The Hidden Dangers Of Fake Luxury Goods | Big Business

Fake luxury goods like watches and shoes make up 70% of the $2 trillion counterfeit industry. Here we have a Burberry coat and it says Burbelly mistakenly on the button. Most people think it's a victimless crime. What they don't realize is they are the victims. Counterfeit jewelry or handbags can have dangerous toxins like cadmium and lead. And knockoff sneakers have funded terrorist attacks. Oh, what's the harm? I'm just buying this pocketbook. What can it do? The problem is where the money is going. Illicit factories are making fakes that are so convincing. Stopping them is getting harder. They shut one down, another one is being built across the pond. So how do criminals smuggle counterfeit jewelry, purses and sneakers? And what can be done to spot the real stuff? Customs and Border Protection officers are the first line of defense. Steve Nethersall is one of them. He works at JFK Airport's mail facility, which receives about a million packages every day. When it's coming from China, bing, that's your number one red flag. In fact, most of the fake luxury goods bound for the U.S. come from China through the mail system. In 2024, U.S. Customs seized 32 million counterfeit items. They would have been worth $5.4 billion if they'd been genuine. The most common counterfeited handbag is Louis Vuitton. The most counterfeited sneaker is Nike Air Jordans. The manufacturer, they have to register that product, trademark protect it with Customs and Border Protection. And then if it's deemed counterfeit, then we have the ability to seize it. Before a package arrives in the U.S., CBP collects intelligence on the sender, container and aircraft. That data, along with X-rays of the boxes, helps Steve's team determine which ones are suspicious enough to pull for manual inspection. They're opening this package because it came from a known counterfeiter in Thailand. We have Gucci eyewear, watches, jewelry. The high-end manufacturers like this never commingle their products. They wouldn't put these items together, and their items wouldn't come in bubble wrap like this. In 2024, knockoff jewelry was the top commodity the U.S. government seized by value. It confiscated over 700,000 pieces, worth more than $1.6 billion. This New Jersey jewelry store has just a few people who sniff out fakes, like Michael Lipman and his cousin Gary. They're an authorized dealer for brands like Cartier and David Yerman. We're buying straight from the company, so there's zero risk there. The bigger risk, of course, is when we're buying precious metals, gold or diamonds from customers. If I make a mistake, it costs us a lot of money. Let's see what you got. Gold is so high now. It's such a great time to sell. What is it at now? $29.09 per ounce of pure gold. I remember when it was $40 an ounce back in the day. First, Michael runs what's called a scratch test on the gold pieces on a black stone made of quartz. So this is a really nice chain. It looks pretty good. I'm going to check the stamp to see if it fits. So this is a 14 karat stamp, so I'm pretty sure it's 14 karat because I can, just from feeling it, basically what I'm looking for is anything to tell me that it's not gold. It could be a discoloration of the metal, it's oxidation, stuff that doesn't really happen to gold. What's the difference between 14 karat and 18 karat? What does the karat mean? It means what purity of gold. So if it's 14 karat, it's approximately 58.5% gold and the rest is alloy. What would be all? Out of 124 karat, which is very rare. I'm pretty sure this is going to come 14 karat because I'm getting a nice scratch on it. If it wasn't real, it would be very light. I'm not doing it in such a way that it's going to hurt the piece. Benny dabs a bit of nitric acid on it. If the gold scratch remains, it's real. If it disappears, it's fake. The lines are still there, so I feel comfortable these are 14 karat. But on these earrings... So I don't see any stamp. It's feeling kind of hollow. I'm a little skeptical because it's so light. When you tap it, it's almost like it's plastic underneath. But let's scratch it and see. It's definitely disappearing a little bit. You see right here? Yeah. When I shave it down, I'm getting the outside coating of the plating off, which reveals the true, what's underneath. That is, I'm pretty sure, plastic. So unfortunately, I can't do anything with these. Michael would only buy these two chains and a necklace from this load. The rest, like these earrings, were gold-plated or metal and are worthless to him. So this is 26.8 grams. So your price for this is $1,247. I really had no idea, but I figured 500 was a nice, even number. So I'm delighted. This gold will be melted and refined, removing all other metals. Assuming it's pure enough, we'll actually make it into a new piece. The cousins also have to be careful when they're buying diamonds. Today, I think the biggest challenge is the lab grown showing up in jewelry, showing up in people trying to sell that. Chemically, lab-growns are diamonds. But attempting to pass them off as natural, earth-mined diamonds is illegal, according to the Federal Trade Commission. But fraudsters try to do it anyway, because mined ones are worth a lot more. The prices for lab-grown