State of the Fake 2020

	Most Authenticated	Highest Unidentified %
#1	Chanel	Céline
#2	Louis Vuitton	Saint Laurent
#3	Gucci	Chloé

EXPLORE AUTHENTICITY RATES BY COUNTRY

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THE AMERICAS
ASIA-PACIFIC
EUROPE & MIDDLE EAST

UNITED STATES
CANADA
MEXICO
PANAMA
BRAZIL

UNITED STATES

2019 Unidentified %: 10.2%

	Most Authenticated	Highest Unidentified %
#1	Louis Vuitton	Goyard
#2	Coach	Hermès
#3	Gucci	Dior

Entrupy Insights

In the United States, the proportion of Unidentified results for authentications of Goyard products increased from 20% in 2018 to 37% in 2019.

CANADA

2019 Unidentified %: 10.6%

	Most Authenticated	Highest Unidentified %
#1	Louis Vuitton	Goyard
#2	Chanel	Balenciaga
#3	Gucci	Céline

Entrupy Insights

In Canada, Bottega Veneta was the fastest growing brand for authentications by Entrupy customers, increasing its volumes by 300% from 2018 to 2019.

MEXICO

2019 Unidentified %: 6.6%

	Most Authenticated	Highest Unidentified %
#1	Louis Vuitton	Dior
#2	Gucci	Céline
#3	Prada	Saint Laurent

Entrupy Insights

In Mexico, Prada was the fastest growing brand for authentications by Entrupy customers, increasing its volumes by over 600% from 2018 to 2019.

PANAMA

2019 Unidentified %: 8.5%

	Most Authenticated	Highest Unidentified %
#1	Louis Vuitton	Fendi
#2	Gucci	Gucci
#3	Chanel	Chanel

Entrupy Insights

Entrupy commenced working with businesses in Panama during 2019, with Louis Vuitton being the most popular brand for authentications.

BRAZIL

2019 Unidentified %: 10.3%

	Most Authenticated	Highest Unidentified %
#1	Louis Vuitton	Balenciaga
#2	Chanel	Goyard
#3	Gucci	Hermès

Entrupy Insights

In Brazil, the proportion of Unidentified results for authentications of Louis Vuitton products decreased from 21% in 2018 to 9% in 2019.

JAPAN
SINGAPORE
THE PHILIPPINES
THAILAND
AUSTRALIA

JAPAN

2019 Unidentified %: 3.8%

	Most Authenticated	Highest Unidentified %
#1	Louis Vuitton	Goyard
#2	Gucci	Balenciaga
#3	Coach	Saint Laurent

Entrupy Insights

In Japan, the proportion of Unidentified results for authentications of Balenciaga products increased from 20% in 2018 to 25% in 2019.

SINGAPORE

2019 Unidentified %: 3.7%

	Most Authenticated	Highest Unidentified %
#1	Chanel	Goyard
#2	Louis Vuitton	Céline
#3	Gucci	Balenciaga

Entrupy Insights

In Singapore, Burberry was the fastest growing brand for authentications by Entrupy customers, increasing its volumes by almost 300% from 2018 to 2019.

THE PHILIPPINES

2019 Unidentified %: 34.2%

	Most Authenticated	Highest Unidentified %
#1	Chanel	Fendi
#2	Louis Vuitton	Goyard
#3	Gucci	Saint Laurent

Entrupy Insights

In the Philippines, Dior was the fastest growing brand for authentications by Entrupy customers, increasing its volumes by 600% from 2018 to 2019.

THAILAND

2019 Unidentified %: 23.7%

	Most Authenticated	Highest Unidentified %
#1	Chanel	Balenciaga
#2	Louis Vuitton	Saint Laurent
#3	Gucci	Coach

Entrupy Insights

In Thailand, the proportion of Unidentified results for authentications of Prada products increased from 11% in 2018 to 30% in 2019.

AUSTRALIA

2019 Unidentified %: 10.6%

	Most Authenticated	Highest Unidentified %
#1	Chanel	Goyard
#2	Louis Vuitton	Dior
#3	Gucci	Céline

Entrupy Insights

In Australia, the proportion of Unidentified results for authentications of Dior products increased from 11% in 2018 to 29% in 2019.

UNITED KINGDOM
ITALY
RUSSIA
CZECH REPUBLIC
UNITED ARAB EMIRATES

UNITED KINGDOM

2019 Unidentified %: 5.2%

	Most Authenticated	Highest Unidentified %
#1	Chanel	Balenciaga
#2	Louis Vuitton	Fendi
#3	Gucci	Chloé

Entrupy Insights

In the United Kingdom, Fendi was the fastest growing brand for authentications by Entrupy customers, increasing its volumes by 300% from 2018 to 2019.

