- 7 months ago
Counterfeiting is a $2 trillion industry, and fake luxury items—like Rolex watches, Nike sneakers, and Hermès Birkins—make up the bulk of it. These knockoffs often contain hazardous toxins such as lead and cadmium, and the profits are frequently linked to other forms of criminal activity. As counterfeit goods become increasingly convincing, how can we detect and stop them?
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00:01Fake luxury goods like watches and shoes make up 70% of the $2 trillion counterfeit industry.
00:07Here we have a Burberry coat and it says Burbelly, mistakenly, on the button.
00:12Most people think it's a victimless crime. What they don't realize is they are the victim.
00:17Counterfeit jewelry or handbags can have dangerous toxins like cadmium and lead.
00:22And knockoff sneakers have funded terrorist attacks.
00:25Oh, what's the harm? I'm just buying this pocketbook. What could it do?
00:29The problem is where the money is going.
00:31Illicit factories are making fakes that are so convincing. Stopping them is getting harder.
00:36If they shut one down, another one is being built across the pond.
00:40So how do criminals smuggle counterfeit jewelry, purses, and sneakers?
00:44And what can be done to spot the real stuff?
00:49Customs and Border Protection officers are the first line of defense.
00:54Steve Nethersall is one of them.
00:56He works at JFK Airport's mail facility, which receives about a million packages every day.
01:01When it's coming from China, that's your number one red flag.
01:05In fact, most of the fake luxury goods bound for the U.S. come from China through the mail system.
01:11In 2024, U.S. Customs seized 32 million counterfeit items.
01:16They would have been worth $5.4 billion if they'd been genuine.
01:21The most common counterfeited handbag is Louis Vuitton.
01:24The most counterfeited sneaker is Nike Air Jordans.
01:28The manufacturer, they have to register that product, trademark protect it with Customs and Border Protection.
01:34And then if it's deemed counterfeit, then we have the ability to seize it.
01:38Before a package arrives in the U.S., CBP collects intelligence on the sender, container, and aircraft.
01:45That data, along with x-rays of the boxes, helps Steve's team determine which ones are suspicious enough to pull for manual inspection.
01:53They're opening this package because it came from a known counterfeiter in Thailand.
01:57We have Gucci eyewear, watches, jewelry.
02:01The high-end manufacturers like this never co-mingled their products.
02:04They wouldn't put these items together, and their items wouldn't come in bubble wrap like this.
02:09In 2024, knockoff jewelry was the top commodity the U.S. government seized by value.
02:15It confiscated over 700,000 pieces, worth more than $1.6 billion.
02:21This New Jersey jewelry store has just a few people who sniff out fakes, like Michael Lippman and his cousin Gary.
02:33They're an authorized dealer for brands like Cartier and David Yerman.
02:37We're buying straight from the company, so there's zero risk there.
02:41The bigger risk, of course, is when we're buying precious metals, gold, or diamonds from customers.
02:48If I make a mistake, it costs us a lot of money.
02:52Let's see what you got.
02:53Okay.
02:54Gold is so high now, it's such a great time to sell.
02:56What is it at now?
02:57$29.09 per ounce of pure gold.
03:02I remember when it was $40 an ounce back in the day.
03:07First, Michael runs what's called a scratch test on the gold pieces, on a black stone made of quartz.
03:13So this is a really nice chain, looks pretty good.
03:17I'm going to check the stamp to see if it's, so this is a 14 carat stamp, so I'm pretty sure it's 14 carat because I can, just from feeling it.
03:27Basically what I'm looking for is anything to tell me that it's not gold.
03:32It could be a discoloration of the metal, it's oxidation, stuff that doesn't really happen to gold.
03:39What's the difference between 14 carat and 18 carat, what does the carat mean?
03:43It means what, what purity of gold.
03:45So if it's 14 carat, it's approximately 58.5% gold and the rest is alloy.
03:52What would be all gold?
03:53Out of a hundred, 24 carat, which is very rare.
03:56I'm pretty sure this is going to become 14 carat because I'm getting a nice, a nice scratch on it.
04:03If it wasn't real, it would be very light.
04:07I'm not doing it in such a way that it's going to hurt the piece.
04:12Then he dabs a bit of nitric acid on it.
04:14If the gold scratch remains, it's real.
04:16If it disappears, it's fake.
04:18The lines are still there, so I feel comfortable these reports I'm carrying.
04:23But on these earrings...
04:25So I don't see any stamp.
04:27It's feeling kind of hollow.
04:29I'm a little skeptical because it's so light.
04:32When you tap it, it sounds, it's almost like it's plastic underneath.
04:38But let's scratch it and see.
04:45It's definitely disappearing a little bit.
04:48You see right here?
04:49Yeah.
04:50When I shave it down, I'm getting, I'm getting the outside coating of the plating off,
04:56which reveals the true, what's underneath.
05:00Okay.
05:01That is, I'm pretty sure, plastic.
