How to Spot a Counterfeit Product


NEW YORK ( MainStreet) — Jaime Palmucci was shopping at a consignment shop in Chicago when she spotted a great steal: a pair of designer Rock & Republic jeans with a $40 price tag.

“I didn’t realize until years later that they were fakes,” Palmucci recalls. She discovered the duds were a dupe after emailing pictures to an employee with the brand. “It was embarrassing and pretty frustrating. I figured that the shop would do a better job of vetting counterfeit items.”

But Palmucci is hardly the first – or last—consumer to purchase counterfeit goods, as counterfeiting has become more widespread during the past few years.

“Law enforcement agencies have made improvements in recovering counterfeit goods,” Joe LaRocca, senior asset protection adviser with the National Retail Federation, tells MainStreet. “But the problem has grown because counterfeit groups have also improved their manufacturing practices and these goods have become much harder to identify.”

Recent stats released by the U.S. Immigration and Customs Enforcement and U.S. Customs and Border Protection confirm that counterfeiting is on the rise. In 2010, the agencies made 19,959 seizures of counterfeit goods, a 34% increase over 2009 numbers. The total domestic value of fake goods seized last year totaled $188.1 million, the estimated manufacturers’ suggested retail price. Had those seized products been the real thing, ICE estimates they would have sold for a total of $1.4 billion, which reveals just how much companies are losing to counterfeiters and how much American consumers want a luxury product at a bargain price.

“Consumers, for the most part, don’t know that the product is counterfeit,” LaRocca says, “but with the economic climate being what it is, they are looking for a deal.”

Unfortunately, there are plenty of good reasons not to buy a counterfeit product. As the ICE cites, buying counterfeit goods can put shoddy, perhaps even dangerous products into consumers’ hands, not to mention fund organized crime and keep Americans from well-paying jobs.

So how can consumers spot and avoid unwittingly buying counterfeit goods? MainStreet talked to experts for suggestions.

The Devil is in the Details

“Many counterfeiters take pride in how authentic their products look,” Kelly McCarthy, an attorney with Sideman & Bancroft who specializes in brand protection, trademark and copyright issues, says.

Consumers might be fooled by a product at first glance, but LaRocca says taking a closer look at it can reveal where a counterfeiter cut corners. A knockoff handbag, for instance, may only be held together by single stitching, whereas a real designer handbag would feature double-stitching.
Similarly, the outer lining of a product may be made from the same fabric as the real deal, but LaRocca points out that oftentimes, counterfeiters purchase overruns of fabric commissioned by brands from unscrupulous manufacturers, and then sew the inner lining using cheaper materials instead.

LaRocca advises consumers to scrutinize a product’s label since many counterfeiters cover this while the product is en route to prevent law enforcement from spotting it. Because of this, “[the label] can end up with a gluey substance over it,” he says.

Still, the best clues, our experts agree, can be traced to a product’s packaging, since that’s where counterfeiters cut their reproduction costs.
“You should be suspicious of a product that is being sold as new that is not in its original packaging,” McCarthy says.

Finally, LaRocca says consumers should be wary of any product being sold without warranty information, a manufacturer’s label or other paper inserts that high-end luxury products have. Missing holograms on electronics or DVDs, sunglasses sold without a nice carrying case or cheap add-ons such as substitute straps for handbags with plastic adornments are also good tip-offs that your product isn’t the real thing.

Attention, Online Shoppers

Sizing up a product online can be trickier, since you can’t actually handle the item. But consumers can look for certain clues to determine whether a listing on an online auction house like eBay or Craigslist is legitimate.

The biggest tip-off is the price point, says Wes Shepherd, whose company, Channel IQ , helps major retailers like Toys R Us and Panasonic set online prices.

“The price between a fake and a real apparel item tends to be at least half,” he says, pointing out that a counterfeiter will have to charge less than wholesale price to get the customer to take any chances. “If it sounds too good to be true, then it generally is.”

Shepherd says consumers should also be wary of listings using stock photos instead of an actual picture of the product, and be likewise suspicious of grammatical and spelling errors in the text.

“If the English is off, the listing could be linked to an offshore account,” he says.

McCarthy cautions against buying from any online seller that claims they sell products in bulk at wholesale prices.

“Brands that are well -known have agreements in place with their manufacturers, stating that they cannot advertise or sell a product directly to the consumers,” she says.

And just like the goods you find in boutiques, McCarthy says to beware any new item without its packaging, and at the very least, ask the seller where it came from.

“If they cannot quickly provide answers as to where the product may be coming from, there is a good chance it is counterfeit,” she says.

Buy What You Know

All experts agree that the best way to avoid counterfeit merchandise is to shop from the brand’s store itself or a reputable retailer that is carrying what you’re after. Otherwise, know you’ll be taking your chances.

“Coach does not offer its products for sale through individuals, street vendors, internet auctions, independent boutiques, flea markets or house parties,” Nancy Axilrod, associate general counsel for Coach Inc. tells MainStreet, adding that during the past two years, her company has filed 450 lawsuits against counterfeiters. “The only way to be certain you are receiving genuine Coach merchandise is to make purchases at Coach stores; Coach Factory Stores [or] authorized department stores.”

Coach also lets shoppers search for authorized retailers in their area via its Store Locator tool. Terri Mock, vice president of global marketing for OpSec, a company that helps brands protect their merchandise from counterfeiters, says this is a habit many brands have adopted.

“Some will even list the illegitimate [stores],” she says, adding that anyone concerned with a sellers’ legitimacy should research counterfeiter lists on a company’s website before buying from a dubious vendor.

How can you spot counterfeit currency? Find out in this MainStreet article.

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