Could a Fake Coach Purse Land You in Jail? Anti-Counterfeiters Target Consumers

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DesignsFauxReal.comThat bootleg Prada bag you proudly dangle from your arm -- the one you scored on Canal Street in New York City, that hotbed of knockoffs? Someday soon, you could be fined for buying that fake -- or worse, thrown in jail.

Anti-counterfeiting crusaders are aiming at a new target: you, the consumer.

Admittedly, they'd rather appeal to your better nature first -- or even your guilt. Organizations that fight knockoffs are now taking their message on the many ills of counterfeiting directly to shoppers, focusing on dangers ranging from the health hazards of phony pharmaceuticals and toothpaste to the risk of having your identity stolen by the vendors of such illegitimate goods.

But, taking a cue from Scared Straight, some in the anti-counterfeiting world are also pushing to criminalize buying knockoff goods, threatening ordinary consumers with fines, or even trips to the slammer.

Anti-Counterfeiters Take On Street Vendors, Online Fraudsters

It's no secret that counterfeit items like fake Gucci bags and phony Rolex watches, mostly made in China, have been sold in tourist areas, flea markets and strip malls across the country for ages.

But the addition of rogue websites to the mix in recent years has catapulted the backstreet knockoff biz into a $650 billion global industry.

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Those rogue websites masquerading as legitimate are hard to trace: Online sellers enjoy "virtual anonymity," said Kristina Montanaro, associate counsel and director of special programs for the International Anti-Counterfeiting Coalition.

As a result, even when they are discovered and shut down, sites purveying phony merchandise "regenerate so quickly that it feels like a game of Whac-a-Mole," she said during a panel discussion at the Fordham Fashion Law Institute's Symposium, "Fashion = Art + Commerce," held in New York last month.

That forum, "Beyond Whac-a-Mole: New Initiatives in Intellectual Property Enforcement," focused on the latest methods being tried to stop the online counterfeiters.

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For instance, the IACC is working with major credit card companies and payment processing networks to block counterfeit websites from processing consumers' payments. Meanwhile, MarkMonitor, which provides brand-safeguarding services, has been working to shut down rogue websites by reporting them to the companies that run search engines.

For example, MarkMonitor identified 239 websites purchasing branded keywords for search ads, and then passing off knockoffs of a certain high-end jewelry brand as the real thing.

"We were able to report those advertisers to the search engines and remove their ads," Te Smith, vice president of communications for MarkMonitor, who was on the panel, told DailyFinance. "The sites were generating almost 1 million visits a year, visits that should have been going to the client's website, but were being stolen by the counterfeiters."

Offline, the Department of Homeland Security has been targeting flea markets across the country where phony merchandise is sold, unleashing a series of raids that have resulted in the seizure of large quantities in counterfeit goods.

Shaming Shoppers

But taking aim at the shoppers who purchase fakes -- who until now, have mostly been cast as unsuspecting dupes -- represents a new tactic.

By directing their tsk-tsk message to consumers, anti-counterfeiting activists acknowledge that many buyers of knockoff merchandise know all too well that they're getting a fake. Indeed, it's this group "that can be the most difficult to reach," Montanaro says.

For its part, the IACC has launched DesignsFauxReal.com, a consumer awareness campaign on the harms caused by counterfeit goods.

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The site takes a tongue-in-cheek approach, sporting a design that evokes the look of a knockoff website, with taglines like, "Free identity theft with every purchase."

"A lot of people don't realize [that when you buy from a rogue website], you're handing your card information over to hardened criminals, so you're at the risk of identity theft," Montanaro says. The IACC is also warning shoppers that buying from counterfeit sites can hurt their credit score.

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Teens See No Moral Problem with Buying Fakes


The International Trademark Association is also unveiling a consumer awareness push this month.

Dubbed "UnReal," the campaign targets 14- to 18-year-olds with the message that counterfeit goods can imperil your health and safety, are linked to organized crime, hurt the economy, and can even hurt your street cred.

INTA will spread its message in classrooms around the country and through social media.

"There's a big opportunity to educate the public on counterfeiting," said INTA's Candace Li during the symposium.

The campaign will also raise awareness that counterfeiters don't just knock off luxury goods, but things like prescription medications. And phony pharmaceuticals can "lead to death," the Unreal campaign's Facebook page pointedly notes.

Other counterfeit products that pose health and safety concerns include items like Christmas lights and brake pads, as well as counterfeit toothpaste, which can contain toxic chemicals, and has been known to end up on the shelves of legitimate retailers, Nancy Prager, a Washington-based intellectual property lawyer, told DailyFinance following the symposium.


The INTA campaign also highlights the link between buying counterfeits and funding an industry tied to organized crime, terrorism and child labor, Li says.

Still, the association faces an uphill battle convincing those teens who like to impress their friends by flashing facsimiles of expensive trendy gear not to buy knockoffs.

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In teen focus groups organized by INTA, many young people revealed that they'd knowingly purchased product knockoffs, and "didn't find a moral obligation not to buy counterfeits," Li said.

The challenge with selling an anti-counterfeit message to young shoppers is that it involves preaching to a generation that's grown up downloading music for free, and tends to have "a huge sense of entitlement," Smith added.

But despite that, INTA's research suggests that a consumer awareness campaign could change their minds. Young people who've been educated about the social and economic damage of counterfeit goods will think twice about buying them, INTA found.

Cracking Down on Canal Street

New York City shoppers may soon have a stronger reason to think twice before snapping up a pair of phony UGG boots in Chinatown.

Taking a page from the playbooks of Italy and France, where it's illegal to buy counterfeit goods, City Councilwoman Margaret Chin has introduced new legislation that would make it a Class A misdemeanor to purchase knockoffs in New York City, which has long been a major hub for fakes. The penalties would be fines as high as $1,000, or up to a year in jail.

The legislation would empower police to issue summons to people caught buying counterfeit goods, said Councilwoman Chin in a press statement.

"The bottom line is counterfeiters have to sell to do their job, and we need a law in place that punishes buyers for supporting this illegal trade," she said. It's "smart crime fighting."


Chin's office hopes to get the bill passed by late 2013. If she's successful, it could spark similar legislative moves across the nation, experts say. Once there's a precedent in a major city like New York, "it's easy for other cities to enact similar legislation," Kelly Magee, director of communication for Councilwoman Chin's office, told DailyFinance.

But industry experts aren't necessarily sold on the idea.

"Arresting people: I don't know if that's great PR for your brand," Montanaro said. "And while it may be well-intentioned, it presents some practical difficulties,"she told DailyFinance.

For one, the law would be tough to enforce. "It would require the government to prove that the consumer 'knowingly' purchased counterfeit goods. The problem is that knowledge can be difficult to prove," she said. "And combined with the limited resources of law enforcement, this presents some concerns for us."
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