Exposing the superfake epidemic: Unveiling fashion brands' push for counterfeit detection

This story is a contribution to CNN Style's ongoing project, "The September Issues," serving as a platform for thought-provoking discussions on the influence of fashion on individuals and the environment.

According to Fashionphile, attaining the status of a "master" authenticator - the highest level of training to identify counterfeit designer items on their luxury online marketplace - requires over 8,000 hours of intensive education. Trainees are taught to swiftly identify flaws in the date format of a Louis Vuitton bag or accurately determine the composition of a Cartier watch's metal alloy.

Its competitor, The RealReal, also relies on human senses and instinct to recognize the smell and feel of a $25,000 Hermés Birkin bag, such as the smoothness of its Barenia leather. However, the retailer's initial assessment is conducted using AI technology, which has been trained on 30 million images to detect subtle differences in stitching or the placement of hardware. Simultaneously, an algorithm calculates the risk level of an item based on factors ranging from the seller's history to the product's popularity in the black market. For instance, if Miu Miu ballet flats are trending online, it is highly likely that their counterfeit versions are as well. In recent years, luxury and tech leaders have aimed to empower the average consumer to determine the authenticity of luxury items, allowing them to verify the genuineness of a quilted Chanel wallet on chain within minutes or even seconds.

The AI-powered app Entrupy claims it can notify buyers and sellers about the genuineness of designer sneakers or purses by analyzing a few uploaded photos. Meanwhile, The Ordre Group, a fashion tech company, has collaborated with renowned brands such as Louis Vuitton, Burberry, and Patou to create a unique "digital fingerprint" for each item. This fingerprint is derived from specific details like a small section of a Louis Vuitton monogrammed wallet's textiles and construction, similar to how facial recognition technology detects imperceptible details. Just like there are 10,000 different identities for 10,000 quilted Chanel wallets, known as unique IDs, the program Authentique registers each of these IDs on the blockchain. This blockchain is virtually impossible to duplicate and is considered highly traceable and secure, unlike methods like RFIDs and holograms, which are prone to counterfeit.

It takes more than 8,000 hours to become a master authenticator at The RealReal, according to the company.

Courtesy The RealReal

"It's as simple as using your phone to scan a product and instantly determine if it's genuine or fake," Simon Lock, founder and CEO of The Ordre Group, confidently stated. He further explained that their AI-powered technology thoroughly examines the materials, including analyzing the dyeing and blending of fibers, and is continually being trained to maintain accuracy even as a garment wears over time.

Authentique is just one example of a digital ID or passport—a digitized replica (or non-fungible token, NFT) of a designer item that enables buyers to authenticate its authenticity and track its lifespan. In Europe, there is a potential for digital passports for garments and textiles to become a legal requirement in the near future. Over the past few years, major players in the industry have united around this technology to combat counterfeits and promote sustainability. The Aura Blockchain Consortium, founded by LVMH, OTB, and Prada Group, which collectively represent iconic brands like Louis Vuitton, Dior, Fendi, Bulgari, Marni, Maison Margiela, and Prada, aims to establish a standardized system for these scannable IDs in the fashion and luxury sectors. The consortium's founding members are currently digitizing millions of products from their catalogs. As per the group, OTB alone has already registered 600,000 products, with every Maison Margiela Tabi shoe from 2023 equipped with an NFC chip embedded in the sole.

Its almost seen as a hack

These strategies are part of the industry's efforts to combat the thriving counterfeit market. It is estimated that fake fashion and luxury items make up 60% or more of the multi-trillion-dollar trade in counterfeit goods. In the past, knock-off bags were primarily found on street corners and in car trunks, but now they are easily accessible with just a few clicks online. Online communities on Reddit, boasting hundreds of thousands of members, are dedicated to discussing and searching for replicas. Additionally, TikTok users proudly display their hauls of designer duplicates, while YouTubers upload tutorials on how to differentiate between low-quality fakes and high-end counterfeits. Counterfeiters have even gone as far as hosting live runway shows for the latest fashion knock-offs, complete with makeshift catwalks adorned with the logos of renowned brands like Louis Vuitton, Dior, and YSL.

A Reddit spokesperson refused to provide a comment but referred to their policies that forbid the solicitation or facilitation of illegal transactions on the platform. Likewise, a TikTok spokesperson highlighted their guidelines that prohibit the sale of counterfeit goods and the infringement of copyrights or trademarks. YouTube did not respond to CNN's request for a comment.

According to Sarah Davis, founder and president of Fashionphile, there was a time when people would never admit to buying counterfeit products. However, in certain social media communities, it is now seen as more of a clever trick rather than something negative.

Is it worth going into debt to pursue a career in fashion design? That's a question that many people find themselves asking. Recently, there has been a growing focus on social media and e-commerce platforms and the legal issues surrounding the products they sell. New regulations in the US and Europe are attempting to address this issue. However, Susan Scafidi, the founder of the Fashion Law Institute, believes that focusing solely on counterfeits is only tackling part of the problem. In certain circles, counterfeit goods are not only accepted but even desired for their own unique qualities.

"It's one thing to have legislation that empowers you to combat real instances of infringement or counterfeiting," she remarked during a telephone interview. "However, what we haven't resolved yet is the societal aspect—you need to fight not only through legal channels but also through the court of public opinion."

