History
ebay counterfeit
2008 was an “Annus Horribilis” for eBay which was condemned by a French court and obliged to pay 38.6
millions euros to LVMH, the famous luxury French group. LVMH charged eBay for its lack of control on fake articles sold on the internet site. The Paris Commerce Court estimated that eBay did not
take the appropriate actions to fight against counterfeit. For instance, eBay was blamed for having refused to close any seller account once the seller was convicted of forgery. eBay also
rejected Louis Vuitton’s request to immediately remove any advertisement containing illicit articles identified by the luxury brand.
Financial measurement of
counterfeit
ebay counterfeit
This 38.6 M€ fine may look huge but it is the result of a calculation done by the expert Maurice
Nussenbaum and detailed in the French economic magazine “Challenge” on 1/07/08. For each of the most impacted brands, Louis Vuitton and Christian Dior, he calculated:
1. The amount of commissions received by eBay regarding the sale of fake articles from 2001
until 2006,
2. The image prejudice ,
3. The moral prejudice.
ebay counterfeit
Commissions received by eBay
The expert calculated that:
- From April to June 2006, 149 739 ads related to the brand Louis Vuitton were processed on the web site,
- 96 681 sales were done at the average price of 96.5 €,
- 90% of the sold items were reported as fake by LVMH but they generated commissions for eBay,
- The court estimated that eBay received 1.6 M€ per year which sums up to 7.9 M€ for the qualified period 2001 –
2006.
The same logic applied to the brand Christian Dior:
- From April to June 2006, 316 904 ads related to the brand Christian Dior (CD) were processed on the web site,
- 107 825 sales were done at the unit price between 15 € and 44 €, quite all of them were reported as fake.
- This would represent 4.1 M€ of commissions, received between 2001 and 2006.
Image prejudice
M. Nussenbaum evaluated the image prejudice at 10 M€ for each brand.
Moral prejudice
This was evaluated at 2 M€ for Louis Vuitton and the same for Christian Dior.
These numbers were all fully validated by the Paris Commerce Court.
Source: 2008 - Challenges
The impossible chase
ebay counterfeit
“The difficulty on eBay is that you can not see a handbag, open it and verify if everything is correct”
says Wolfgang Weber, in charge of the fight against cybercrime at eBay, for Europe. So, eBay can rely on three sources of information to identify fake articles:
- A dedicated software used to scan the eBay database and identify the questionable advertisements,
- The remarks coming from the customers,
- The observations reported by the luxury brands.
In order to protect its reputation, eBay imposes sanctions on the users selling counterfeit articles:
30,000 accounts were closed in 2008. eBay also collaborates with justice by reporting cases and providing the personal data of the sellers to the authorities. The company announces to have
reported more than 500 cases in 2008, leading to more than 300 arrests for a total value of 29 M€ of counterfeit articles.
In total, eBay reports more that 2,000 people collaborating to the fight against forgery. But most of
them work on tracking forbidden articles (such as weapons, pornographic material,…) and counterfeit is only “a tiny part” of their activity admits Wolfgang Weber. Basically, eBay reports to have
invested “more than 30 M€ each year” in the fight against counterfeit, compared to a total revenue of 8.5 B$ in 2008.
But despite of this strategy the trials multiplied: eBay won against Tiffany in the US (NYC, 2008) and
against L’Oréal (Paris, 2009) in Europe, but the company lost against Hermès (Troyes, 2008) in France, LVHM and Christian Dior (Paris, 2008).
ebay counterfeit
Source: 2009 - Agence France-Presse
ebay counterfeit
The battle has just started
ebay counterfeit
With the keen interest generated by the luxury industry last years, it is more than likely that
counterfeit will spread and increase. eBay can not investigate each advertisement related to a luxury brand but the vast majority of forgery is focused on brands with a very strong image. And
they are not so many. So, focus on the ten top copied brands could have a very strong effect in this battle.
Moreover, eBay was extremely smart in creating Paypal as an independent company. Could it make sense to
create another subsidiary dedicated to the fight against counterfeit? Not only this company could have a better understanding of the luxury brands business but it can also propose services to
other web companies such as Price Minister.
ebay counterfeit
Last but not least, ethic and equity are today values beloved by the customers and the media. In such a
case, why not saying that counterfeit is cause of children and women slavery in many countries? Why not explaining that the money generated by an “innocent” fake watch is often invested in the
drug dealing? And then, drug money is invested in weapons dealing and ultimately in terrorism. The man in the street, in western countries, is surely more concerned today by the impact of drugs
and violence in the society rather than the prejudice suffered by multimillionaires owning the luxury brands.
http://www.ebay.com
ebay counterfeit
