I’m trying to keep up with Jack as he scurries down Lafayette Street in the busy district of Chinatown. I have no idea where he’s taking me. In fact, I feel like I’m following a white rabbit down a hole, except instead of a rabbit, I’m chasing a Chinese man in his twenties, speckled complexion, and hair that stands up at least four inches.
I met Jack a few days ago while shopping for knockoff goods. He works as a shop assistant in a Canal Street store selling counterfeit goods. When he heard me complain that the counterfeits weren’t real looking enough, he furtively followed me out of the shop, yanked me inside a bakery to ask if I wanted to get “the good stuff, A-quality bags.” The shop he worked at didn’t have the best quality fakes he said, but he could show me more authentic looking ones. I agreed to not to mention it to the shop owner he worked for and made plans to meet him three days later.
What I didn’t tell him is that I’m doing this shopping for a story. I want to get a clear look at the business of counterfeiting, from the customer’s point of view. The poor quality fakes, with labels such as Cucci instead of Gucci, were on sale at the store for as little as 30 bucks; I wanted to get to the really authentic imitations kept at a secret storehouse. The illegal knockoffs with quality and trademarks are almost indistinguishable from the real thing. I’d spent most of my life in China, the largest manufacturer of fake goods and knew more or less how they worked.
Anticipating it could involve following strange men to unknown places, I asked my friend Rose to accompany me just in case.
Thankfully, we don’t have to go far. Jack leads my friend and me to a Dunkin’ Donuts on Lafayette Street and sits us down. Several more young Chinese men who are styled exactly like Jack—black faux-leather jackets, dyed hair, jeans, and gruffed up converses—are idling inside near the doorway.
Jack reaches into his pocket for his iPhone and then angles it to face me. He flicks through photo after photo of expensive designer bags and accessories—it’s an impressive range of Chanel, Hermes and Louis Vuitton. Besides their signature totes and shoulder bags, he has small accessories like key pouches and makeup bags.
“Which one do you want?” He asks.
I feign indecision for a few seconds then ask for a Chanel 2.55 in black—one of the most coveted Chanel purses. Jack takes out a walkie-talkie device and repeats my request in southern-inflected Mandarin, and adds, “Shi zhong guo ren, zhong guo ren. (She’s Chinese, Chinese.)” I took that as reassurance for the person on the other end of the line.
It takes a few minutes for them to bring the bag down from the storeroom and I use that time to take in the situation. It’s not a busy day in Dunkin’ Donuts. I tally up Jack and his crew and the other women they bring in to show fake bags—we outnumber the actual customers of the Dunkin Donut’s. We’re taking up the whole front section of the shop, but the staff doesn’t seem to care.
The bag finally arrives covered by a cloth bag and under the arm of another young Chinese man who walks in and hands it to Jack.
I uncover the Chanel and check it out. “No, I wanted the purse made of lambskin, not this material.” Jack walkie-talkies his buddy again. A few more minutes go by then another guy comes into the store with the second handbag.
We go back and forth a few more times but all of a sudden Jack says, “Follow me,” and heads for the doors. My friend and I are a bit slower at grabbing our things and when we exit the shop, he is nowhere to be seen. One of his partners is standing outside the store but ignores us.
After a bit I see Jack waving to me from across the road, looking slightly peeved. He’s holding a new bag. I cross the street and hurry to keep up with him as he darts ahead.
He brings us into a Ten Ren’s teashop and we sit down again.
I size up the bag he shows me. “Where is the other bag for my friend?” I say since we’d asked to see two different colors. Jack replies he’ll bring that one down only after I view this one. After a few minutes in the Ten Ren’s, he grows impatient with me and it’s clear he wants to close the deal. He throws a few prices at me. $300. $280. Deciding I’d seen enough, I start to leave but Jack makes one last offer: $150. I decline by pointing out a slight flaw in the inner lining. I apologize to Jack and leave.
But not a bad price, I note to myself, for a very convincing replica of a $4,000 Chanel purse.
Type in the terms “fake bags” and “New York” into any search engine and the first page of results that pop up will all direct you right to Chinatown. Many times, clicking into a website will show Internet users a step-by-step guide on how to buy a fake Rolex or designer handbag and may even go as far as including pictures and prices.
Indeed, Chinatown has become equated with the sale of counterfeit goods. But knockoff Prada and Kate Spade purses are “not the authentic Chinatown” and it is the local community that is bearing the brunt of these illegal activities, says Kelly Magee, communications director for Councilmember Margaret Chin’s office who oversees the area.
Residents complain the counterfeit trafficking means “people standing outside their building until all hours of the night, noise, public urination, fighting and turf wars, just a general feeling of lawlessness and crime that people don’t want on their doorsteps.”
For businesses, it means the loss of revenue. Or it could simply mean feeling insulted when tourists and other shoppers assume that they are counterfeiters too. He Liting and her husband run a small accessories shop on Canal Street. They say they shoo away every fourth customer because they come in looking for fake goods. “They always think they can bargain here. I tell them my prices are listed and what you see is what I sell. I don’t have a fake wall that will open up to a mountain of LV [Louis Vuitton].”