are maybe 20% of what mined diamonds are. I'm talking new. Resale, there's very little resale value. Prices for lab-grown have been dropping tremendously in the last couple years, as there's much more supply. How you doing? I'm Gary. Nice to meet you. Steve. Steve, pleasure. Sit down. So what do you have? Today, Gary is checking out two diamond rings and two sets of earrings. I was cleaning out my grandmother's jewelry box. For years, Gary relied mostly on this diamond tester, which can easily spot fakes, like this one made of cubic zirconia, a synthetic man-made material. You see how nothing is happening. There's no red going. It's like it's touching nothing. It's nowhere near a diamond. But the machine can't differentiate lab-grown from mined, because they're chemically identical. So Gary invested in this new one, called the ID100. This is a $12,000 tester, and they're just going up in price. Doing a whole spectral analysis on a diamond is a whole other level of technology. We can't live without it, basically. So that would be like an x-ray machine and an MRI. Exactly. That's an excellent analogy there. Some stones that look like diamonds, like this moissanite, can also trick the old tester. Moissanite and diamond share the same heat conductivity attributes, and that's why it'll pass this machine. But the ID100 will catch it. OK, these most likely are lab-grown. So what we have here are mined diamond from the earth, not diamond, called a cubic zirconian, not diamond, called moissanite, and lab-grown diamond. Gary's team only buys mined diamonds. It's a diamond. I think the worldwide jewelry market's $350 billion. So there's a tremendous amount of goods coming from everywhere, and the fakes keep getting better and better and better. Tiffany and Cartier are the two luxury jewelry brands most targeted by counterfeiters. In 2021, CPP Cincinnati seized $3.6 million worth of fake Cartier bracelets. The luxury brand David Yerman has also had a problem with dupes. We used to see David Yerman knockoffs a lot. The fake pieces are very light, so this has weight to it. This has tension, like the perfect amount of tension so you can get it on and it's comfortable. The knockoffs will be flimsy. The quality of the stones will be darker. The company has filed multiple lawsuits against counterfeiters, and it's won. They've really clamped down. Companies go to such lengths to combat fakes because their reputations can take a hit. When a buyer doesn't realize they've bought a knockoff bracelet and it falls apart, they might blame the real company. And over time, that could erode consumer trust in the brand. This is especially true when the fake jewelry is made of subpar materials. In fact, in 2019, an L.A. jewelry store owner was arrested with $15 million worth of fake jewelry. Some were 2,000 times over the U.S. limits of cadmium and lead. Footwear is another industry riddled with counterfeits. And that's a challenge for secondhand sneaker stores like Image in Queens, New York. Co-owners Shu Cheng and Greg Lamb have been authenticating sneakers for 20 years. Fakes aren't getting better. Back then, fakes were so much easier to tell. I'm talking about the year 2000. But now we look at every detail. We even smell it. The fake pair, they use like a more toxic glue. 80% of the time this shoe comes in has been fake. Right off the bat, as you can see, the color. Like the real pair is like a darker red compared to the fake ones, like a lighter red. See how it's more form? This one's like more puffier, you know? As you can see on the camera, in person, they look like two identical shoes. For example, this is the fake one. The toe box is a little bit darker than the real pair. The real pair has a lighter hue to it. The leather feel on the fake pair is so much stiffer than the real pair. The real pair is nice and soft and plush. The shape as well. You see the shape is more bulky looking. And then while the real pair looks very sleek looking. Shu has to sniff out the fakes because, in this game, his reputation is on the line. If I'm not sure, I'll put it on the side either. I'm not even gonna try. If I can take a $400 loss to make sure that my customer gets a legit product, I will do that. Shu says right now, this Travis Scott and Nike collab is the most counterfeited sneaker on the market. Anytime this pair comes in, we have pairs available to double check them, make sure the threading is good, sole color and everything. The image team paid $800 for this pair, but they're selling it for double because the shoes are so popular and Nike released a limited supply. Fake companies are gonna go, hey, I can make a buck off this. Why not? Nike is the world's most popular shoe brand, so its sneakers also dominate the resale market. They make up 70% of the store's inventory. Iconic pairs like these Jordan 1 OGs in good condition can rack up a lot of value over time. A size 9.5 sold for triple the price in less than a year on the resale site StockX, likely due to the buzz from the Last Dance documentary series. We compared them to, like, art. There's only one Mona Lisa. Why is it worth so much? These were given to friends and family of Sony that worked on the PlayStation. They made 151 pairs of these only, yeah. When we bought in 2006, we paid like $1,000, which