ITALY

2019 Unidentified %: 20.6%

	Most Authenticated	Highest Unidentified %
#1	Gucci	Fendi
#2	Louis Vuitton	Balenciaga
#3	Chanel	Saint Laurent

Entrupy Insights

In Italy, Gucci was the fastest growing brand for authentications by Entrupy customers, increasing its volumes by over 800% from 2018 to 2019.

RUSSIA

2019 Unidentified %: 18.7%

	Most Authenticated	Highest Unidentified %
#1	Louis Vuitton	Céline
#2	Chanel	Gucci
#3	Dior	Balenciaga

Entrupy Insights

In Russia, the proportion of Unidentified results for authentications of Céline products increased from 13% in 2018 to 38% in 2019.

CZECH REPUBLIC

2019 Unidentified %: 18.3%

	Most Authenticated	Highest Unidentified %
#1	Dior	Chloé
#2	Gucci	Saint Laurent
#3	Louis Vuitton	Hermès

Entrupy Insights

In the Czech Republic, the proportion of Unidentified results for authentications of Chanel products decreased from 38% in 2018 to 33% in 2019.

UNITED ARAB EMIRATES

2019 Unidentified %: 4.8%

	Most Authenticated	Highest Unidentified %
#1	Louis Vuitton	Céline
#2	Chanel	Louis Vuitton
#3	Gucci	Dior

Entrupy Insights

In the United Arab Emirates, the proportion of Unidentified results for authentications of Louis Vuitton products decreased from 17% in 2018 to 7% in 2019.

	Most Authenticated	Highest Unidentified %
#1	Louis Vuitton	Hermès
#2	Gucci	Goyard
#3	Chanel	Céline

	Most Authenticated	Highest Unidentified %
#1	Coach	Balenciaga
#2	Louis Vuitton	Goyard
#3	Gucci	Céline

	Most Authenticated	Highest Unidentified %
#1	Coach	Goyard
#2	Louis Vuitton	Dior
#3	Gucci	Céline

	Most Authenticated	Highest Unidentified %
#1	Coach	Hermès
#2	Louis Vuitton	Chloé
#3	Chanel	Dior

	Most Authenticated	Highest Unidentified %
#1	Louis Vuitton	Hermès
#2	Gucci	Céline
#3	Coach	Dior

BUSINESS TYPE	2019 UNIDENTIFIED %	INVENTORY SOURCE	RELATIVE RISK
C2C MARKETPLACE	10.8%	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.	Highest: Hotbeds for counterfeiters to sell fake items due to lack of authentication programs but decreasing as marketplaces add authentication services.
PAWN	10.2%	Items are purchased from individuals at the point of sale.	High: Merchandise coming from individual consumers and being taken in by untrained salespeople significantly increases the risk of counterfeits.
OFFLINE RESELLER	8.2%	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.
ONLINE RESELLER	7.0%	Items often come from a stable of 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.
WHOLESALER	1.0%	Because 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.

COLLABORATIVE APPROACHES ACROSS INDUSTRY ARE REQUIRED TO COMBAT THE COUNTERFEITING PROBLEM

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Brand
Retailers
Marketplaces
Government
Industry

Brand

Key problems

Brands lose revenues from the diversion of genuine sales to counterfeit channels.
The widespread distribution of counterfeits can dilute a brand's value in the eyes of consumers.
Intellectual property enforcement can be a "whack a mole" game for brands.

Common solutions

End-to-end product traceability solutions

These solutions enable products to be traced through their entire lifecycle, both physically and digitally - improving information flows, visibility and the detection of unauthorized or counterfeit products through the supply chain.
By extending these solutions to consumers, brands can empower customers to verify a product's authenticity and identity at the point of sale, consumption or in the after market.

Close collaboration with law enforcement

Brands commonly work with governments and law enforcement agencies to support investigations into counterfeit activities, and provide evidence that lead to the prosecution of counterfeiters and their distributors and buyers.

Examples in action

LVMH's AURA platform for tracking luxury goods

LVMH, in partnership with Microsoft and blockchain software company ConsenSys, has developed the AURA platform, a blockchain system for tracking and authenticating luxury goods.
According to reports, in 2020 the luxury conglomerate will launch this technology for Louis Vuitton and Parfums Christian Dior brands.

