Five Brand Strategies To Protect Consumers from Counterfeit Luxury

Luxury brands were slow to embrace e-commerce, insisting that the luxury consumer experience was inseparable from the sensory wonderland of the in-store experience. But today even luxury consumers view the convenience, flexibility, and selection of online shopping as an indispensable extension of a brand's customer service, because it allows them to select the seller whose offerings match best with their personal priorities. Price, size options, white-glove delivery… if they don’t find what they want, they click off to look elsewhere.

And therein lies the risk for brands, and brands in luxury most of all. Savvy modern counterfeiters are expert at creating the appearance of enticing, authentic options for consumers sourcing purchases online. In these scenarios, the brand name is bait for deceptive sales, payment fraud and identity theft, and the victims are brand fans and loyal consumers. Protecting them is a new and urgent priority for brands’ customer service teams, prompting luxury leaders like Versace and Armani to embrace exciting new methods for safer, risk-free shopping.

Here are 5 of the most common consumer protection strategies that luxury and premium brands are using today to protect consumers from counterfeiters:

Stopping the Supply of Counterfeits

Disrupting the global counterfeit supply chain to prevent fakes from reaching consumers is one of the most traditional strategies for anti-counterfeiting. Global customs and border protection agencies inspect and seize products that would be worth billions if they were real. In the United States alone, the US CBP seized 34,143 shipments with violations of intellectual property in fiscal 2017, removing goods with an estimated sales value of more than $1.2 billion. Still, the International Trademark Association estimates global losses from counterfeiting and piracy will reach US $4.2 trillion by 2022. Cross-border online sales, small batch shipping, drone delivery, and same-country manufacturing are all factors reducing the effectiveness of border interventions.

Adding Distinctive Product Features

Counterfeits that avoid detection at borders can be presented to consumers as authentic. To make this more difficult, brands have historically integrated distinctive logos, fabrics, stitching patterns and hardware that law enforcement, brand inspectors, retailers, professional authentication experts and interested consumers could use to identify authentic and counterfeit goods. As counterfeiters learned to make credible copies, a new generation of these “distinctive product features” emerged in the form of holograms, chemical taggants, reflective threads, microdots, and so on — each with a promise that they would never be copied (until they were). Unfortunately, the race to stay ahead of the counterfeiters has meant that each iteration of new technology has become more specialized and more hidden (what the industry calls ‘covert’). This is good policy for investigators but bad for consumers, who are increasingly cut out of using distinctive product features to evaluate authenticity for themselves.

Selling Direct-to-Consumer

Cutting out counterfeits is another reason that direct-to-consumer brands have been trending with the evolution of e-commerce, becoming a key source of competitive advantage for digitally native brands that prioritize the customer relationship. Eliminating a middleman allows brands to build deeper, more direct connections with customers, maintain higher margins, and leverage their boutique scale to promote an aura of luxury and exclusivity, even when their prices are more approachable. Brands like Everlane and Tamara Mellon have led the way with the online, direct-to-consumer model and enjoyed great success, but are now bumping up against constraints to scale. From an anti-counterfeiting perspective it’s worth noting that the model stops working the moment the product is sold. Secondary resale markets are a popular backup for consumers hoping to source hot products sold out in stores, but they’re also a counterfeiters’ candy store.

Expanding Consumer Education

Empowering consumers with information to source authentic products is a vital step in reducing the number who are victimized by counterfeiters. Yet, aside from some notable exceptions like Tiffany & Co., luxury brands have been hesitant to take an official, public position that helps consumers avoid counterfeits. Thirty years ago this attitude made sense. Counterfeits shilled in street markets and subway stations were obviously imposters, so heritage brands could assume that anyone buying them was doing so deliberately. Today an estimated 75% of people who buy counterfeits have been convinced that they scored a deal on the real thing. These are consumers who want authentic products and are disillusioned to discover they’ve been tricked. In the gap left by brands’ silence grew a cottage industry of self-styled experts using social media channels to advise followers on recognizing authentic products, usually with no input from the brands themselves. While some of this advice can be helpful, it falls to the consumer to wade through confusing or conflicting sources and weed out what’s useful. (And the counterfeiters are reading, too.)

Adding Digital Authentication

When you connect the enormous growth in e-commerce options over the last three decades with the last decade’s explosion in smartphone technology, it’s only natural that brands attentive to customer service and consumer behavior are investing heavily in digital technologies of all types. Among these are innovations in “connected products” (also known as the Internet of Things) that allow consumers to scan a unique identifier on a product and unlock content that the brand stores online — including a confirmation that the product is authentic.

Luxury leaders like Armani, Nobis, Parajumpers and Versace are joining streetwear leaders like Stone Island in providing a digital authentication option that allows consumers to confirm in a few clicks that a product is authentic — and can therefore be trusted to contain all of the quality, functionality, and style that made the brand famous. And unlike the security provided by official brand stores or selling direct-to-consumer, the anti-counterfeiting protection from digital authentication is built into the product and lasts for its entire lifetime, including during sales on secondary markets like eBay, Depop and Grailed.

In conclusion, border enforcements, distinctive product features and consumer education about the risk of buying counterfeits are all a good start. But if it's your job to safeguard a brand and its consumers, the best option is empowering consumers to immediately and reliably recognize when a product is authentic - and guaranteed to deliver on your brand's promise. Remember that modern luxury consumers expect to find what they want, where they want, when they want it - and they’ll most likely be searching it on mobile. You want them to have an exceptional experience with your brand, and that includes ensuring that the products they buy are truly yours.