05:03Okay?
05:04So I, unfortunately, I can't do anything with these.
05:07Michael would only buy these two chains and a necklace from this load.
05:12The rest, like these earrings, were gold-plated or metal and are worthless to him.
05:18So this is 26.8 grams.
05:20So your price for this is $1,247.
05:23Wow.
05:24I really had no idea, but I figured 500 was a nice, even number.
05:28So I'm delighted.
05:30This gold will be melted and refined, removing all other metals.
05:34Assuming it's pure enough, we'll actually make it into a new piece.
05:38The cousins also have to be careful when they're buying diamonds.
05:43Today, I think the biggest challenge is the lab-grown, showing up in jewelry, showing up in people trying to sell that.
05:51Chemically, lab-growns are diamonds, but attempting to pass them off as natural, earth-mine diamonds is illegal, according to the Federal Trade Commission.
05:59But fraudsters try to do it anyway, because mined ones are worth a lot more.
06:04The prices for lab-grown are maybe 20% of what mined diamonds are.
06:11I'm talking new.
06:12Resale, there's very little resale value.
06:15Prices for lab-grown have been dropping tremendously in the last couple years, as there's much more supply.
06:21How are you doing? I'm Gary.
06:24How are you? Steve.
06:25Steve, pleasure.
06:26Sit down.
06:27So what do you have?
06:28Today, Gary is checking out two diamond rings and two sets of earrings.
06:32I was cleaning out my grandmother's jewelry box.
06:36For 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.
06:46You see how nothing is happening. There's no red going.
06:49It's like it's touching nothing. It's nowhere near a diamond.
06:54But the machine can't differentiate lab-grown from mined, because they're chemically identical.
06:59So Gary invested in this new one, called the ID100.
07:03This is a $12,000 tester, and they're just going up in price.
07:07Doing a whole spectral analysis on a diamond is a whole other level of technology.
07:12We can't live without it, basically.
07:14So that would be like an X-ray machine and an MRI.
07:17Exactly. That's an excellent analogy there.
07:21Some stones that look like diamonds, like this moissanite, can also trick the old tester.
07:27Moissanite and diamond share the same heat conductivity attributes, and that's why it'll pass this machine.
07:34But the ID100 will catch it.
07:36Okay, these most likely are lab-grown.
07:40So what we have here are mined diamond from the earth, not diamond, called a cubic zirconian, not diamond, called moissanite, and lab-grown diamond.
07:52Gary's team only buys mined diamonds.
07:55Pass.
07:56It's a diamond.
07:57Ah, pure.
07:58Woohoo!
07:59Okay, great.
08:00I think the worldwide jewelry market's $350 billion.
08:04So there's a tremendous amount of goods coming from everywhere.
08:10And the fakes keep getting better and better and better.
08:15Tiffany and Cartier are the two luxury jewelry brands most targeted by counterfeiters.
08:20In 2021, CPP Cincinnati seized $3.6 million worth of fake Cartier bracelets.
08:27The luxury brand David Yurman has also had a problem with dupes.
08:32We used to see David Yurman knockoffs a lot.
08:35The fake pieces are very light, so this has weight to it.
08:39This has tension, like the perfect amount of tension so you can get it on and it's comfortable.
08:46The knockoffs will be flimsy, the quality of the stones will be darker.
08:52The company has filed multiple lawsuits against counterfeiters, and it's won.
08:57They've really clamped down.
08:59Companies go to such lengths to combat fakes because their reputations can take a hit.
09:04When a buyer doesn't realize they've bought a knockoff bracelet and it falls apart, they might blame the real company.
09:10And over time, that could erode consumer trust in the brand.
09:12This is especially true when the fake jewelry is made of subpar materials.
09:18In fact, in 2019, an L.A. jewelry store owner was arrested with $15 million worth of fake jewelry.
09:25Some were 2,000 times over the U.S. limits of cadmium and lead.
09:29Footwear is another industry riddled with counterfeits.
09:36And that's a challenge for secondhand sneaker stores like Image in Queens, New York.
09:43Co-owners Shu Chang and Greg Lam have been authenticating sneakers for 20 years.
09:47Fakes aren't gotten better. Back then, fakes were so much easier to tell.
09:52I'm talking about the year like 2000, but now we look at every detail.
09:57We even smell it.
09:59The fake pair, they use like a more toxic glue.
10:0280% of the time this shoe comes in has been fake.
10:06Right off the bat, as you can see, the color.
10:08Like the real pair is like a darker red compared to the fake one.
10:12It's like a lighter red.
10:13See how it's more form?
10:15This one's like more puffier, you know?
10:20As you can see on the camera in person, they look like two of the identical shoes.
10:24For example, this is the fake one.
10:26The toe box is a little bit darker than the real pair.
10:28The real pair has a lighter hue to it.
10:30The leather feel on the fake pair is so much stiffer than the real pair.
10:34The real pair is nice and soft and plush.