Columbia Sportswear on the front line

Columbia Sportswear Company takes a proactive approach to fighting counterfeiters, by working closely with customs officials and law enforcement in over 50 countries to seize millions of counterfeit products.
In 2017, Columbia worked with Greek authorities to help seize 19,200 pairs of counterfeit Columbia shoes.

Retailers

Key problems

Retailers bear the risk of fraudulent customer returns entering their product inventory.
Publicized cases of counterfeits being discovered by customers on shelves or after sales, can negatively impact a retailer's reputation and erode buyer trust.
Retailers lose revenues from the diversion of genuine sales to counterfeit channels.

Common solutions

Authentication technology solutions to verify products

First and second-hand retailers have traditionally relied upon internal knowledge and subjective verification procedures to verify the authenticity of goods - this commonly presents a challenge with expertise being difficult to source, maintain and scale.
Increasingly, retailers are turning to sophisticated product authentication technologies (such as those offered by Entrupy) to enable a more foolproof and efficient process for verifying goods.

Information sharing between brands and retail partners

Close relationships between brands and retailers have become more critical than ever, to enable strong controls over the sourcing and distribution of authorized goods.
For retailers, increasing the scope in which product security information is shared by their brand suppliers empowers stronger detection and enforcement efforts at retail level.

Examples in action

UK luxury department store: Combating retail returns fraud with "fingerprints"

Armed with the Entrupy Fingerprinting solution, the UK luxury retailer can instantly determine whether a customer's return is the same exact item that was originally fulfilled to that customer.
At the point of processing a return, an employee can take a single microscopic image using the Entrupy Fingerprinting app, to compare it against the original for tiny discrepancies that may indicate potential returns fraud.

Walmart sets the standards for its suppliers

Walmart, the retail giant, operates more than 11,600 stores around the world and works with 100,000 suppliers.
Walmart uses its massive buying power to enforce strict standards upon its suppliers for information sharing and business practices, enabling strong controls over its sourcing function.

Marketplaces

Key problems

Publicized cases of counterfeits being sold on online marketplaces can negatively impact their reputation and erode buyer and seller trust.
Online marketplaces are increasingly bearing legal liability for counterfeit goods being sold on their platforms by bad acting sellers.
Listings takedowns and other forms of policing can be challenging for online marketplaces, due to the scale and diversity of listings, and anonymity of buyers and sellers.

Common solutions

Online monitoring solutions and listings takedowns

Online monitoring solutions systematically query search engines and crawl websites of interest to identify potential counterfeit listings and brand infringements.
Leading online marketplaces commonly operate their own self-monitoring programs which enlist the help of brands and industry groups to detect and remove counterfeit listings being sold on their platforms.

Mandatory authentication processes

To supplement online monitoring solutions, many online marketplaces have embedded product authentication as a key part of the transactional workflow.
In such cases, products are required to be authenticated, either by human experts, or using product authentication solutions, such as Entrupy, prior to final delivery to the end buyer.

Examples in action

Amazon's Project Zero monitoring program

Amazon’s monitoring program, Project Zero, enables the scanning of 5 billion daily listing update attempts. Brands provide key data points about themselves (e.g., trademarks, logos, etc.) to drive the AI-based system, and are empowered to take action against suspicious listings themselves with a self-service counterfeit removal tool.
Critics of the program have claimed that it is a band-aid solution to a systematic problem for the global marketplace.

StockX's sneaker authentication process

StockX, the e-commerce auction site for sneakers, luxury handbags, watches and streetwear requires that every product sold on their platform undergo strict product verification and authentication processes.
StockX's in-house team conducts "a multi-point inspection across the entire product" prior to shipping the verified good to the end buyer.

Government

Key problems

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.
Tax revenues are displaced by the diversion of genuine sales to counterfeit channels.
Global enforcement activities have become more challenging with the increasing sophistication of counterfeiting production and distribution practices.

Common solutions

Domestic enforcement activities

Domestic efforts to curtail counterfeiting are fought on multiple fronts - via inspections at customs and borders, raids and investigations of suspected counterfeit distributors, and coordination across multiple government and law enforcement agencies.

Multilateral cooperation across international agencies

Bilateral and multilateral engagements between government agencies are necessary for effective exchange of information on intellectual property enforcement operations, share best practices and to facilitate joint enforcement actions.

Examples in action

Dubai local enforcement efforts

The Dubai Department of Economic Development (DED) partners with brands, international agencies and technology solution providers (including Entrupy) to fight against local counterfeiting activities. In 2016, the DED announced it had recovered goods worth Dh 1.6 billion (USD $435 million).
According to Mr. Ahmad Almheiri, Senior Manager of Trademark and Commercial Agencies Disputes at the DED: "The establishment of administrative level actions against counterfeiters will effectively help in reducing the visibility of counterfeit products in the market."

