How Can Luxury Brands Deter Counterfeits?

SMITH BRAIN TRUST – Luxury brands use legal threats and guilt campaigns in efforts to deter people from buying knockoff, or counterfeit, high-end luxury handbags. And it’s been to little effect. Worldwide consumer demand for fake luxury products continues to outpace itself.

In new research, Maryland Smith’s Yajin Wang reveals a better way to suppress demand. Let consumers know that no matter how convincing the imposter, other people can tell it’s a fake.

After all, she says, citing her research, the primary motivation for buying a luxury designer accessory is to impress others. If the knockoff has the opposite effect, the allure is lost.

“Consumer desire for counterfeit luxury goods is largely driven by social motives, such as signaling status, gaining social approval and communicating your identity to others,” says Wang.

Cartier, Chanel and other designers have used guilt campaigns in the battle against fakes – essentially admonishing consumers about the moral or legal implications of buying phony goods. But those campaigns have found limited success. In surveys, half of respondents admitted to buying counterfeit goods, despite believing that doing so is morally and legally wrong. They often justify the purchases with some moral disengagement, Wang says, for example, by complaining that they couldn’t afford the real thing.

Such moral disengagement doesn’t end with the purchase of the phony merchandise,  says Wang, marketing professor at the University of Maryland's Robert H. Smith School of Business. It continues as the knockoff is used or worn in a social context.

“The act of buying a counterfeit luxury product is something done often in private and can be hidden,” says Wang. “But the use of a counterfeit product takes place in a social context, where that immoral behavior is visible for others to see and to judge.”

Wang, with co-authors Jennifer Stoner from the University of North Dakota and Deborah Roedder John from the University of Minnesota, conducted five studies that examine the impact of social interactions on moral disengagement and behavior among women.

In their field studies, they found that women experience heightened feelings of social anxiety when they suspect that their fake designer handbag has been outed as a phony. The experience reduced their level of moral disengagement and reduced their interest in buying a counterfeit product. “We illustrate the usefulness of these findings by developing an anti-counterfeit advertisement, with messaging based on our results regarding social anxiety and show this ad to be effective in reducing purchasing counterfeit luxury products,” the researchers said in their study.

Wang and her co-authors loaned luxury goods – Burberry scarves, Tiffany bracelets and Louis Vuitton handbags – to female research subjects and told them to imagine they had purchased the items at a steep discount at an outdoor market while studying abroad. They were given a computer survey to complete about luxury items, during which they would be interrupted briefly by an actor, who would comment on the item. Some would deliver a signal that indicates that they believe the item to be real, a “high-authenticity signal,” – “I really like your Tiffany bracelet. It looks cute on you.” – or a signal that indicates that they suspect it’s a fake, or a “low-authenticity signal”  – “I really like your Tiffany bracelet. Is it real?”

Questions about the item’s authenticity were often interpreted as a signal that the fraud had been detected, while the compliments were interpreted as a signal that the item had been deemed genuine.

Some replicas are more deceptive than others. Many handbag knockoffs cost just a few dollars and are made entirely of plastic, from the imitation leather to the cheap gold-colored emblems to the clasps. Others can cost hundreds of dollars, and are made from finely stitched leather, with real silk interiors and gold-plated emblems. It’s estimated that together, the good and bad counterfeits account for more than 7 percent of the sales of global luxury goods.

In one of the tests the researchers conducted, subjects were given what they believed to be a high-quality counterfeit crossbody Louis Vuitton handbag. (The bag was actually authentic.) Subjects were then given a high-authenticity signal, “It looks cute on you,” or a low-authenticity signal, “Is it real?” The subjects were given $8 for participating in the study and were offered a chance to buy a $1 raffle ticket to win a counterfeit bag. Those who believed they had been caught carrying a fake spent far less money on the raffle – about half of what the other group spent.

Detecting the response to the earlier studies, the researchers tested the effectiveness of an advertising campaign that focused not on the guilt of buying a fake or the threat of legal ramifications, but the shame of being caught using a phony. 

The campaign’s slogans zeroed in on that social anxiety, saying it’s easy for other people to spot counterfeits. It said: “When it’s fake, we ALL know it’s fake. Fake purses are easy for others to spot. Don’t take the chance. Buy real.”

“Consistent with our prediction, women viewing the social anxiety advertisement were less interested in purchasing counterfeit luxury products than women viewing the control advertisement,” the study says.

The research, believed to be the first to examine counterfeit luxury use in a social context, is forthcoming in the Journal of Consumer Psychology. 

Read more: “Counterfeit Luxury Consumption in a Social Context: The Effects on Females’ Moral Disengagement and Behavior,” is published in the Journal of Consumer Psychology.

Yajin Wang is an assistant professor of marketing at the University of Maryland’s Robert H. Smith School of Business. She teaches consumer behavior in the undergraduate program.

Research interests: Social aspects of luxury consumption and conspicuous consumption. Her research probes not only consumer perception, but also the psychological and behavioral consequences of using prestigious consumer goods.

Selected accomplishments: Research has been published in Journal of Consumer Research and Psychological Science, and has been covered in the New York Times, Wall Street Journal, Harvard Business Review, BBC News, FOX News, and CNN.

About this series: Maryland Smith celebrates Women Leading Research during Women’s History Month. The initiative is organized in partnership with ADVANCE, an initiative to transform the University of Maryland by investing in a culture of inclusive excellence. Other Women's History Month activities include the eighth annual Women Leading Women forum on March 5, 2019.

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