was a lot. It's taken Shu and Greg over two decades to build their impressive collection. This is Kobe's first signature Nike shoe, game worn and autographed by Kobe. Here we have a Jordan 11, black and red, signed by the man himself, Michael Jordan. And everybody's favorite movie, Back to the Future, Marty McFly Nike Mags. When this shoe came out, we first opened. We didn't have no money to buy the shoe off auction. We opened a credit card. To go buy this shoe, we need a piece of history. We bought the cheapest size 9 at auction at like $3,000. This shoe in the market now is probably worth like 20 grand. I guess you could say it was a good investment opening that credit card. This collection can really get you a nice house, right? A condo. Greg and Shu buy most of their inventory from other sneakerheads like Shaq Lawson, a Business Insider employee with over 100 sneakers in his collection. How's everything, brother? How's everything, bro? Good. You been good? Been good. So what's up with you today? What we got? Brought some stuff. Just want to see what you guys would give me for it. Sure, no problem. Let's see what we got in the first pair. Oh, wow. Look at these. We don't see these often anymore, man. Nike Foamposites Supreme. Shaq bought this pair from Image 12 years ago for $500. Right now, if you were to sell it on your own, you'd probably get like $600 for this pair. It's held value for like over 10 years now. Nike's enduring value is why counterfeiters go to such lengths to trick sneakerheads. They're all from China. And the crazy part is people tell me that the fake factory are a few miles down from the real factory. And these fakes can be very popular among fans who can't afford the real stuff. So much so that sneakerheads are sharing spreadsheets like this one, listing hundreds of cheap fakes for sale on Chinese e-commerce site CN Fans. $62 for phony Jordan 11s, $55 Balenciaga dupes. I don't like it because I only sell real product in here. In my opinion, it's not a good look. Shaq is buying his sixth real pair on resale this month. I think I'm really set on these. I think I'm going to try these on. These are Black Infrared 6s, pretty good condition. Michael Jordan won his first NBA championship in this shoe. I like to put the laces behind instead of like looping it in the front. It's kind of a sneakerhead thing. Like we often don't tie our shoes just because it's an easy slip on, slip off. And there's just something about when you get a new pair of Jordans and like you just look at them and you're like, I feel complete. I'm going to take them. So $267.75, all right. I think I know the exact spot to put them. All right, brother. Enjoy the rest of your day, all right? Have a great rest of the new year, too. See you guys soon. We are now in my sneaker room, also known as the kingdom. Shaq has 140 pairs worth well over $20,000, all tucked away in a back room of his Brooklyn apartment. You're never going to hear me say I don't have something to wear. He bought the majority of them from Image. Every sneaker in here is tied to a specific memory. This one to me is special because I remember being online for it with my little brother. These specifically, I'll always remember my first time in L.A., I wore these. These are the Ben 23 Jordan 13s, and there's only 1,734 pairs of them. This is my favorite Jordan of all time, the Air Jordan 13 Flint. I've had five pairs of these. I remember wearing it to school in elementary school, and someone stepped on it, and I was ready to fight, not because they stepped on my foot and it hurt, but just because they stepped on these, and I love them. These are the very first hype sneaker I bought. Just holding this, you know, I'm getting emotional. I actually just got kicked out of college at that point. I think I was, like, about 18 because I was taking too many days off to actually take my mom to appointments. My aunt gave me $100 and told me, buy yourself something that means something to you, and the next day I got these. If I lost everything in this room and still had these, I'd be happy. These are my origin shoes. They're more than just leather and stitching. It's like, this is a book of memories for me. But even a veteran sneakerhead like Shaq has had his fair share of run-ins with fakes. The first time I tried to get these shoes, I actually ended up buying a fake. So I spent about $500 on this style shoe, and it was fake. And the reason I found that it was fake was because on these they say Flywire, but the font is in white. The pair that I got, it had it in pink. He understands why people would buy fakes on purpose. I don't judge. Wear what you can afford. Wear what you like. I know that many sneakerheads are against it, but then how do you call someone who invests all this money into fakes not a sneakerhead in a way? I never will take part of it because I don't want to use real money to buy fake things. You have a large community of people who are enthusiasts, who love these shoes, who have to worry about these fakes that are getting so good getting circled in. But it's not just collectors like Shaq and Image that are contending with the flood of fakes. StockX, one of the largest online sneaker resellers in the world, has rejected over $80 million worth of fake pairs since 