10:37The shape as well.
10:38You see the shape is more bulky looking.
10:41And then what the real pair looks very sleek looking.
10:45Shiu has to sniff out the fakes because in this game, his reputation is on the line.
10:51If I'm not sure I'll put it on the side either.
10:52I'm not even gonna try.
10:53If I can take a $400 loss to make sure that my customer gets a legit product, I will do that.
10:59Shiu says right now, this Travis Scott and Nike collab is the most counterfeited sneaker
11:03on the market.
11:05Anytime this pair comes in, we have pairs available to double check them.
11:08If they're sure the threading is good, sole color and everything.
11:12The image team paid $800 for this pair.
11:14But they're selling it for double because the shoes are so popular
11:17and Nike released a limited supply.
11:20Fake companies are gonna go, hey, I can make a buckle off this.
11:22Why not?
11:24Nike is the world's most popular shoe brand.
11:26So sneakers also dominate the resale market.
11:29They make up 70% of the store's inventory.
11:33Iconic pairs like these Jordan 1 OGs in good condition can rack up a lot of value over time.
11:39A size 9.5 sold for triple the price in less than a year on the resale site StockX.
11:45Likely due to the buzz from the Last Dance documentary series.
11:48We compare them to like art. There's only one Mona Lisa. Why is it worth so much?
11:54These were given to friends and family of Sony that worked on the PlayStation.
11:58They made 151 pairs of these only. Yeah.
12:01When we bought in 2006, we paid like a thousand bucks, which was a lot.
12:05It's taken Shiu and Greg over two decades to build their impressive collection.
12:10This is Kobe's first signature Nike shoe. Game worn and autographed by Kobe.
12:18Here we have a Jordan 11, black and red, signed by the man himself, Michael Jordan.
12:23And everybody's favorite movie, Back to the Future, Marty McFly, Nike Mags.
12:27When this shoe came out, we first opened. We didn't have no money to buy the shoe off auction.
12:32We opened a credit card. To go buy this shoe, you know, we need a piece of history.
12:37We bought the cheapest size 9 at auction at like $3,000.
12:41This shoe in the market now is probably worth like 20 grand.
12:43I guess you could say it was a good investment opening that credit card.
12:46This collection can really get you a nice house, right? A condo.
12:52Greg and Shiu buy most of their inventory from other sneakerheads like Shaq Lawson,
12:56a Business Insider employee with over a hundred sneakers in his collection.
12:59How's everything, brother? How's everything, bro?
13:02Good. You been good? Been good.
13:03So, what's up with you today? What we got?
13:04So, brought some stuff. Just want to see like what you guys would give me for it.
13:07Sure. No problem.
13:08Let's see what we got the first pair. Oh, wow. Look at these.
13:11We don't, we don't see these often anymore, man.
13:14Nike Phone Posit Supreme.
13:16Shaq bought this pair from Image 12 years ago for $500.
13:20Right now, if you were to sell it on your own, you'd probably get like $600 for this pair.
13:24It's held value for like over 10 years now.
13:27Nike's enduring value is why counterfeiters go to such lengths to trick sneakerheads.
13:33They're all from China.
13:34And the crazy part is people tell me that the fake factory are a few miles down from the real factory.
13:40And these fakes can be very popular among fans who can't afford the real stuff.
13:44So much so that sneakerheads are sharing spreadsheets like this one, listing hundreds of cheap fakes for sale on Chinese e-commerce site CNFans.
13:54$62 for phony Jordan 11s.
13:57$55 Balenciaga dupes.
13:59I don't like it because I only sell real product in here. In my opinion, it's not a good, it's not a good look.
14:06Shaq is buying his sixth real pair on resale this month.
14:10I think I'm really set on these. I think I'm going to try these on.
14:13These are black infrared sixes. Pretty good condition.
14:16Michael Jordan won his first NBA championship in this shoe.
14:20I like to put the laces behind.
14:23Instead of like looping it in the front.
14:25It's kind of a sneakerhead thing.
14:27Like we often don't tie our shoes just because it's an easy slip on, slip off.
14:31And is there something about when you get a new pair of Jordans and like you just look at them and you're like, feel complete.
14:37I'm going to take them.
14:39Call $267.75, all right?
14:41I think I know the exact spot to put them.
14:44All right, brother. Enjoy the rest of your day, all right? Have a great rest of the new year, too.
14:48See you guys soon.
14:54We are now in my sneaker room, also known as the kingdom.
15:00Shaq has 140 pairs worth well over $20,000, all tucked away in a back room of his Brooklyn apartment.
15:07You're never going to hear me say, I don't have something to wear.
15:10He bought the majority of them from Image.
15:13Every sneaker in here is tied to a specific memory.
15:16This one to me is special because I remember being online for it with my little brother.
15:22These specifically, I'll always remember.
15:23My first time in LA, I wore these.
15:26These are the Ben 23 Jordan 13s and there's only 1,734 pairs of them.
