Cheap Luxury's High Price

Today’s New York Times Op-Ed section has an interesting article on the connection between luxury handbag counterfeiting and terrorism. At first I was skeptical but the article convinced me otherwise.

In Terror’s Purse Strings, Newsweek correspondent and author Dana Thomas shares how important handbags are to the fashion industry.

According to consumer surveys conducted by Coach, the average American woman was buying two new handbags a year in 2000; by 2004, it was more than four. And the average luxury bag retails for 10 to 12 times its production cost.

If the margin is this good for the manufacturers, imagine what it is for counterfeiters!

As soon as a handbag hits big, counterfeiters around the globe churn out fake versions by the thousands. And they have no trouble selling them. Shoppers descend on Canal Street in New York, Santee Alley in Los Angeles and flea markets and purse parties around the country to pick up knockoffs for one-tenth the legitimate bag’s retail cost, then pass them off as real.

Luxury goods counterfeiting is NOT a victimless crime. These same crime rings that counterfeit goods also deal in drugs, weapons, human trafficking, and even terrorism. There is a known connection between counterfeiting rings and numerous terrorist organizations, and even the 1993 World Trade Center bombing.

We retailers need to let our customers know that counterfeit goods are not a victimless crime. As long as consumers will buy them, criminals will make them and continue to steal sales from legitimate retailers and luxury good manufacturers. Even worse, the stealing of the lives of children and innocent victims. 

Comments

[Charles Donnely (fake)]

Perhaps the problem is with overly strict intellectual property laws?

When there is demand, as during prohibition and with current drug laws, and the demand cannot be met legally, those who generally deal in illegal activities will find a great profit center. The tighter the laws clamp down, the more the hardened criminals that remain will monopolize the profits with virtually no competition.

Certainly the government can't enforce these IP laws very effectively, the resources to do so are way out of proportion with the benefit. Criminals will continue to have financing and our politicians will continue bankrupt the country fighting them, until one day we realize this kind of system does not provide a benefit to society. The intellectual property violation committed is nothing compared to the financing it draws for more sinister activities.

Relax IP laws, and innovation won't dissappear, artists were creating long before these rules existed.

[Matt Norcia]

The problem with intellectual property laws is that, like so many aspects of modern society, deliberate misinterpretation of their intended use can be utilized for the benefit of those who would profit from the hard work of others. It's frustrating and unfortunate when laws that are intended to serve artists and protect them from the depraved and corrupt ultimately result in harming the innocent. Perhaps a solution exists in a combination of motivating producers to create legitimate B-level versions of popular items, and educating consumers as to the implicit harm of buying knock-offs (to themselves (shoddy merchandise, no warranty, etc.) as well as the manufacturers and retailers). As retailers, the onus for this second task lies with us.