2016. Counterfeiting detection begins when a user makes an account. It starts with everything from bot detection to policy to seller identification. After a verified user sells a pair of sneakers through StockX, they send them to a warehouse like this one, which sees roughly 10,000 items a day. First, staff scan the RFID chips, which manufacturers often put in the box to track and identify authentic pairs. Counterfeiters even try to copy those. The company also uses CT scans. Allowing us to get a shape of what is under the hood. Finally, a human checks it. Anthony Tangarife can inspect 250 pairs a day. Fonts over here. Feel the overall cardboard, make sure it's not too flimsy, not too thick. Give it a little scratch test. Comes with a mom and pop shop receipt. Everything's checking out. Now getting into the shoes. And basically what I'm looking for is any types of factory flaws, any loose threads, glue stains. Because our verification process goes far beyond just real and fake. Something wouldn't pass if it had a scratch on it. And believe it or not, the smell. With this particular shoe, you definitely want to get a leathery smell. Nothing too strong, nothing too chemically, which counterfeits do tend to have. It would smell anywhere between nail polish remover, gasoline sometimes. These would pass our verification process. Anthony attaches a green StockX tag to the shoes to tell buyers they've been authenticated. People have counterfeited our verification tags, and it went from a basic green tag to a tag that now has a QR code that we use for internal purposes to vet the product. But some buyers say this process isn't always foolproof. StockX was found liable in March for selling 37 pairs of fake Nikes on its site. The company told us the products in this case were a tiny fraction of the tens of millions of shoes it's reviewed. It's part of a lawsuit Nike brought against the platform back in 2022. The judge did, however, reject Nike's other allegation that StockX willfully sold counterfeits on its site, a decision StockX touts as a win. But that hasn't stopped customers and YouTubers online from questioning the retailer. Sometimes there are noise. There is conversation that might exist on X, on Reddit. And we look at all those to make sure that these are outliers. And when there's 35 million people on the platform every month, the noise isn't representative of the overall view. So a lot of people are asking, is it safe to continue to buy on StockX? Will I continue to buy from StockX on other platforms? Well, yes. This is the Jordan 1 lost and found from StockX. And knowing the rewards, knowing the risks, that right there is pretty much the most I'm willing to spend. If StockX authenticators do come across a fake, it's either destroyed, turned over to law enforcement, or returned to the seller. We do keep some items for training purposes. I have the verified past one with and suspected an authentic. Somebody would have been wearing this outside, you're not going to call them out. But now if you get closer and actually take an in-depth look at it, you're definitely going to sell. Another industry that's fallen prey to fraudsters? Watches. One of the most counterfeited types of jewelry out there. In my perception, the demand for fakes is simply because people like getting something over on the man. Rob Holmes is a private investigator for luxury watch brands, just like his dad was in New York in the 80s and 90s. Canal Street was the epicenter for counterfeit watches in the entire United States. In Chinatown, they would be stand-alone stores with big metal roll-down, roll-up doors. I grew up in the 80s going on raids with my father and making undercover buys. On raid days, they would go with a van or a U-Haul truck with off-duty cops and firemen inside the back of the trucks. And they would have spotters along the way who would go to local diners and tell them the addresses where they spotted those watches that day. Then the people would fly out of the trucks and if they didn't get there in time and the guys rolled down and locked the doors, we had industrial-strength saws where we could saw through those locks. It wouldn't be uncommon for my father to come home with a U-Haul truck full of bags, hefty bags, full of counterfeit watches. Today, you can still find watch dupes lining Canal Street. As a person who has been dealing with these things for years, when it doesn't say Swiss, you know something's wrong. John Buckley, a veteran watch reseller, has spent 28 years trying to spot the knockoffs. You didn't pay $75,000 for this watch. This is not authentic. 