US-China Joint Efforts

The US and China agreed that both parties will work to “combat the prevalence of counterfeit or pirated goods” on online platforms.
China has agreed to consider revoking an e-commerce platform’s operating license if there are repeated sales of counterfeit or pirated goods. The US, meanwhile, has agreed to study additional measures of combating the online sale of counterfeit or pirated goods.

Industry

Key problems

Consumers commonly lack awareness about the prevalence and risks of counterfeit products.
A whole-of-industry approach to fight the global counterfeiting problem is difficult to facilitate, due to a hesitation by stakeholders to share commercially sensitive information.
Intellectual property rights laws and policies are not standardized globally, which creates challenges for international enforcement actions.

Common solutions

Public education campaigns

Industry bodies representing brands and other industry professionals work to curtail counterfeiting and protect the shared interests of their members globally.
They are mandated by their members to inform the general public of the dangers of counterfeiting.

Influence with international governments

Industry bodies often undertake advocacy work with international governments to advance the interests of their members against counterfeiting.
They commonly promote thought leadership within their mandate, to influence the public and ultimately to enact policies which protect stakeholders from counterfeiting.

Examples in action

Unifab's consumer awareness during COVID-19

Unifab is a French association of 200 organizations representing many sectors, whose mission is to fight against counterfeiting and protect intellectual property globally.
In 2020, Unifab launched a digital consumer awareness campaign to inform the public of the heightened threat of counterfeit commerce during the COVID-19 global pandemic, including risks to health and safety from fake medical supplies.

INTA's international advocacy for IP laws

The International Trademark Association (INTA) works to promote effective trademark laws and policies worldwide on behalf of its nearly 6,500 members.
INTA carries out its policy and advocacy work through model laws and guidelines, board of directors resolutions, amicus briefs, testimony and submissions, and reports.

OUR RECOMMENDATIONS TO FIGHT THE GLOBAL COUNTERFEITING PROBLEM

Brands must build even closer bonds with their supply chain partners
- Currently the extent of information sharing by brands across their supply chains is highly variable. Retailers and distributors often bear the risks of counterfeits infiltrating their inventory, but have limited access to product security knowledge and/or mechanisms that are controlled by brands, to effectively monitor, investigate or enforce against incidents which can corrupt their supply.
- Forging closer, multi-lateral relationships across the supply chain, with an emphasis on bilateral information sharing, will benefit brands and their partners.
Brands must strengthen their engagement with consumers
- Continual consumer engagement by brands and industry bodies about the dangers of counterfeiting to educate shoppers about the personal risks and societal costs of counterfeiting.
- Brands can further reduce the demand for counterfeit "substitutes" by building stronger relationships with their customers. For luxury brands, the traditional emphasis has been on marketing the qualities of their products and longstanding brand heritage. More recently, these brands have developed campaigns that highlight product sustainability, experience and exclusivity.
- Counterfeit sales have exploded online, particularly in the less regulated resale channels. Some brands may benefit from starting their own resale platforms (certified pre-owned), to discourage consumers from buying from "less reputable" sellers on any platform.
Industry stakeholders must jointly co-opt new anti-counterfeiting technology standards
- Despite the popularity of advanced anti-counterfeiting technologies - such as IoT-powered product security solutions and digital traceability platforms that leverage blockchain - being implemented at brand-level, other parties in the supply chain are unable to derive benefits, either (a) due to a lack of multi-lateral information sharing (as mentioned above), or (b) due to a lack of industry-level technology standards which makes deployment difficult or unscalable.
- To maximize the benefits of technology on all fronts, it would be of interest for all industry stakeholders to jointly co-opt industry -based technology standards - where access to anti-counterfeiting solutions can be provided without compromising on brand confidentiality or trade secrets.
- According to Mr. Ahmad Almheiri, Senior Manager of Trademark and Commercial Agencies Disputes at the Dubai Department of Economic Development (DED): "Technology can serve as a reliable median between authorities and trademark owners and/or their representatives by establishing an infringement claim platform which allows right holders to file an infringement case against the counterfeiters. Moreover the continuous development within AI technology physically help in identifying counterfeit and digitally aids websites to identify counterfeit goods based on different attributes."
Industry stakeholders must collaborate and share information
- Traditionally brands and retailers have been coy about sharing proprietary market intelligence about counterfeiting with industry peers, due to competitive tensions and a concern that any external acknowledgement of the counterfeiting problem may tarnish their public image.
- Given the continual growth of the counterfeiting problem, a greater impetus is needed across all of industry to bring a united front to the fight against counterfeiting with significantly improved sharing of intelligence and best practices.
International authorities must be provided stronger laws, tools and resources to enforce IP rights
- A lack of universally strong and consistent trademark rights around the world hampers the efforts of authorities to enforce rights in different jurisdictions.
- International lawmakers, working together with brands and industry bodies, must work together to ensure authorities have the requisite legal tools to fight counterfeiters at borders, and points of manufacturing and distribution.

