It’s Not Just Secondhand Retailers That Have a Counterfeit Problem

Online luxury’s counterfeit problem is spreading.

Since the dawn of e-commerce, shoppers ordering designer bags on a digital resale site like eBay have done so knowing they risked buying a fake — essentially, a trade-off for securing a lower price. But now, those knock-offs are starting to show up on firsthand marketplaces as more consumers are ordering new handbags or sneakers and going on to return a fake version.

Some shoppers are starting to sound the alarm. In January, influencer Tiffany Kimm went viral after claiming Ssense sent her a fake version of The Row’s $1,090 90’s bag. In a follow up video, Kimm said that Ssense ended up issuing her a refund and a 10 percent discount credit, but wouldn’t confirm if the original bag she ordered was indeed a counterfeit. The incident created paranoia in other shoppers. In February, another TikTok user named Jennielyn made a response video to Kimm where she questioned the authenticity of a Gimaguas shoulder bag she ordered from Ssense for $700 which came without a branded duster bag, the tag cut off and thinner leather than she expected.

“We are committed to ensuring the authenticity of all products sold. We have measures in place to prevent the sale of counterfeit items,” an Ssense spokesperson said in a statement. “Our return policy outlines how items must be returned in their original condition, including all packaging, accessories and Ssense tags, to facilitate thorough examination.”

Returns fraud, in which customers send back empty boxes, less expensive or counterfeit items instead of the merchandise they ordered, is a major — and growing — problem in fashion. In 2024, it led US retailers to lose $104 billion in revenue, more than quadruple the losses from 2020, according to data from fraud prevention software provider Riskified.

It’s also an extremely difficult problem for retailers to tackle. For starters, as replicas become more sophisticated, fakes are harder to spot. Building an authentication system is a notoriously tricky and expensive endeavour. Plus, primary retailers historically haven’t had to do so to earn consumer trust the way that resale sites eBay, The RealReal and Vestiaire Collective have. And of course, even when there is an authentication process in place, counterfeits can still slip through.

But luxury e-tailers can’t afford to ignore the problem for much longer. Receiving a counterfeit product when you’re paying for the real thing can sow a dangerous level of consumer distrust. And considering the current luxury spending environment — global sales in the sector dropped 2 percent in 2024, and US president Donald Trump’s forthcoming tariff increases threaten to further hamper consumer sentiment — there’s extra incentive to get the issue under control.

“Once someone managed to get a fake through the door, and you ended up sending that to an end customer that spent their hard earned money … there’s a huge chance that you’re missing that customer for life,” said Eyal Elazar, senior director of product marketing and market intelligence at Riskified.

BoF breaks down how retailers can buck the trend.

How do counterfeits make their way onto firsthand retail sites?

Fake goods showing up in firsthand luxury e-tailer’s inventories through returns is partially a result of a rise in counterfeits on the market. Once mostly restricted to backdoor sellers on Canal Street and the like, shoppers today can get their hands on fakes through websites like AliExpress, DHGate, Shein and even Amazon. In response to Trump imposing more than 100 percent tariffs on China, manufacturers in the region that claim to produce luxury bags for brands like Hermès and Chanel are going viral on TikTok, offering to sell to them directly. The share of fakes that authentication software platform Entrupy encountered across billions of dollars worth of luxury items jumped from 8.3 percent in 2021 to 8.7 percent in 2023.

But the increase in counterfeit returned goods also reflects a luxury backlash among younger consumers. Prices for high-end goods have increased more than 50 percent in 2019, according to HSBC. As such, more shoppers — particularly Gen-Zers — aren’t convinced they’re worth the exorbitant prices, and also feel that luxury brands make enough money as is. They’re not only seeking out dupes for coveted items like The Row’s $6,400 Margaux bag or Alaia’s $1,350 Mary Jane-styled leather ballet flats, but they’re also openly bragging about doing so on social media.

“A lot of Gen-Z sees this as sticking it to the corporation,” said Gwyneth Lewis, chief of staff at trademarking software firm Huski AI. “In the 2010s people would wear a dress and return it. The 2020s version is buying something real and returning something fake.”

It’s also easier to get away with: Consumers can take advantage of more lax online return policies introduced to drive sales during the pandemic e-commerce boom, such as the ability to get a refund once they ship back an item.

While a greater number of younger consumers are willing to proudly carry a dupe, it’s still a relatively small number who go so far as to engage in the type of returns fraud that drives sizable revenue losses for retailers. One of Riskified’s clients (which it didn’t disclose for privacy reasons) found that only less than 1 percent of their customers caused a loss of $4 million in 2024 from fraud-related activity, Elazar said.

“There’s a handful of people that are ruining it for everyone,” Elazar added. “The more of these bad people that we catch and prevent, the less this becomes a trend.”

How can online retailers address it?

The most obvious solution to ward off counterfeits would be for retailers to authenticate all high-end goods, especially handbags and footwear, when they are returned to their warehouses. But doing so would be a sizable investment for what is still a relatively minor issue, and even if such processes were implemented, detecting a fake is not straightforward.

Luxury resale marketplace Vestiaire Collective, for example, has prevented €12 million ($13 million) worth of counterfeit goods from making it onto its site this year. To do so, the Paris-based company operates four authentication hubs in New York, Hong Kong, France and the UK, where it employs more than 100 authenticators, some of whom are so skilled they can detect a fake bag by the scent of its leather, said Victoire Boyer Chammard, Vestiaire Collective’s senior brand manager and authentication specialist.

“In terms of investments linked to trust, it was never a subject of costs,” Boyer Chammard said. “We want to put money on the table to ensure that we try to be trusted.”

While firsthand retailers could invest in similar practices, doing so would add another layer to an already time-consuming returns process where the main concern is getting items back into stock as quickly as possible. Add to that, hiring authentication experts is an additional expenditure at a time when businesses are already dealing with higher shipping costs — and bracing for the impact of threatened tariffs. Plus, the authentication process is far from perfect, even for resale marketplaces: StockX, for instance, is currently in a legal dispute with Nike, which is accusing the Detroit-based reseller of allowing counterfeit versions of the sneaker giant’s styles to be sold on its site.

“Some of the marketplaces hurt their bottom lines to put extra processes in place,” Lewis said. “They are managing so many different problems.”

To that end, there are alternatives. Max Peiro, chief executive of luxury analytics firm Re-Hub, suggested luxury e-tailers can add QR code-embedded seals to their products; if they’re broken, an item can’t be returned. Because they are harder to remove than standard tags, it prevents customers from swapping in a fake and also ensures that items are always in resalable condition.

Retailers can also partner with firms that help identify return policy abusers and remove perks like instant refunds to those identified. Riskified’s software can detect shoppers whose past returns include shipping back boxes full of dried ice or items they didn’t originally order based on their IP addresses or zip codes, and ensure that any future returns they make — even if they placed an order with a new name and credit card — will be flagged for further inspection.

More firms are developing similar features. In March, returns management company Narvar introduced an AI tool that flags potential policy abusers and is already gaining traction with its retail partners, said Anissa Kumar, Narvar’s chief executive, although she wouldn’t disclose how many clients have started using the service.

While it’s likely impossible for retailers to ensure no counterfeits will ever show up on their marketplaces, finding and penalising more of the customers who are likely to engage in this sort of fraud is one step toward maintaining consumers’ trust in the long-term.

“You have to make sure that once you spot someone who’s a fraudster, you block them and you block them in an effective way,” Elazar said.