A few days later, I contact the manager at the Dunkin’ Donuts where Jack brought me to try and find out how aware the store is of the problem and to ask what they are doing about the counterfeit sellers. The manager, a man named Aris, picks up the phone and as soon as I bring it up he thanks me. He has been trying to get rid of them but without success. “We’re calling the cops. We told them so many times [to leave],” he says, his voice full of frustration.
One time Aris says the cops did show up but the counterfeit sellers were still one step ahead of the police. “They don’t carry goods with them on the spot. They have their partners get them and they have lookouts. They frisked him [counterfeit seller] and found nothing. He says, ‘Oh, I’m not doing anything.’”
It’s a relatively new problem or at least something Aris has never noticed in his store before three weeks ago. He connects it to the holiday season. “We’re losing business so we are trying hard to correct that problem. I’ve had complaints from my guests, regular guests,” he says in pained tones.
According to a 2004 report released by the city comptroller, counterfeiting accounts for the loss of an estimated $1 billion in tax revenue—$380 million in unpaid sales taxes, $360 million in personal income taxes and $290 million in business income taxes. And when combined with lost state tax revenue from the sale of counterfeit goods across the state, the total loss of tax revenue reaches over $2.6 billion a year.
It’s also costing the designer brands a pretty penny. LVMH, the parent company of Louis Vuitton, reportedly employs 40 lawyers and 250 independent investigators and spends in excess of $20 million each year in efforts to combat counterfeiting of their goods.
Despite the police’s constant efforts, the illegal counterfeiting trade persists. The tactics I saw that day with Jack were in many ways the evidence of the authorities past effectiveness. The crackdown on open selling forced many vendors underground—they operate out of vans, secret backrooms, or in Jack’s case in a variety of unwillingly involved local businesses.
Now, “it’s an indoor problem,” says Lt. Capone, special operations head of the NYPD’s Fifth precinct, “We need probable cause to go in and search. It’s not as easy as it seems.”
Capone says the rings are tremendously well organized and have their people keep tabs on the police movements at all times. “They know all our Chinese officers. They have guys hanging out outside the precinct watching who comes and goes.”
Even if they were to arrest someone like Jack, chances are he’d quickly be back out on the street. Fashion design is not offered a great deal of protection by the law. The idea of trademarking certain colors, material on a dress, a buckle placement, a style of stitching or any combination of the above presents an immense legal challenge. Unable to prove trademark infringement, sellers typically are able to get away with a slap on the wrist. Sellers view the fines as a pre-calculated cost of doing business.
Further underlying that is the widespread culture of acceptance for trademark counterfeiting. Unlike an infraction such as drunk driving where people can directly see the potential harm, buyers often assume that counterfeiting is a victimless crime. Many don’t understand that counterfeit goods are tied to illegal drugs, human trafficking and international terrorism.
In a 2007 press conference, police commissioner Raymond Kelly revealed that parts of the counterfeiting industry were directly linked to the 2004 Madrid bombings and were known to provide funding for Hezbollah, a militant group in Lebanon.
That disconnect in the buyer’s mind is why Councilmember Margaret Chin, who represents many of the worst problem areas, such as SoHo and Chinatown, is trying to push through a bill that will nip the problem from an entirely different angle: the demand.
Current laws regarding copyright trademark infringement are lopsided—they only punish the manufacture and sale of counterfeit merchandise, not the purchase. But as Councilmember Chin explains, “to stem the tide of counterfeit goods production and sale in our city, our laws must be comprehensive.”
On April 28 of this year, she proposed LS1430, an amendment that would make purchasing a fake product in the city a Class A misdemeanor with fines up to $1000 and/or a year in jail. If passed, the law would make it illegal for a person to buy a counterfeit product when they know or should know, based factors including quality, price, or condition of seller and sale location, that the good is fake.
Heather McDonald, a partner at Baker Hostetler, represents numerous fashion and consumer brands and has been involved in many counterfeiting cases over the past 25 years. She says, “If buyers are penalized for supporting criminal activity when buying fake goods, the demand for these goods will decrease dramatically, and if the demand decreases, so will the supply.” Because New York City is a central distribution point for counterfeit goods the measure would mean improvement all across the country.
Though the initial reaction towards the bill generated discontent from some buyers who feel that only the vendors should be targeted, the bill is also aimed in large part to address safety concerns for would-be customers.
“You see large groups of especially women and young girls following these men into a van, up to an apartment, which they would never do in other situations,” says Magee, “but this lure of the bag or the good whatever it is making them let their guard down.”
Magee says right after LS1430 was introduced she received phone calls from women who wanted to report their dicey experiences buying fake goods. “A few women [called me and] said, ‘You know, I’ve been buying counterfeit bags for years. I’ve been following them wherever they went. Then one time, I was in the storeroom buying the bag and they heard the police were coming and they locked everybody in for two hours.’ She was scared out of her mind. It is dangerous. There have been instances where people were injured or hurt.”
The bill is still in its preliminary stages but a hearing is expected early this year. “It’s not going to solve everything,” Magee continues, “but the law will be a powerful tool in the arsenal.”
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