Is High-Fashion Counterfeiting Connected to the Mafia?
NEW YORK ( MainStreet) Is the counterfeiting of designer goods different from knock-offs? Is organized crime involved in the fashion industry? If so, what happens to the ill-gotten gains?
As New York Fashion Week wraps up, it's high time to explore some of these issues.
Professor David S. Wall, head of the School of Applied Social Sciences at Durham University in the U.K., published a study in 2010 called "Jailhouse Frocks: Locating the Public Interest in Policing Counterfeit Luxury Fashion Goods."
Asked about the the difference between knock-offs and counterfeit items, Wall replied that there are distinctions, albeit subtle ones.
"'Knock-off' is usually regarded as design piracy and describes the copying of the style--e.g. usually without the brand logo-- whereas counterfeits copy the branded product in its entirety to pass off as the complete product and confuse consumers, who may be seen as victims, into paying the market price for what are usually much poorer quality goods," he said.
But Wall noted that there is a branch of the legitimate "high street new fast fashion industry" that deals in knock-offs. It allegedly copies designs at fashion shows. Then these entities furnish similar "in the style of" products onto the shelves in days or weeks. He also said he is aware of allegations about the involvement of organized crime, but he has no direct evidence - although he believes it quite possible.
According to Wall's article, counterfeiting presents some interesting issues for academicians researching crime and for policymakers.
He says that it differs from the usual types of crime that comprise the major part of the criminal justice system. Although "it is growing in prevalence due to the enormous returns on investment," Wall thinks that other types of offenses will be a priority and there will be little desire to spend taxpayer dollars to combat this crime.
Wall cited previous studies that indicated counterfeiters are motivated by mark-ups that are potentially greater than narco-trafficking but without the risk. He also notes that counterfeit goods have increased recently as a result of globalization and changes in consumer preferences. Indeed, estimates place the recent counterfeit goods market between 5% and 7% of all world trade.
A 2008 report by the Organization for Economic Co-operation and Development (OECD) estimated that counterfeit trade and pirated products in 2005 to be about $200 billion with the potential of several several hundred billion dollars more if domestic and internet counterfeiting is included.
Wall also mentioned that a study by the Ledbury Research company in 2005 and 2006 to identify trends in counterfeit luxury consumption in the United Kingdom. Ledbury estimated that 43% of consumers buy luxury goods each year. They categorized the purchases as "clothing (28%), shoes (22%), watches (12%), jewellery (11%) and leather goods (10%)."