferation of fake goods poses significant threats to brand integrity and consumer trust. Brands should implement enhanced digital monitoring systems that utilize AI to track and identify counterfeit listings across online marketplaces and social media platforms. This proactive approach allows brands to act swiftly against unauthorized sellers and remove fake products from circulation.
Brands should adopt a proactive legal strategy by pursuing counterfeiters through litigation and collaborating with law enforcement agencies to conduct raids on counterfeit operations. Finally, fostering a community of vigilant consumers can help in the fight against counterfeiting. Encouraging customers to report suspected counterfeit listings through dedicated channels empowers them and reinforces the brand’s commitment to authenticity. 

Own it: The Resale Revolution is Here

Porsche and Rolex's embrace of certified pre-owned (CPO) programs for their cars & watches shows a strategic shift towards sustainability & consumer trust in the luxury market.

This initiative addresses the growing demand for pre-loved luxury items while reinforcing the authenticity and value of these products. It’s a win-win for both brands and consumers. Ignoring older products already in the market is leading to market cannabilization: where companies are losing sales due to an introduction of a new product that displaces one of its older products. The cannabilization of existing products results in no increase in the company's market share, despite sales growth for the new products. This can ultimately hurt companies' bottom line and therefore should be avoided.

Social networks should establish an authorized reseller program

Ensuring Authenticity in the Rise of Social Commerce

Social commerce will only continue to rise in popularity in the coming years. Consumers' buying habits are heavily influenced by social media: 68% of counterfeit purchases on social media are made via Facebook.
However, the issue right now is that there are a lot of unauthorized sellers on social media; only authorized sellers should be able to maintain a presence there.
In order to ensure that there are only authorized sellers, social media networks should establish an authorized reseller program, ie. something similar to TikTok Seller, or partner with a third-party vendor, like Entrupy.

Governments vs. Fakes: Legal Power Moves

Local Verification Kiosks & Pop-ups

The governments can aid in setting up kiosks in airports, key retail locations or malls where consumers can bring products for immediate verification using advanced authentication technology. It’s a convenient way for everyone to access authenticity. They can also organize temporary pop-up clinics in accessible areas where experts offer on-the-spot product authentication and educational workshops on counterfeiting.

reward programs and whistleblower protection

Establishing reward programs for individuals who report counterfeit products or suspicious activities (especially since they are linked to crime and terrorism) can encourage more people to participate in combating counterfeiting. This approach can be implemented through collaboration with law enforcement and industry groups. Providing legal protection and support for whistleblowers who expose counterfeiting operations can help uncover and dismantle counterfeit networks. Governments and industry associations can create frameworks to protect and reward whistleblowers.

Acknowledgements

We would like to provide our special thanks to the following partners who provided us with access to their expert commentary and/or access to their digital media for use in this report.

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