15:33This is my favorite Jordan of all time, the Air Jordan 13 Flint.
15:39I've had five pairs of these.
15:43I remember wearing a school in elementary school and someone stepped on it and I was ready to fight.
15:50Not because they stepped on my foot and it hurt, but just because they stepped on these and I love them.
15:54These are the very first hype sneaker I bought.
16:02Just holding this shoe, I'm getting emotional.
16:04I think I actually just got kicked out of college at that point.
16:06I think I was like about 18 because I was taking too many days off to actually take my mom to appointments.
16:12My aunt gave me $100 and told me, buy yourself something that means something to you.
16:18And the next day, I got these.
16:21If I lost everything in this room and still had these, I'd be happy.
16:26These are my origin shoes.
16:28They're more than just leather and stitching.
16:31It's like, this is a book of memories for me.
16:34But even a veteran sneakerhead like Shaq has had his fair share of run-ins with fakes.
16:39The first time I tried to get these shoes, I actually ended up buying a fake.
16:43So I spent about $500 on this style shoe and it was fake.
16:50And the reason I found that it was fake was because on these they say flywire, but the font is in white.
16:57The pair that I got, it had it in pink.
17:00He understands why people would buy fakes on purpose.
17:04I don't judge wear what you can afford, wear what you like.
17:07I 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.
17:18I never will take part of it because I don't want to use real money to buy fake things.
17:22You 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.
17:29But it's not just collectors like Shaq and Image that are contending with the flood of fakes.
17:36StockX, one of the largest online sneaker resellers in the world, has rejected over $80 million worth of fake pairs since 2016.
17:45Counterfeiting detection begins when a user makes an account.
17:48It starts with everything from bot detection to policy to seller identification, and a lot of this is automated.
17:58After 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.
18:06First, staff scan the RFID chips, which manufacturers often put in the box to track and identify authentic pairs.
18:12Counterfeiters even try to copy those.
18:16The company also uses CT scans.
18:19Allowing us to get a shape of what is under the hood, the structure underneath the surface might be slightly different if we're looking at a counterfeit item.
18:28Finally, a human checks it.
18:31I've been collecting sneakers for way over 10 years.
18:33I verify from Nike to Adidas to designer, so pretty much everything.
18:39Anthony Tangerif can inspect 250 pairs a day.
18:44First things first, we're always going to start with the box before we always get into the shoe, because believe it or not, boxes are counterfeited as well.
18:51You want to look at the fonts on the box label, the border cuts, the spacing.
18:58Fonts over here.
19:00Feel the overall cardboard, make sure it's not too flimsy, not too thick.
19:03Give it a little scratch test.
19:06Comes with a mom and pop shop receipt.
19:09Everything's checking out.
19:11Now getting into the shoes.
19:14And basically what I'm looking for is any types of factory flaws, any loose threads, glue stains.
19:20Because our verification process goes far beyond just real and fake.
19:24Something wouldn't pass if it had a scratch on it.
19:27And believe it or not, the smell.
19:29With this particular shoe, you definitely want to get a leathery smell.
19:34Nothing too strong, nothing too chemically, which counterfeits do tend to have.
19:39It would smell anywhere between nail polish remover, gasoline sometimes.
19:44These would pass our verification process.
19:47Anthony attaches a green StockX tag to the shoes to tell buyers they've been authenticated.
19:51People 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.
20:04But some buyers say this process isn't always foolproof.
20:08StockX was found liable in March for selling 37 pairs of fake Nikes on its site.
20:13The company told us the products in this case were a tiny fraction of the tens of millions of shoes it's reviewed.
20:19It's part of a lawsuit Nike brought against the platform back in 2022.
20:24The judge did, however, reject Nike's other allegation that StockX willfully sold counterfeits on its site.
20:31A decision StockX touts as a win.
20:33But that hasn't stopped customers and YouTubers online from questioning the retailer.
20:36Sometimes there are noise, there's conversation that might exist on X, on Reddit, and we look at all those to make sure that these are outliers.
20:49And when there's 35 million people on the platform every month, the noise isn't representative of the overall view.
20:56So 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?
21:03Well, yes. This is the Jordan 1 lost and found from StockX.
21:07And knowing the rewards, knowing the risks, that right there is pretty much the most I'm willing to spend.
21:11If StockX authenticators do come across a fake, it's either destroyed, turned over to law enforcement or returned to the seller.
21:19We do keep some items for training purposes.
21:22For training purposes.
21:23I have the verified past one, with and suspected and authentic.
21:30If somebody would have been wearing this outside, you're not going to call them out.
21:35But now if you get closer and actually take an in-depth look at it, you're definitely going to sell.
21:42Another industry that's fallen prey to fraudsters?
21:46Watches.
21:48One of the most counterfeited types of jewelry out there.
21:50In my perception, the demand for fakes is simply because people like getting something over on the man.
