PASADENA, United States — When a woman walked into the Walker/Viden consignment store last week with a vintage Louis Vuitton briefcase to sell, it took co-owner Jennie Walker less than 30 seconds to recognise it as a counterfeit. It didn’t help that the $74.99 Goodwill price tag was still attached on the inside, but the real smoking gun was the vinyl lining.
“To a trained eye, you know right away that something’s off,” Walker said, whether it’s the placement of a tag or the logo’s typeface.
While Walker can police her store, rapidly expanding online resale platforms like The RealReal and Poshmark face new challenges in tackling fakes, which have seen a parallel growth spurt, enabled by increasingly global trade flows and sophisticated counterfeiting technology. Counterfeit products — watches, handbags and other accessories — were worth about $540 billion in 2017, according to the Organisation for Economic Co-operation and Development.
And although these resale platforms have made strides in de-stigmatising secondhand luxury, building a resale market slated to exceed $40 billion by 2022, according to online reseller ThredUp, the cost of fighting counterfeits is rising as well. Resale companies are hiring teams of hands-on experts to examine goods, as well as data scientists to build technology that weeds out illicit listings.
The stakes are high — they risk sending alienated customers to competitors if too many counterfeits slip through. And luxury brands, already wary of secondhand markets for selling their goods at discount prices, are waiting to pounce. Last month, Chanel filed a complaint against The RealReal in federal court in New York, alleging the site sold at least seven counterfeit handbags bearing its label. The luxury house claimed only they — and not the reseller — could guarantee a Chanel handbag or ready-to-wear is the real deal.
In a statement to BoF, Chanel called The RealReal’s authenticity guarantee “false marketing,” adding “only Chanel skilled staff can know what is genuine Chanel.” The RealReal countered that the lawsuit was “an alarmingly thuggish effort to stop consumers from reselling their authentic used goods.”
According to its website, The RealReal employs over 50 “brand authenticators, gemologists, horologists and art curators,” who “inspect thousands of items each day, so you can be sure every item is 100 percent authentic.” Other resale sites, including Poshmark, Vestiaire Collective and eBay, also employ authenticators as well as other methods, from profiling sellers to flagging items with suspiciously low prices (a $200 Goyard bag is likely a fake).
Even talking about what ‘expert authentication’ means is tricky, because Chanel is right. Only they have the records of serial numbers.
These authenticators look at many of the same physical elements as consignment shop owners like Walker. But in both instances, there’s room for error.
“Even talking about what ‘expert authentication’ means is tricky, because Chanel is right. Only they have the records of serial numbers, and that information isn’t available to third-parties,” said Tracy DiNunzio, founder and chief executive of Tradesy, a resale marketplace.
Tradesy verifies sellers rather than individual items, using factors such as email addresses, payment methods and social media history to determine the likelihood of a user selling fakes, a system DiNunzio compared to performing background checks.
Potentially risky users have their listings and transactions reviewed manually. If a buyer contests the authenticity of a product, “we will gladly take it back,” DiNunzio said, adding that the company has refunded $9,000 this year against hundreds of millions of dollars in sales.
Most resale platforms rely on physical examination of products. At Poshmark, sellers send any item purchased for over $500 to an authentication team before it’s passed along to the buyer. In the company’s warehouses, experts video record an inspection lasting anywhere from 30 minutes to an hour, in which they examine an item’s shape, date code, hardware markings, scent and more.
“Our team will destroy the product if they find it to be a replica. If there’s any ambiguity, they’ll cancel the transaction, refund the buyer and send back to seller,” said Manish Chandra, Poshmark's founder and chief executive. "We have not found an alternative to physical authentication."
Most resale sites bear the risk if a counterfeit manages to slip through. Like Tradesy, Poshmark customers can contest the authenticity of a product and receive a refund after the company verifies it. Vestiaire Collective and eBay offer similar return policies for counterfeits, and both promote their own authentication programs that involve manual inspection. The RealReal limits returns — regardless of whether the reason is authenticity — to within 14 days of in-store purchase or shipment date, according to its website.
Poshmark, one of the largest retail marketplaces with more than 75 million active listings, has another method of authentication: tips from users.
“Because we are a social commerce platform, if a user is doing something [sketchy], our community is able to detect it and warn us,” Chandra said. “There are high-credibility people and low-credibility people depending on their profiles.”
Ebay created an authentication programme in 2017, which now applies to between 10 percent to 20 percent of its luxury products depending on the category and brand. The company relies on mostly third-party experts for physical authentication, according to Noah Zamansky, director of eBay Authenticate. A group of 20 top sellers have been certified as part of the program, which means their listings are guaranteed authentic if the product falls under the 15 available handbag brands and 30 luxury watch brands.
Ebay also has a database that allows brands to report suspicious listings, such as when a seller uses a screenshot of a company’s own images.
The company does not disclose specific numbers of listings removed, though Zamansky said the site has “been able to eliminate a huge amount of counterfeits” through its verification programs. Ebay doesn’t appear to police lower-priced luxury goods — two Chanel purses are currently up for auction that had a starting price of 1 cent.
"The starting bid price does not indicate an item is illegitimate," eBay said in an email statement. " Specifically, some of our top luxury handbag sellers start their auctions at $0.99, which encourages a lot of buyer engagement."
Peer-to-peer resale sites like Poshmark, Tradesy and eBay might be on the hook for refunds, but they are protected from legal action, at least in the US. In 2010, the Supreme Court held that eBay wasn’t liable for selling fake goods on its website, a decision stemming from a lawsuit Tiffany & Co. filed against the auction site in 2004. Ebay also settled a 2008 lawsuit with LVMH over a similar complaint. The result of these lawsuits, however, require these marketplaces to take down problematic listings when notified, according to Susan Scafidi, founder and director of the Fashion Law Institute at Fordham Law School.
That precedent doesn’t cover sites like The RealReal, Rebag and Vestiaire Collective, which take possession of the items they sell and must therefore guarantee their authenticity. While Chanel’s lawsuit is unlike to fundamentally alter how those businesses operate, it could require them to put up large disclaimers about their lack of brand affiliation, Scafidi said.
"Most likely, though, Chanel is trying to cast doubt in the minds of consumers about the credibility of resale," she added, doubling down on its stance against the secondary market.
But resellers are hoping brands opt to join them rather than attempt to quash them in court. Slowly, some are coming around. Earlier this year, Stella McCartney announced that any of her customers who consign with The RealReal would receive $100 in store credit at Stella retail stores or online, one of the first luxury labels to directly partner with a resale site.
“I think the future is brands taking responsibility for their own products, sort of like a certified BMW. Someone like Chanel could totally offer pre-owned, certified Chanel bags,” said Walker/Viden’s Walker. “But they’re not doing that now so everyone else has the right to do so.”