A recent report shows how a counterfeiting syndicate generated an estimated 20 million euros in profits with fakes of the luxury brand Hermès. The criminals operated in France in immediate proximity to the brand owner – and with the help of insiders.

With illicit imitations of handbags by the French luxury goods manufacturer Hermès International SCA, a counterfeiting ring presumably generated profits of at least around 20 million euros (approx. 22 million US dollars). As currently reported, the counterfeiters operated among others in France, on the outskirts of Paris, until 2012. The illegal manufacturing sites were thus located not far from the official workshops of the luxury goods manufacturer – and were also supported by employees of the original manufacturer.

The counterfeits of well-known bags, including the iconic Hermès Birkin Bag, were of such high quality that they appeared authentic even to some Hermès collectors. In fact, parts of the material even came from the workshops of Hermès itself – these original materials were apparently supplied to the counterfeiters by at least two Hermès employees, according to a report recently published on the industry platform The Fashion Law. The Hermès employees are said to have been closely involved in the criminal activities and to have supervised the manufacturing of the fake goods.

The brand owner became aware of the criminal activities in his own house via internal monitoring systems, which indicated abnormal behavior. French law enforcement authorities eventually identified two employees in 2012 by monitoring and tracing packaging boxes and materials. When the authorities broke up the counterfeiting ring, they arrested about a dozen people. The two Hermès employees involved were also detained; however, the company suspected that other employees might have been involved too.

As it turned out, the reach of the counterfeiters’ business extended far beyond Paris and France. The trail of the counterfeiting network, which appeared quite small initially, led from Europe to the United States and as far away as East Asia. For the French arm of the operation alone, the authorities have so far been able to trace earnings of around 20 million euros (approx. 22 million US dollars).

Hermès is repeatedly targeted by counterfeiters and copycats. The former CEO of the company, Patrick Thomas, strongly condemned the extent of such illegal imitations in 2012. “It’s an absolute disgrace,” said Thomas. According to him, around 80 percent of the goods traded online under the name of Hermès are in fact fakes. However, the fashion house commended the successes of the French law enforcement authorities in the case of the criminal network that was broken up in 2012. They are said to be “very satisfied with the efficient and diligent collaboration established with the national gendarmerie in this case and reiterates its relentless commitment to fighting counterfeiting”, as a spokesman for the brand said.

To counter the alarming extent of counterfeiting, the French luxury industry association Comitè Colbert launched brand protection campaigns in the mid-2000s. As one part of this, a large-scale communications campaign at French airports was designed to raise consumer awareness of the risks of counterfeits. For example, posters pointed out that buying counterfeits is a criminal offence in France, unlike for example in the USA.

Source: The Fashion Law