21:59Rob Holmes is a private investigator for luxury watch brands, just like his dad was in New York in the 80s and 90s.
22:05Canal Street was the epicenter for counterfeit watches in the entire United States.
22:10In Chinatown, they would be standalone stores with big metal roll-down, roll-up doors.
22:15I grew up in the 80s going on raids with my father and making undercover buys.
22:21On 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.
22:29And they would have spotters along the way who would go to local diners and tell them the addresses where they've spotted those watches that day.
22:38Then 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.
22:52It wouldn't be uncommon for my father to come home with a U-Haul truck full of bags, hefty bags, full of counterfeit watches.
23:01Today, you can still find watch dupes lining Canal Street.
23:07As a person who has been dealing with these things for years, when it doesn't say Swiss, you know something's wrong.
23:13John Buckley, a veteran watch reseller, has spent 28 years trying to spot the knockoffs.
23:19You didn't pay $75,000 for this watch.
23:22This is not authentic.
23:23100% no bueno.
23:26First of all, this rotor is not gold.
23:29Finishing is a mess.
23:31All the best.
23:33Unbelievable.
23:35John comes to New York City's Diamond District to look for real ones for his clients.
23:39He buys and sells about a dozen watches a week.
23:41Little Eddie's got a paddock that I need.
23:44Hopefully, I can buy it from him and I'm going to show him a couple of pieces that I've got.
23:50What's good about this watch, it comes fully complete.
23:52Look at the condition.
23:53You got everything?
23:55He's hoping to get this rare Patek Philippe for under $40,000.
23:59Listen, I know it's a nice watch.
24:01I'm not here to beat you up.
24:02You know I need it.
24:03$36,000?
24:06I thought I was pretty good at $35,000.
24:08$37,000, that's my final price.
24:09I think it's fair.
24:12You can think about it.
24:14I don't have to think.
24:15Mazal.
24:16No problem.
24:17You're the man.
24:19This watch will be sold for $40,000 and change.
24:23So I'll make $3,000 on the watch.
24:25Which is not bad.
24:28John says he rarely makes more than a few thousand dollars per watch.
24:32Sometimes it's only a few hundred.
24:33There are very few home runs in this game.
24:36I mean, I don't know what is considered a home run.
24:38Making ten grand on a watch.
24:40It's like, that doesn't happen.
24:42Down the street, John has his eyes in a gold Rolex Day-Date with diamonds on the bezel.
24:47How much is this $21,000 watch?
24:50$25,000.
24:53Factory diamond dial, factory diamond bezel.
24:56$23,500.
24:58The deal.
25:00What I'm going to do for you, I'm going to obviously say yes.
25:02Really?
25:03It's beautiful.
25:05Thank you, Yashem Hazal.
25:07John typically buys watches he knows one of his clients is looking for.
25:12We like cash flow.
25:13I write a check.
25:14I want to know that, you know, I'm going to have that money back.
25:16I'll make my profit on it and move on to the next one.
25:19He doesn't want to risk getting stuck with something he might not sell, even if he loves it.
25:24Like this diamond-studded Rolex from Cutter, which has an asking price of $175,000.
25:30I don't have a home for it.
25:32These watches are so pricey because they're partly assembled by hand with premium materials like gold and platinum.
25:41And there aren't many new ones entering the market.
25:44Brands like Patek Philippe and Audemars Peugeot make fewer than 100,000 watches per year.
25:50And it's estimated Rolex makes a million annually, which is not enough to keep up with demand.
25:55Today, a Rolex Daytona model is so popular, it's almost impossible to get one.
25:59I'm still on a waiting list since 1996, just to give you an idea.
26:04For most people, the only way to get one is to get one secondhand.
26:08The result of that, in many cases, is a higher demand than available supply, which causes prices to go up.
26:16Between 2011 and 2021, Rolexes outperformed the Dow, real estate and gold.
26:25In 2017, this Rolex owned by actor Paul Newman sold for a record $15.5 million.
26:31It is history now! $15,500,000!
26:37And the U.S. government's proposed tariffs could drive the price of used Rolexes up even more.
26:43But as demand sores, watch dealers have to be even warier of counterfeits.
26:49The biggest trap of the trade.
26:50You 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.
26:59Now, manufacturing has gotten so good that even the cheaper knockoffs have everything.
27:05Back at his workshop, John is testing whether this Rolex from a dealer in the southern U.S. is counterfeit.
27:11Movement's working properly. Movement is right.
27:16I mean, I'm looking at the color of the case. This piece is not the same color as this piece.
27:22This is 18 karat gold.
27:24We 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.
27:31So he runs these gold Rolex parts through that same scratch test we saw earlier in the jewelry shop.
27:37He adds a few drops of nitric acid, dissolving any material that isn't gold.
27:43The acid did not dissolve the gold. Over here, the acid dissolved the gold.
27:50It is not authentic.
27:52But most of the time, he can spot a fake with the naked eye.