100% no bueno. First of all, this rotor is not gold. Finishing is a mess. All the best. Unbelievable. John comes to New York City's Diamond District to look for real ones for his clients. He buys and sells about a dozen watches a week. Little Eddie's got a Patek that I need. Hopefully I can buy it from him and I'm going to show him a couple of pieces that I've got. What's good about this watch, it's fully complete. Look at the condition. You got everything? He's hoping to get this rare Patek Philippe for under $40,000. Listen, I know it's a nice watch. I'm not here to beat you up. You know I need it. $36,000? I thought I was pretty good at $35,000. $37,000, that's my final price. I think it's fair. You can think about it. I don't have to think. Mazel. No problem. Thank you. This watch will be sold for $40,000 and change. So I'll make three grand on the watch, which is not bad. John says he rarely makes more than a few thousand dollars per watch. Sometimes it's only a few hundred. There are very few home runs in this game. I mean, I don't know what is considered a home run, making $10,000 on a watch. It's like, that doesn't happen. Down the street, John has his eyes on a gold Rolex Day-Date with diamonds on the bezel. How much is this $21,000 watch? $25,000. It's factory diamond dial, factory diamond bezel. $23,500. The deal, what I'm going to do for you, I'm going to obviously say yes. Really? It's beautiful. Thank you, Yasha. Mazel. John typically buys watches he knows one of his clients is looking for. We like cash flow. I write a check, I want to know that, you know, I'm going to have that money back, I'll make my profit on it and move on to the next one. He doesn't want to risk getting stuck with something he might not sell, even if he loves it. Like this diamond-studded Rolex from Cutter, which has an asking price of $175,000. I don't have a home for it. These watches are so pricey because they're partly assembled by hand with premium materials like gold and platinum, and there aren't many new ones entering the market. Brands like Patek Philippe and Audemars Pigot make fewer than 100,000 watches per year, and its estimated Rolex makes a million annually, which is not enough to keep up with demand. Today, a Rolex Daytona model is so popular, it's almost impossible to get one. I'm still on a waiting list since 1996, just to give you an idea. For most people, the only way to get one is to get one secondhand. The result of that, in many cases, is higher demand than available supply, which causes prices to go up. Between 2011 and 2021, Rolexes outperformed the Dow, real estate, and gold. In 2017, this Rolex owned by actor Paul Newman sold for a record $15.5 million. It is history now! $15,500,000! And the U.S. government's proposed tariffs could drive the price of used Rolexes up even more. But as demand soars, watch dealers have to be even warier of counterfeits, the biggest trap of the trade. You used to see watches that would just have maybe one of the trademarks, like just the crown on the face, but not the crown on the dial. Now manufacturing has gotten so good that even the cheaper knockoffs have everything. Back at his workshop, John is testing whether this Rolex from a dealer in the southern U.S. is counterfeit. Movement's working properly. Movement is right. I mean, I'm looking at the color of the case. This piece is not the same color as this piece. This is 18-karat gold. We always have to check, because I can't take a chance on paying for it, number one, or selling it to someone else if I'm not sure. So he runs these gold Rolex parts through that same scratch test we saw earlier in the jewelry shop. He adds a few drops of nitric acid, dissolving any material that isn't gold. The acid did not dissolve the gold. Over here, the acid dissolved the gold. It is not authentic. But most of the time, he can spot a fake with the naked eye. We could usually spot these just based on the symmetry of the case. They don't have that nice Rolex slope. The other, I mean, obvious thing that you look at, if you look at the amount of space between the face and the glass, you will see that it is very high. It's probably got an extra millimeter and a half. But sometimes the only way to tell is by opening up the watch. There's no mistaking a Rolex movement from a counterfeit. I don't care how good Chinese factories are. And dealers like John can't get it wrong. New young bucks that come into the business, they get caught out there real fast. And your reputation is burned, burned, when you can't make good on a sale. You can never spend enough money to get your reputation back, you know? So whatever it costs you to keep it, it's worth every penny. Luxury bag resellers, like this pawn shop in Queens, New York, also go to lengths to protect their reputation against fakes. When a customer brings in a bag to sell, authenticators like Vanessa Cabrera use an app called Entropy to verify it. This one is also in very good condition, as you can see. If this Chanel crossbody is real, it could be worth over $5,000. She uses this iPod with a microscope attachment to take detailed pictures. The Entropy app will use these to create what the company calls a fingerprint for the bag. Entropy uses AI to compare these photos to millions of images of real and fake bags already in its database. That was quick. It's that extra layer of confidence. Without the right tools in your back pocket, you can never be 100% sure. Yeezy Pawns president Lauren Kaminsky Goldman was the one who took the chance on Entropy. Today, she brought in this vintage 2002 Chanel ring hobo bag for Vanessa to authenticate. If it's legit, it could be worth over $1,000. But what's your gut telling you? The leather looks good. The stitching as well, it looks very clean. This one doesn't have a decal. So that makes me think that it probably is not. I'm going to take a picture. So we have the result for the authentication of the Chanel. And it's authentic. Yay! Entropy