The Emperor's New Handbag?

Luxury goods manufacturers have been adding overt and covert security measures to their goods to allow consumers, police, retailers, and customs officials to spot fakes. But, for fear of alerting the counterfeiters, they're not telling anyone what the security measures are. A report in yesterday's Wall Street Journal (subscription required to view it) entitled "Holograms Tell Fake from Fendi", revealed the lengths and costs some luxury brand owners are going to, to protect their goods, now that :

"Today, many fake handbags are made of good leather, packaged elaborately and sold (usually unwittingly) in high-end accessories stores."

and

"copies of [LV's] handbags are sometimes so good that consumers realize they're fake only when they take them into the company's boutiques for repairs."

But, it's well known that holograms are relatively easy to spoof, and how is a customer (or over-stretched policeman or customs official, for that matter) supposed to know what it is supposed to look like? The WSJ article points out:

"Holograms are better than nothing, but they are already being copied," says Claudio di Sabato, head of security at Italian fashion house Prada Group NV. Indeed, police in Naples said they recently uncovered a warehouse with photocopiers used to create fake holograms -- with the basic design but without the deep colors and multidimensional images -- for counterfeit handbags. And a Fendi saleswoman recently said she had already seen a bogus Fendi handbag complete with a hologram."

If that wasn't reason enough to claim the "emperor has no clothes", consumers say they won't rely on a hologram as a proof of authenticity.


Here's a fake and real hologram from a life-saving anti-malarial drug. Sure side-by-side, one looks suspect - but on it's own, who could tell?
And here's a real and fake hologram on a SONY memory stick. Again, could YOU a consumer tell which one is real?

The physical appearance of fakes has gotten so good, that visual-only techniques such as color-shifting inks and holograms have lost their discriminating power. What is needed is a more interactive way of authenticating a product, that the customer can rely on. Holograms may be "better than nothing", but that's not saying much.

Stealing from the Steelers
The SuperBowl isn't just a great opportunity for advertisers ... it's an irresistable opportunity for brand pirates. Merchandise bearing team logos, such as the Steeler's "Terrible Towel" was widely counterfeit following the SuperBowl. The quality is indeed terrible, the colors run, the products shrink ... and worst, the charitable recipients of the Steelers largesse (a school for retarded adults and children) doesn't receive a penny.

Licensed products are easily counterfeited, and difficult for licensees to control. For example, $6M of unofficial NFL gear was confiscated in 2005 - but the true size of the problem is unknown.

Until license-owners adopt simple ways for consumers to know if they're buying the real thing, and their dollar is supporting their teams and good causes ... the stealing will continue.

Fake Brands Good Headlines Make

The last week saw mulitple headlines regarding counterfeit products - further pushing awareness of the problem into the public domain and psyche. What is interesting is these stories show the scope of the problem - from Tiffany jewelry, through MP3 players, and irons, to toothpaste. Unless the consumer has a reliable way of authenticating a product themselves, they remain at risk.

• Tiffany & Co. is suing eBay for enabling a huge market in fakes and for serving ads that point to fake Tiffany products when the brand is searched. Tiffany's research found an astonishing 95% ... NINETY-FIVE PERCENT... of Tiffany branded products sold on eBay are fake. eBay has a program, called VeRO, that allows brand owners to monitor and shut down trademark infringing sales.
• The San Jose Mercury News ran a cover story today, highlighting the scale of counterfeiting in high tech industry. In it, they quote: The Imaging Supplies Coalition estimates that one in every 20 printer cartridges sold in the United States is fake, with worldwide losses running at $2 billion a year. Perhaps what consumers find surprising is the high tech nature of these fakes - these are not simple devices to copy.
• A massive fake toothpaste bust in the Philippines also yielded a fake L'Oreal, and 2000 bottles of fake perfume.
• This news snippet came to my attention today, too. Back in November, 2005 the Ningbo Municipal AIC in China confiscated over 20,000 infringing irons produced by Zhejiang Jiangxin Electrical Appliance Co., Ltd. The infringer was caught red-handed in two successive raids producing irons with trademarks including “TEFAL”, “BRAUN”, “SIEMENS”, “SAMSUNG” and “PHILIPS”.
• Finally, Transparency International this week released their report on corruption in the global health system. It contains much of the usual data on the terrible scale of drug counterfeiting.