Acknowledgements:

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

Chic Consignment(Massachusetts-based luxury consignment business)
Dubai Department of Economic Development
Opulent Habits(New Jersey-based luxury consignment business)
Style Theory(Singapore-based fashion rental business)
The Purse Affair(Australia-based luxury resale business)

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Entrupy

FOREWORD: ENTRUPY STATE OF THE FAKE 2020

ENTRUPY PROVIDES ON DEMAND, AI-POWERED AUTHENTICATION SOLUTIONS TO RETAIL BUSINESSES GLOBALLY

Entrupy by the Numbers

Entrupy Authentication Solutions

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LUXURY AUTHENTICATION

FINGERPRINTING: RETAIL RETURNS

SNEAKERS: LEGIT CHECK TECH

TRUSTED AND RECOGNIZED BY THE WORLD'S TOP ORGANIZATIONS

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Industry Awards:

Retail Insider

Awards.AI

THE INTERNATIONAL BUSINESS AWARDS

THE INTERNATIONAL BUSINESS AWARDS

AI BREAKTHROUGH AWARDS

EDISON AWARDS

Industry Initiatives:

LA MAISON / LVMH

unifab

Retail Industry Leaders Association

What they say about Entrupy:

Dubai Department of Economic Development

ShopGoodwill.com (Goodwill e-commerce platform)

Style Theory (Singapore-based fashion rental business)

Nordstrom

RetailInsider.com Transforming Retail Awards 2019

Chic Consignment (Massachusetts-based luxury consignment business)

THE GLOBAL COUNTERFEITING PROBLEM CONTINUES TO GROW

Counterfeits make up 2.5% of global trade and are forecast to cost the global economy...

UP TO: $2.8 TRILLION

Consisting of...

WITH FAR REACHING CONSEQUENCES TO GLOBAL SOCIO-ECONOMIC ISSUES...

Risks to Health & Safety

750,000

Labor Exploitation

100 HOURS OR 7 DAYS

Links to Organized Crime

Italy's Camorra...

In Mexico, organized crime group Los Zetas...

$ 2.4M / DAY

Environmental Impacts

Entrupy has donated counterfeit handbags in bulk to students at FIT

THE MOST COUNTERFEITED ITEMS - FROM HIGHLY - COVETED DESIGNER WARES TO EVERYDAY PRODUCTS

Entrupy has developed solutions capable of recognizing counterfeits in all of the following categories:

COUNTERFEITERS ARE ENABLED BY SHIFTS IN CULTURE, MODERN TECHNOLOGIES, AND SUPPLY CHAINS THAT ARE PRONE TO EXPLOITATION

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Counterfeiting production is enhanced by feedback from a niche counterfeit consumption culture

Counterfeit Production Cycle

1. ONLINE COMMUNITIES

2. COUNTERFEITER FEEDBACK

3. FAST-FASHION TURNAROUND

Entrupy Insights

Counterfeiters have infiltrated everyday e-commerce platforms to directly reach consumers

MOST COUNTERFEIT TRANSACTIONS NOW LOOK LIKE EVERYDAY ONLINE SHOPPING EXPERIENCES

WEBSITES

SOCIAL MEDIA

MARKETPLACES

Counterfeiters exploit customs and border patrol with small parcels

Entrupy Insights

OVERVIEW OF ENTRUPY AUTHENTICATIONS IN 2019

Dollar value* of Authentic and Unidentified items, 2017 - 2019

Authentic vs. Unidentified items, 2019

Entrupy Insights

BRANDS WITH MOST AUTHENTICATIONS IN 2019

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By total number of Entrupy authentications performed

LOUIS VUITTON

Entrupy Insights

COACH

Entrupy Insights

GUCCI

Entrupy Insights

CHANEL

UP TO:
$2.8
TRILLION

100 HOURS
OR
7 DAYS

ENTRUPY INSIGHTS
BIGGEST MOVERS: 2018 TO 2019