27:55We could usually spot these just based on the symmetry of the case.
28:00They don't have that nice Rolex slope.
28:03The 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.
28:14It's probably got an extra millimeter and a half.
28:19But sometimes, the only way to tell is by opening up the watch.
28:22There's no mistaking a Rolex movement from a counterfeit. I don't care how good the Chinese factories are.
28:27And dealers like John can't get it wrong.
28:31New young bucks that come into the business, they get caught out there real fast.
28:35And your reputation is burned. Burned when you can't make good on a sale.
28:41You can never spend enough money to get your reputation back, you know?
28:45So whatever it costs you to keep it, it's worth every penny.
28:48Luxury bag resellers, like this pawn shop in Queens, New York, also go to lengths to protect their reputation against fakes.
29:01When a customer brings in a bag to sell, authenticators like Vanessa Cabrera use an app called Entropy to verify it.
29:08This one is also in very good condition, as you can see.
29:14If this Chanel crossbody is real, it could be worth over $5,000.
29:19She uses this iPod with a microscope attachment to take detailed pictures.
29:24The Entropy app will use these to create what the company calls a fingerprint for the bag.
29:29We take a picture of the handbag in between the blue square, and then they ask for a hardware logo photo.
29:37So now they're asking for the serial number.
29:41Entropy uses AI to compare these photos to millions of images of real and fake bags already in its database.
29:48That was quick.
29:50It's that extra layer of confidence.
29:53Without the right tools in your back pocket, you can never be 100% sure.
29:57Easy Pawn's president, Lauren Kaminsky Goldman, was the one who took the chance on Entropy.
30:01Today, she brought in this vintage 2002 Chanel ring hobo bag for Vanessa to authenticate.
30:07If it's legit, it could be worth over $1,000.
30:11But what's your gut telling you?
30:13The leather looks good.
30:14The stitching, as well, it looks very clean.
30:18This one doesn't have a deco.
30:20So that makes me think that it probably is not.
30:25I'm gonna take a picture.
30:26So we have the result for the authentication of the Chanel, and it's authentic.
30:38Yay!
30:44Entropy says its software is right 99% of the time.
30:48But if it does get it wrong, the company will pay out duped customers.
30:53We met with its CEO, Vidyut Srinivasan, in his office in Manhattan, New York.
30:58This is a fake that we recently came across.
31:01High quality, great workmanship, craftsmanship.
31:03You see the leather, you see the heat stamps.
31:06This is actually one of the items that we got incorrect.
31:09Entropy refunded $2,000 to the customer who bought this.
31:13When his team comes across fakes, Vidyut asks them to wear gloves.
31:17If you look at any report, any data reports, 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.
31:28And most of them are in areas that consumers use.
31:32Maybe the handle, maybe the buttons, maybe the zipper.
31:35It is an upside-down world that has amazing world-class distribution that have been tied to things like terrorism.
31:42In the 2000s, Al-Qaeda suggested selling fakes as a way to fund criminal operations.
31:48And the brothers who mounted the 2015 attack on the Charlie Hebdo newspaper may have funded their weapons by selling fake Nikes.
31:55While trafficking counterfeits can lead to serious consequences, like millions in fines and years of jail time,
32:01it generally carries less risk for criminals than trafficking drugs like cocaine or heroin.
32:08For Vanessa, sometimes these counterfeits are easy to spot by eye.
32:14On fake ones, you don't see this finish.
32:18They use different type of lining inside.
32:20But the hardest bags for her to authenticate, Hermes.
32:25They're common targets for counterfeits because they're so pricey.
32:29So those can take entropy days to verify.
32:32So this is one of the most sought-after handbag names on the resale market.
32:37This is an Hermes Kelly.
32:39It actually was a family heirloom, so these things get passed down in families.
32:44The most prized possession in the Hermes world is a Birkin.
32:49Some models can cost hundreds of thousands of dollars.
32:52They're not just giving it to any person who walks right through the door.
32:56There is a whole process of building a relationship with the store,
33:00buying other items maybe to kind of build up that trust enough in you as a client.
33:08Maybe then a sales rep will invite you to buy a Birkin.
33:11They're so hard to come by.
33:14That's why they're so popular on the second-hand market.
33:17From 1980 to 2015, the resale value of Birkins outperformed gold and the S&P 500.
33:25Jamie Chua, a Singaporean influencer, has one of the largest collection of Hermes bags in the world, with over 200.
33:33This is a one-of-a-kind Birkin bag that was made for me.
33:37It has this Indian embroidery called the Oran embroidery.
33:44These are useless.
33:47You can't put anything in them.
33:51Maybe like a credit card and a piece of tissue.
33:54In 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.
34:08This Himalayan crocodile Birkin, with white gold detailing and 245 diamonds, is one of the most expensive Birkins in the world.
34:17They're made completely by hand, out of pricey materials like alligator, calf and ostrich skin.
34:22It takes days to make this bag. The craftsmanship, the materials that go into it.
