NY Counterfeits: The True Cost

NEW YORK—Dimi Vyamdi stood at the door of a dessert shop on Mott Street. For four weeks, she has heard whispers from men and women, “Louis Vuitton” some say. Others whisper “Rolex, Chanel.”

Vyadmi knows the game. “Many people can’t afford genuine brand-name products, but everyone would like to have a brand-name bag,” she said, with a laugh.

The counterfeit industry feeds off indifference. High prices keep designer bags out of reach for most of us, and counterfeits give a cheap alternative. You can find them being sold out of black trash bags around Times Square, or in the side streets of Chinatown. Someone may lead you to the back of a truck, or a store owner may pull back a curtain revealing a wide selection of knock-off bags.

Yet, behind the industry of counterfeits is a market that preys on the meek. It’s a ring where the able-bodied are forced to work in factories, and the attractive-bodied are forced into prostitution. It’s an industry tied to the drugs and guns being trafficked into the United States by gangs, and it’s an industry that is grabbing cash from the pockets of honest businesses here in New York.

Valerie Salembier is president of the Authentics Foundation, a non-profit she started as a way to advocate to consumers about the dangers that result from the counterfeit industry.

“If women, particularly, understood that the $50 fake bag they bought on Canal Street or somewhere in Chinatown, that it was funding things like child labor, I know would attitudes change,” she said.

Salembier became interested in fighting the counterfeits market when she was the publisher of Harper’s Bazaar.

She held up two small Louis Vuitton bags and asked, “Can you guess which one is a fake?”

The colors and logo look identical. The size and design are the same. The differences are getting harder to find. Other than a few areas with sloppy painting and sewing, the discrepancies frequently stem more from oversight, like a hard bottom or feet added to products that aren’t supposed to have them.

“If you’re selling a fake for $25, you know it’s a fake when you buy it,” Salembier said. “What’s happening is that the counterfeiters—the big criminal organizations—understand this now. So they are making counterfeits with far better materials, and in some cases it is difficult to tell, unless you know what to look for.”

The counterfeit industry is a cozy home for gangs and terrorists. Part of this is because of the nature of the industry. “It’s high profit and low risk,” Salembier said.

According to Max Abrahams, a fellow at John Hopkins and an expert on terrorism, counterfeits also provide a strong source of revenue that’s difficult to track.

“It makes perfect sense that terrorist groups would have these sources of funding because they want to stay on the down-low and they have to stay clandestine—they have to avoid society,” Abrahms said.

An Illicit Market

The global counterfeit market is estimated to bring in $250 billion a year and is run by transnational organized crime groups, according to the United Nations Office on Drugs and Crime (UNODC). It includes counterfeit bags, cigarettes, toys, medicine, and a broad array of other goods—including the infamous exploding batteries that were recently uncovered in New York.

“Criminal organizations are also often involved beyond just producing and moving counterfeit goods, with many also trafficking drugs, firearms and people,” it states.

Manufacturing the goods requires expensive equipment, and because of this it is rarely done on a small scale. According to a report from the Union des Fabricants, a typical factory that can manufacture leather goods and duplicate labeling will typically cost hundreds of thousands of dollars.

“Many counterfeit production plants are financed by investors from Hong Kong and Taiwan, who can obtain a higher return on their money, particularly in the provinces of Guangdong (Canton) and Zhejiang (region south of Shanghai),” it states.

Read the full story here.