New scannable digital IDs, utilizing AI and blockchain technology, are aiming to enhance security by enabling consumers to quickly authenticate their luxury items.

The ethics surrounding the purchase of knock-offs can be contentious. The lack of transparency regarding who is manufacturing counterfeit bags, the working conditions involved, and who ultimately benefits raises concerns. However, the traditional deterrents, such as honoring the "brand integrity" of major conglomerates, may not hold as much weight. This is particularly true for consumers immersed in TikTok culture, who may find it difficult to sympathize with brands, according to Scafidi.

Furthermore, the entry price for designer goods continues to rise, exacerbating economic inequalities. Business of Fashion reports a 27% increase in the average price of women's designer handbags in the US between 2019 and 2022. Despite this, the luxury sector recorded record-breaking profits last year, with approximately 95% of brands experiencing growth, according to estimates by consulting firm Bain & Company.

"If the inflation index were based just on handbags, it would be shocking and the Fed would be raising rates like crazy, and wed all be panicked," Scafidi said with a laugh.

A need for human suspicion

Content has become increasingly complex as counterfeit garments and accessories have progressed from inexpensive imitations to deceptive "superfakes." Additionally, the constant influx of new styles each season from luxury labels has further complicated authentication methods. According to Davis, when Fashionphile was established in 1999, handbag labels had only a limited number of style variations, which made training authenticators simpler. However, in the present day, there is a vast array of styles, shapes, and textiles to navigate through every season, posing a greater challenge for authenticators.

According to Hunter Thompson, director of authentication at The RealReal, fake products tend to emerge just weeks after new products are released. He emphasizes that this is different from previous years when the release of fakes lagged behind.

Trends, whether they are new or recycled, also unfold in real time. Thompson states, "Currently, vintage fashion is on trend, and we are seeing new replicas of items from the 80s or 90s." Additionally, the concept of quiet luxury, characterized by a lack of obvious logos, has recently been widely copied, as seen with brands like The Row.

And while the frequency of users receiving counterfeit products after ordering from reputable online platforms is uncertain, it is a prevalent concern on the internet. The RealReal, for instance, reached an $11 million settlement with its investors last year in response to allegations that its authentication system was not as robust as advertised prior to its IPO. Additionally, Chanel's lawsuit, which has been temporarily suspended since July, claims that the platform has listed fake bags. While The RealReal has consistently denied these accusations, they have chosen not to provide any further comments to CNN on the subject.

As 'superfakes' become increasingly difficult to identify, resale marketplaces must strive to enhance their authentication detections since there is currently no universally accepted industry solution in place.

Digital IDs are unlikely to fully solve the counterfeiting problem in the industry, as consumers seeking illegal duplicates will continue to search for them. However, they could offer an added layer of security for genuine buyers who want to quickly identify and eliminate counterfeit products. According to experts, current AI models are not dependable on their own, especially for newly released items that algorithms have not been trained on. In 2017, Fashionphile, which receives approximately 700,000 bags per day, abandoned their plans to utilize AI due to its inadequate performance. They have not yet made a decision to implement it again.

"We receive new items daily from both this season and the previous one. Unfortunately, there is no available data regarding this," she stated.

According to Scafidi, a "hybrid model" will always be essential. "It is crucial to have a human element to detect anything that seems off," she stated. Additionally, she emphasized that "any human authenticator who disregards technology is limiting their capabilities."

She believes that digital IDs have great potential as a tool to combat counterfeiting. However, their implementation will not be without challenges. It would require all brands, consignment platforms, and auction houses to agree on the same authentication system in order for it to be effective. Otherwise, there is a risk of competing tools undermining one another. One such tool, like Authentique, has the potential to disrupt the resale market. It grants brands ownership power over an ID, making it difficult for buyers to resell items outside of the brand's own secondhand shop. If resale platforms collaborate, brands could demand a portion of future sales, potentially saving on authentication expenses, as Lock pointed out.

In one of the world's largest secondhand textile markets, discarded clothes are being given a new chance at life.

The registration process for products can also be time-consuming. According to Romain Carrere, the CEO of the Aura Blockchain Consortium, which consists of over 35 brands, they have digitized over 20 million items since its establishment in 2021. However, there are only a few instances where consumers can access the technology through a QR code, NFC chip, or product "fingerprint." Carrere explained that they are still in the early stages due to the recent development of the technology, and they are currently conducting various testing phases with brands. He emphasized that the production aspect is just as challenging as the technology itself.

Scafidi believes that there is a growing trend towards providing luxury consumers with greater transparency regarding their purchased products. This helps to integrate them into an anti-counterfeiting system more seamlessly.

According to Scafidi, consumers may become more knowledgeable about the resale market, and have a higher inclination to utilize codes that track the history and every transaction of their specific item. This will likely apply more to high-end products, such as watches, and their repair and return records, which showcase the product's unique background.

She added that there is still a lot of work to be done in convincing buyers who would prefer to find cheaper imitations or replicas of a product. Winning the demand side will depend on brands finding a way to tap into the loyalty of consumers, who have a strong connection with the brands they adore and engage in a form of tribal affiliation.