says its software is right 99% of the time. But if it does get it wrong, the company will pay out duped customers. We met with its CEO, Vidyut Srinivasan, in his office in Manhattan, New York. This is a fake that we recently came across. High quality, great workmanship, craftsmanship. You see the leather, you see the heat stamps. This is actually one of the items that we got incorrect. Entropy refunded $2,000 to the customer who bought this. When his team comes across fakes, Vidyut asks them to wear gloves. If you look at any report, any data report, you will see that almost all the counterfeit samples tested will have some kind of harmful chemical or toxin or metal, heavy metal, in them. And most of them are in areas that consumers use. Maybe the handle, maybe the buttons, maybe the zipper. It is an upside-down world that has amazing world-class distribution. They've been tied to things like terrorism. In the 2000s, Al-Qaeda suggested selling fakes as a way to fund criminal operations. And the brothers who mounted the 2015 attack on the Charlie Hebdo newspaper may have funded their weapons by selling fake Nikes. While trafficking counterfeits can lead to serious consequences, like millions in fines and years of jail time, it generally carries less risk for criminals than trafficking drugs like cocaine or heroin. For Vanessa, sometimes these counterfeits are easy to spot by eye. On fake ones, you don't see this finish. They use different type of lining inside. But the hardest bags for her to authenticate? Hermes. They're common targets for counterfeits because they're so pricey, so those can take entropy days to verify. So this is one of the most sought-after handbag names on the resale market. This is an Hermes Kelly. It actually was a family heirloom, so these things get passed down in families. The most prized possession in the Hermes world is a Birkin. Some models can cost hundreds of thousands of dollars. They're not just giving it to any person who walks right through the door. There is a whole process of building a relationship with the store, buying other items maybe to kind of build up that trust enough in you as a client. Maybe then a sales rep will invite you to buy a Birkin. They're so hard to come by. That's why they're so popular on the second-hand market. From 1980 to 2015, the resale value of Birkins outperformed gold and the S&P 500. Jamie Chua, a Singaporean influencer, has one of the largest collection of Hermes bags in the world, with over 200. This is a one-of-a-kind Birkin bag that was made for me. It has this Indian embroidery called the Oran embroidery. These are useless. You can't put anything in them. Maybe like a credit card and a piece of tissue. In the event of a fire, which is not going to happen, of course, I would grab my diamond bag because I can go straight to Christie's. I know they're eyeing it. This Himalayan crocodile Birkin with white gold detailing and 245 diamonds is one of the most expensive Birkins in the world. They're made completely by hand out of pricey materials like alligator, calf, and ostrich skin. It takes days to make this bag, the craftsmanship, the materials that go into it. That's why they're a common target for counterfeiters. One ring operating out of France had actual Hermès employees smuggling real materials and hardware into its factories. Fake Birkins, which don't have the same level of craftsmanship as the real ones, have even been sold right alongside your groceries. Walmart is making headlines for selling a bag that's a knockoff of an iconic luxury item. Third-party sellers put up the listings of the dupes on the Walmart site for about $100, and it went viral, with customers calling it the Walmart Birkin or the Workin. My Workin from Walmart is here. We're going to unbox it together. Okay. That is so pretty, actually. If you were to go back to 2007 and someone was wearing a Louis Vuitton bag, they probably wouldn't be so quick to say, this is fake. Whereas today, I think it's a little bit more commonplace and acceptable to be like, girl, this is not real. I paid $300 for this. Dupes are also on the rise because the cost of authentic luxury bags has ballooned in recent years. Chanel has increased the price of its most popular bag by 75% since 2019. In 2023, Hermes raised the price of its basic Birkin by 10%. Some people say, you know, there's no way a bag can cost $20,000 no matter how great the leather is. I think they kind of might see that as a way to protest and push back that, like, you can make this bag cheaper because it exists in a cheaper form already. But even if the Birkin can pose as a proverbial middle finger to expensive brands, there's still some ambiguity surrounding it, both ethically and legally. You're not 100% sure who made it and what their working conditions are like. So I think that aspect is a little bit, you know, is what should give people pause. While the very cheap price might make it clear the Birkin wasn't real, some language in the listings may test the legal boundaries, like having Birkin in the title. But even in the instances where the third-party sellers on the website do not use the trademarks Birkin and Hermes, these sellers may be breaking the law because the distinctive shape of the Birkin bag is itself protected