The Purse-Party Blues

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. --With reporting by Bruce Crumley and James Graff/Paris, Helen Gibson/London, Neil Gough/Hong Kong and Jeff Israely/Rome