34:28That's why they're a common target for counterfeiters.
34:31One ring operating out of France had actual Hermes employees smuggling real materials and hardware into its factories.
34:39Fake Birkins, which don't have the same level of craftsmanship as the real ones, have even been sold right alongside your groceries.
34:46Walmart is making headlines for selling a bag that's a knockoff of an iconic luxury item.
34:54Third-party sellers put up the listings of the dupes on the Walmart site for about $100.
34:59And it went viral, with customers calling it the Walmart Birkin, or the Workin.
35:04My Workin from Wilmez is here. We're going to unbox it together.
35:08Okay!
35:10That is so pretty, actually.
35:12If 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.
35:21Whereas 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.
35:29Dupes are also on the rise because the cost of authentic luxury bags has ballooned in recent years.
35:34Chanel has increased the price of its most popular bag by 75% since 2019.
35:41In 2023, Hermes raised the price of its basic Birkin by 10%.
35:45Some people say, you know, there's no way a bag can cost $20,000, no matter how great the leather is.
35:51I 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.
35:59But even if the work-in can pose as a proverbial middle finger to expensive brands, there's still some ambiguity surrounding it, both ethically and legally.
36:10You'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.
36:18While the very cheap price might make it clear the work-in wasn't real, some language in the listings may test the legal boundaries, like having Birkin in the title, according to the intellectual property lawyer Ryan Klarberg.
36:31But 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.
36:43Walmart stopped selling Birkins in January 2025. 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.
36:55If I could afford $40,000 for a Birkin, I probably would want a $40,000 purchasing experience. I'm going to need a glass of champagne or something.
37:09But even more counterfeited than handbags? Clothes. Remember StockX? Apparel made up half of all suspected fakes it found in 2024.
37:18I would say the hardest part, probably the expensive catalog because we constantly update our catalog. So we get a lot of products.
37:25Tay Pratt has been verifying clothes for StockX for three years.
37:29Anything that has like a high price point or that's like highly sought after are very fake.
37:33Like hoodies made from the brand Fear of God. Today, Tay is verifying a Stussy Nike collab sweater, worth over $100 if it's real.
37:40The first thing I personally do, I'm going to 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.
37:50I'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.
37:58I'm next going to go to the actual hang tag itself. All Nike hang tags have a specific color for each size. So I'm going to look at the red. I'm making sure that's shiny and reflective.
38:07But we're also looking at if the item is actually used or not and in perfect dead stock condition. There's no dirt marks, no lint, no pilling.
38:15This one was real, so it'll be listed on the site. Tay has come across fake versions of this sweater.
38:21Pay 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.
38:29Like 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.
38:38This 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.
38:44These fakes can be made with everything from toxic dyes and flammable materials to dangerous metals.
38:51Even 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.
39:04Luxury heels can fetch similarly high prices, especially ones with an iconic red bottom, Christian Louboutins.
39:17Teresa Romer, an author and TV personality based in Houston, Texas, has over 560 pairs of shoes, a hundred of which are Louboutins.
39:26This 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?
39:36These are so expensive because each pair is made by hand. That's why these heels can start at $600.
39:43Even used pairs that have been refurbished can fetch a lot.
39:47That's why Vincent Rao, a cobbler in New York City, charges up to $95 to resole these worn out pumps.
39:53When 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.
40:00Vincent sands the shoe and adds a red sole protector.
40:03Take your hammer and start applying the sole nice and evenly all around the shoe.
40:11Then he'll cut the sole, glue it on, and sand it down some more.
40:15He then mixes three paints, a red, scarlet red, and flat white, to try and match the iconic Louboutin color.
40:21Back to its former glory, this pair might fetch hundreds of dollars.
40:26That price is part of why authorities have come across a lot of fakes.
40:31The feds saying they have seized more than 20,000 pairs of counterfeit high heels by designer Christian Louboutin.
40:37In 2012, customs officers in Los Angeles found the shoes in five shipments.
40:43What tipped them off is the boxes were coming from China, but real Louboutins are made in Italy.
40:49The shoes would have been worth $18 million if they'd been real.
40:53Each pair, had it been genuine, would have been sold at $1,200 a pair.
40:56So that's a big loss for our revenue, had they have entered the commerce of the United States.
41:04But how do criminals make and move so many luxury counterfeits globally?
41:09Well, most operate in China or Hong Kong.
41:12Wherever manufacturing is cheap, that's where manufacturing is going to happen.
41:16These factories can afford the same machines that the real companies use.
41:21And they use the same software.
41:23Often that software is stolen through industrial espionage.
41:27They also might smuggle products out of the real factories so they know what to replicate.
41:31But they'll swap the materials for cheaper, lower quality ones to reduce costs.
41:36But sometimes those materials are toxic.
41:38Things like lead, cadmium and arsenic, which can cause rashes and even cancer.
41:44I don't think health and safety of consumers is a top priority in their business model.