by IP rights. Now, if you search Birkin on walmart.com, all that comes up are what look to be real Birkins, listed for as much as $50,000. If I could afford $40,000 for a Birkin, I probably would want a $40,000 purchasing experience. I'm gonna need a glass of champagne or something. But even more counterfeited than handbags? Clothes. Remember StockX? Apparel made up half of all suspected fakes it found in 2024. I would say the hardest part, probably the extensive catalog, because we constantly update our catalog, so we get a lot of products. Tay Pratt has been verifying clothes for StockX for three years. Anything that has a high price point or that's highly sought after are very fake. Like hoodies made from the brand Fear of God. Today, Tay's verifying a Stussy Nike collab sweater, worth over $100 if it's real. The first thing I personally do, I'm gonna look at the quality of the neck tag. Nike neck tags have embroidery for their logo, so I'm making sure that embroidery looks nice and clean. I'm making sure, again, the size tag looks nice and clean. And since it's a collab with Stussy, I'm looking at the opposite side as well, and I'm looking at the embroidery on the Stussy logo. I'm next gonna go to the actual hang tag itself. All Nike hang tags have a specific color for each size, so I'm gonna look at the red. I'm making sure that's shiny and reflective. But we're also looking if the item is actually used or not and in perfect dead stock condition. There's no dirt marks, no lint, no pilling. This one was real, so it'll be listed on the site. Tay has come across fake versions of this sweater. Pay attention to the coloring. With the fake one, it's way lighter than the real one. You can see the color differences between these reds. Like, this one's almost a pink color, and this one's like a stark, bold red. You can feel the quality, too, to see how, like, loose this fabric is, and this one kind of holds its integrity. This one's pretty close. They got this pretty close. But if you actually look at the tag itself, you can tell it's lower quality. These fakes can be made with everything from toxic dyes and flammable materials to dangerous metals. Even when you wash it multiple times, these chemicals still stay there. It can literally be anywhere on any product that you purchase that is counterfeit from any source, online or offline. Luxury heels can fetch similarly high prices, especially ones with an iconic red bottom, Christian Louboutins. Teresa Romer, an author and TV personality based in Houston, Texas, has over 560 pairs of shoes, 100 of which are Louboutins. This is actually my favorite, favorite pair of Christian Louboutins. Who wouldn't want to wear these? It's like wearing jewelry on your feet, right? These are so expensive because each pair is made by hand. That's why these heels can start at $600. Even used pairs that have been refurbished can fetch a lot. That's why Vincent Rau, a cobbler in New York City, charges up to $95 to resole these worn-out pumps. When you have a painted sole such as this one, the paint's going to wear right off as soon as you take a few steps. Vincent sands the shoe and adds a red sole protector. Take your hammer and start applying the sole nice and evenly all around the shoe. Then he'll cut the sole, glue it on, and sand it down some more. He then mixes three paints, a red, scarlet red, and flat white to try and match the iconic Louboutin color. Back to its former glory, this pair might fetch hundreds of dollars. That price is part of why authorities have come across a lot of fakes. The Fed's saying they have seized more than 20,000 pairs of counterfeit high heels by designer Christian Louboutin. In 2012, customs officers in Los Angeles found the shoes in five shipments. What tipped them off is the boxes were coming from China, but real Louboutins are made in Italy. The shoes would have been worth $18 million if they'd been real. I mean, that each pair, had it been genuine, would have been sold at $1,200 a pair. So that's a big loss for our revenue had they have entered the commerce of the United States. But how do criminals make and move so many luxury counterfeits globally? Well, most operate in China or Hong Kong. Wherever manufacturing is cheap, that's where manufacturing is going to happen. These factories can afford the same machines that the real companies use, and they use the same software. Often that software is stolen through industrial espionage. They also might smuggle products out of the real factories so they know what to replicate. But they'll swap the materials for cheaper, lower quality ones to reduce costs. But sometimes those materials are toxic. Things like lead, cadmium, and arsenic, which can cause rashes and even cancer. I don't think health and safety of consumers is a top priority in their business model. These factories also pay low wages and can have unsafe working conditions. There have been plenty of stories of the counterfeit watch industry being tied to child labor, sweatshops, and even human trafficking. You're going to have organized criminals who are doing this kind of stuff. They might make a fake listing through online marketplaces like Amazon, or enlist the help of influencers. Social influencers, in some instances, will direct their followers