The Purse-Party Blues

For the luxury-goods makers, it's a high-stakes battle. Louis Vuitton's Murakami bag, for example, generated more than $300 million in sales last year. It's hard to quantify exactly how much money a luxury brand loses to counterfeiting, since investigators and manufacturers say most people who buy fakes wouldn't pay for the real thing anyway. The larger risk is that the brand will get devalued. Brandmakers fight counterfeiting "not because they feel this will steal a genuine quantifiable sale from them," says luxury-goods analyst Andrew Gowen of Lazard & Co. in London, "but because of the overexposure of the brand."

Chemise Lacoste recently commissioned a poll in 12 markets to study the impact of counterfeits. When asked how they felt about the proliferation of fake luxury items, most respondents said the prevalence of a widely copied product considerably eroded the image of the authentic brand; 76% said the growing abundance of forged items and logos made buying the original far less alluring.

One of the biggest problems is that customers in the West have become inured to the idea that counterfeits — and knowingly selling them — are illegal. The Comite Colbert, a French luxury-goods organization, recently launched a campaign at Paris airports to discourage tourists returning from Italy — the entry point for many Chinese-made fake goods — from bringing back counterfeit bags. One sign showed a fake Louis Vuitton cell-phone case with the tag line "Your last call will be to your lawyer" and warned that fake goods would be confiscated and that bringing in counterfeit goods could result in a fine of up to $360,000 and three years in prison.

People who buy fakes often rationalize counterfeiting as a victimless crime. "I've seen law-abiding people who wouldn't think of stealing suddenly become much fuzzier when it comes to buying counterfeit goods," says Carol Sadler, general counsel at Coach, which has seen a 368% increase in the number of fake bags seized in the past two years. "Buying stolen intellectual property is theft." But the criminal scope of the counterfeiting business doesn't trickle down to the consumer in quite the same way that, say, the details of the latest Vuitton bag do. "People do not realize where the money goes," says Kate Spade's Kolsun. "If you tell them it funds criminal operations, they say, 'Gosh, I didn't know.'" Even if they did, many people find those cheap bags just too good to resist.