41:49These factories also pay low wages and can have unsafe working conditions.
41:54There have been plenty of stories of the counterfeit watch industry being tied to child labor, sweatshops and even human trafficking.
42:03You're going to have organized criminals who are doing this kind of stuff.
42:06They might make a fake listing through online marketplaces like Amazon or enlist the help of influencers.
42:13Social 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.
42:24When they're having back channel communications through DMS and such with their followers about the counterfeit nature of a luxury bag.
42:31Counterfeiters even use AI to create fake social media posts that might look something like this.
42:37To get these dupes and fakes into the U.S., factories will simply ship them through the international mail system in small, low value packages.
42:45Like the one Steve Nethersol's team finds at JFK International Airport in New York City.
42:52Ooh. 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.
43:05They don't put any of this in it, the filler inside it.
43:10Brands will send Steve an information kit on the real products and telltale signs of fakes.
43:15Most of what's in these kits is kept top secret to protect the brand against counterfeiters.
43:20But Steve could share a few things.
43:22Rolex would never put their watches in little Ziploc bags. They don't put these inside it, the silica gel.
43:28Rolex does not send to individuals in the United States. They only send to their retail stores.
43:34Here we have a Burberry coat and it says Burbelly mistakenly on the button.
43:40But for CBP to seize anything, there has to be a trademark on that product.
43:44Let'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.
44:00Next, Steve figures out what this item would have cost had it been real. What's called the MSRP.
44:06This one here would be about $11,000. That's the MSRP. What the manufacturer would be losing had this been genuine.
44:12From 2020 to 2024, the number of annual CBP seizures more than doubled, and the total MSRP value of those jumped as well.
44:23Here we have a post gone full of seizures, so it's going to go into the storage room.
44:28In the end, all these products will be destroyed.
44:31So what happens to the counterfeiters?
44:34For one, Homeland Security Investigations, or HSI, can decide to open up a case.
44:39But Steve says that doesn't happen often.
44:42To the HSI agents, there's only so many of them. They're going to deal with the most important thing, which is narcotics.
44:48All the fentanyl and the cocaine that are killing people. That is the top priority. And it should be.
44:55The second problem? American authorities don't have jurisdiction in China, where a lot of counterfeits are made.
45:00In 2023, HSI arrested 434 people on suspicion of counterfeiting. Just over 200 were convicted.
45:10Today, you'll still see fake products pawned off on the streets of New York.
45:14In fact, in 2022, the NYPD sees $2 million worth of fake bags from Canal Street.
45:22But most seizures start online.
45:25Platforms like Amazon, Alibaba, and eBay have spent hundreds of millions of dollars fighting these fakes.
45:32Amazon, the world's largest online retailer, launched a counterfeit crimes unit in 2020.
45:36Through Project Zero, brands can send Amazon info on their trademarks and even take down fake listings themselves.
45:44Amazon also uses AI to scan an estimated 8 billion listings every day.
45:49In 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.
46:01In 2023, Amazon said it took down about 700,000 fraudulent accounts.
46:07And last year, it seized and disposed of 15 million counterfeit products worldwide.
46:12The platform might also take these counterfeiters to court.
46:16We partnered, for example, with Valentino on a civil suit against a bad actor who was infringing on Valentino's brand.
46:23Or Amazon might send the fraudsters data like IP addresses, physical addresses and bank account info to law enforcement.
46:31So that they can take quick action against these bad actors and conduct enforcement raids and seizures.
46:38Amazon partnered with U.S. Homeland Security to seize 10,000 counterfeit car grills.
46:43Counterfeiters are agnostic to the types of products that they're selling.
46:49They may have automotive parts, but they're also going to have luxury goods as well.
46:54Amazon has also partnered with Chinese law enforcement to raid factories making fake luxury goods.
46:59Europol also conducts raids.
47:02In 2021, it seized $18 million worth of luxury items from a criminal ring in Spain.
47:08In 2024, it busted an Israeli ring selling counterfeit watches in Antwerp.
47:13That same year, a joint Europol operation led to the seizure of $99 million worth of fake clothes, shoes and accessories.
47:21And nearly 400 arrests across 17 countries in Europe.
47:26It grows every day and it's because of consumer demand.
47:30People need to be educated more about the dangers.
47:33So if you're in the market for a luxury handbag or a secondhand pair of kicks, how can you protect yourself?
47:38I tell people whether you're going to buy a product or you're going to have a product repaired, go to an authorized dealer.
47:45Do not buy counterfeit products. Try as much as possible to get certified products.
47:50If you can put more thought into the ethics, then I definitely think buyers should.
47:54And always be wary of a really good deal.
47:57And the old saying, if it seems too good to be true, it probably is.
48:08for where I gave you truth with others.
48:09Maybe you will agree with you, some
48:30few days later to�els, if you have success when transgressions the most you're going to plan for them.
48:34I'll not forget you.
48:38You
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