to what we call generic links, where they will say, buy from this store or this seller in the Amazon store when they're having back-channel communications through DMs and such with their followers about the counterfeit nature of a luxury bag. Counterfeiters even use AI to create fake social media posts that might look something like this. To get these dupes and fakes into the U.S., factories will simply ship them through the international mail system in small, low-value packages, like the one Steve Nethersole's team finds at JFK International Airport in New York City. We have Nike sneakers here. Take the box, crush it up. This is obviously to save space. This is not traditional of the manufacturer if this was authentic, to crush all these items in here like this. They don't put any of this in it, the filler inside it. Brands will send Steve an information kit on the real products and telltale signs of fakes. Most of what's in these kits is kept top secret to protect the brand against counterfeiters. But Steve could share a few things. Rolex would never put their watches in little Ziploc bags. They don't put these inside it, the silica gel. Rolex does not send to individuals in the United States. They only send to their retail stores. Here we have a Burberry coat, and it says BurBELLY mistakenly on the button. But for CBP to seize anything, there has to be a trademark on that product. Let's see what we got in here. Shirts. Yes, it's all Suzuki shirts. Suzuki has motorcycle and car trademark, but not on apparel. So this will end up being released. Next, Steve figures out what this item would have cost had it been real, what's called the MSRP. This one here would be about $11,000. That's the MSRP. What the manufacturer would be losing had this been genuine. From 2020 to 2024, the number of annual CBP seizures more than doubled, and the total MSRP value of those jumped as well. Here we have a post-on full of seizures, so it's going to go into the storage room. In the end, all these products will be destroyed. So what happens to the counterfeiters? For one, Homeland Security Investigations, or HSI, can decide to open up a case. But Steve says that doesn't happen often. To the HSI agents, there's only so many of them. They're going to deal with the most important thing, which is narcotics. All the fentanyl and the cocaine that come out of killing people, that is a top priority, and it should be. The second problem? American authorities don't have jurisdiction in China, where a lot of counterfeits are made. In 2023, HSI arrested 434 people on suspicion of counterfeiting. Just over 200 were convicted. Today, you'll still see fake products pawned off on the streets of New York. In fact, in 2022, the NYPD seized $2 million worth of fake bags from Canal Street. But most seizures start online. Platforms like Amazon, Alibaba, and eBay have spent hundreds of millions of dollars fighting these fakes. Amazon, the world's largest online retailer, launched a counterfeit crimes unit in 2020. Through Project Zero, brands can send Amazon info on their trademarks and even take down fake listings themselves. Amazon also uses AI to scan an estimated 8 billion listings every day. In the instance that a bad actor attempts to load a logo that is counterfeit or that is fake, that our models can pick up on those labels and take that down proactively. In 2023, Amazon said it took down about 700,000 fraudulent accounts. And last year, it seized and disposed of 15 million counterfeit products worldwide. The platform might also take these counterfeiters to court. We partnered, for example, with Valentino on a civil suit against a bad actor who was infringing on Valentino's brand. Or Amazon might send the fraudsters data, like IP addresses, physical addresses, and bank account info, to law enforcement. So that they can take quick action against these bad actors and conduct enforcement raids and seizures. Amazon partnered with U.S. Homeland Security to seize 10,000 counterfeit car grills. Counterfeiters are agnostic to the types of products that they're selling. They may have automotive parts, but they're also going to have luxury goods as well. Amazon has also partnered with Chinese law enforcement to raid factories making fake luxury goods. Europol also conducts raids In 2021, it seized $18 million worth of luxury items from a criminal ring in Spain. In 2024, it busted an Israeli ring selling counterfeit watches in Antwerp. That same year, a joint Europol operation led to the seizure of $99 million worth of fake clothes, shoes, and accessories. And nearly 400 arrests across 17 countries in Europe. It grows every day. And it's because of consumer demand. People need to be educated more about the dangers. So if you're in the market for a luxury handbag or a second-hand pair of kicks, how can you protect yourself? I tell people, whether you're going to buy a product or you're going to have a product repaired, go to an authorized dealer. Do not buy counterfeit products. Try as much as possible to get certified products. If you can put more thought into the ethics, then I definitely think buyers should. And always be wary of a really good deal. And the old saying, if it seems too good to be true, it probably is. Microsoft Mechanics www.microsoft-mechanics.com