Everyone has seen the sidewalk vendor hawking a too good to be true designer handbag. The clues to counterfeit luxury items used to be so obvious that most people knew exactly what they were buying. This sadly is no longer the case. The production of counterfeit items causes American manufactures to suffer about $200 billion in losses each year according to the International AntiCounterfeiting Coalition (Freedman, 1999). A large part of counterfeited items are fashion goods. They are usually easily recognizable, especially at the designer or luxury end of the market. The more exclusive a brand is, the more likely it is to be counterfeited (Lai & Zaichkowsky, 1999). As these goods are also high value, there is considerable profit to be made from counterfeiting these brands.
In recent years counterfeiting has become a major headache for designers, consumers, and the government. Manufacturers, mostly in Asia, create knockoffs of popular fashion items in order to sell to unsuspecting consumers at a cheaper price than the originals. While there are a few government agencies devoted to catching these criminals, most are never caught due to the huge demand for these items. Due to the popularity of the Internet and online shopping, the problem is only getting worse. In this paper the research indicates that the production of counterfeit luxury goods has caused significant economic damage by competing with legitimate businesses, eroding the value of the brands that they counterfeit, and by causing the loss of American jobs and preventing the United States from collecting taxes on the counterfeiter’s sales and profits.
The business of counterfeiting makes it harder for genuine retailers to compete in the marketplace. Legitimate businesses are greatly affected by the counterfeit industry, they suffer decreased sales, and jobs are lost because owners are forced to cut back the workforce due to these decreased sales. Now that almost anything can be faked, counterfeiting is becoming a huge economic issue. Many businesses are losing customers because they are not able to spot counterfeit items. Customers are doing more and more shopping on the Internet for convenience and lower prices rather than shopping at their local trusted retailer.
Customers are buying merchandise without knowing the seller or their reputation (McCausland, 2010). “The shopper who would never have considered buying from the guy on the corner whispering, ‘Pssst! Want to buy a watch?’ can easily be fooled by a website that looks genuine but isn’t,” says Susan Scafidi, a law professor at Fordham Univeristy (McCausland, 2010). Some websites are even very open about the fact that they sell counterfeit merchandise. They label their designer knockoffs as “replicas” or “inspired by” the original designer (Freedman, 1999). The shoppers who do not realize that they are buying counterfeit goods or who are knowingly buying counterfeit goods will continue to purchase these items from counterfeiters...