Counterfeit Smackdown! EBay Ordered To Pay $61 Million

That headline is the good news. The bad news is the $61 million in damages ordered by a French court isn’t meant for regular shoppers who have been defrauded when shopping on eBay. Instead, it’s been awarded to LVMH Moët Hennessy Louis Vuitton, the French luxury goods company behind Louis Vuitton purses (among other fancy things, as you can see from their name). LVMH argued that “90 percent of the Louis Vuitton bags and Dior perfumes sold on eBay are fakes,” and that eBay profited off the sales without doing enough to stop them. EBay can appeal the decision, or simply click the “Pay It Now!” button.

EBay has countered that LVMH’s lawsuit has nothing to do with counterfeiters, but rather that LVMH is trying to control “the territories in which its products can be sold.”

“When counterfeits appear on our site we take them down swiftly, and today’s ruling is not about our fight against counterfeiting,” eBay said. “It’s about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers that eBay empowers every day. We will fight this ruling on their behalf.”

“EBay Ordered to Pay $61 Million in Sale of Counterfeit Goods” [New York Times]
(Photo: MoonSoleil)

Comments

Edit Your Comment

  1. bobbleheadr says:

    I read on a legal site that one official involved in this admitted that if Ebay was a French company that it never would have been penalized, but taking money from a foreign company for a local one never cost anyone public support.

  2. synimatik says:

    I’ve always seemed to have good luck with the few times I’ve used ebay. In fact, the system double paid one auction. Of course the ass clown that got the two payments tried to keep both. They stepped in and took my money back and refunded to me.

    I’m sure others have had way worse luck… I’m just sayin is all.

  3. WarOtter - I went to Japan and all I got was this tumor. says:

    I don’t agree this is a good thing. Forcing a company to police it’s customers (as far as controlling buying/selling) seems like it is going to create a whole slew of problems .

    I dunno, I just don’t like the idea. EBay has always been heavy on the ‘buyer beware’ side of things. Maybe a warning message to say these things may be fakes, but how can ebay single handedly track and verify authenticity of thousands of products it has no control over?

  4. I just returned from Italy, and the street vendors selling counterfeit LVMH and Gucci (among others) is out of control. And I saw people buying!

    The bigger picture is what this does to enable groups like the mafia (and possibly terrorist orgs, depending on the cash partnership-du-jour)…when someone at a port is paid off to turn a blind eye to a container, it often contains more than just fake purses from China. Heroin, guns, you name it. Some critics say that this will ultimately be the transport mode of choice for a dirty bomb or small nuclear device. That’s a far cry from buying $20 purses at a home show, or haggling with an African on the streets of Venice.

  5. homerjay says:

    In unrelated news- Ebay raises fees for everything again.

  6. bohn002 says:

    i think something is wrong, Im getting [consumerist.com] when i click the title of the article, had to hand craft it to [consumerist.com] to get it to actually show the rest of the article and comments, Most of the articles on the front page do the same thing. AM i the only one?

  7. battra92 says:

    Seriously, go eBay! I am more apt to believe them than Louis Vutton in this case.

  8. paladyn says:

    I’m on Ebay’s side on this one. There’s no way they have the ability to individually verify the authenticity of everything their sellers post.

  9. Pro-Pain says:

    Are you kidding me? I’d never pay them a cent if I was Ebay. In fact, I’d block all of fucking France from using the service. Like Ebay can control what’s authentic. Please…Louis Vutton…double please…

  10. I don’t doubt eBay’s argument. Monster Cable had a listing of mine pulled (after it had ended and the buyer had already paid). After 3 requests, Monster Cable finally took the time to explain why they pulled my auction: I violated their distributor’s exclusive import rights because I offered it for sale to Canada (accidentally, by the way).

  11. Meshuggina says:

    This whole thing is kind of ridiculous. eBay has a responsibility to take down counterfeit goods when it’s made aware of them, but how is the company supposed to police every auction?

    Sites like eBay provide a service; why should it be held responsible if someone abuses that service?

  12. Wormfather is Wormfather says:

    I hate to do this but “LVMH Moët Hennessy Louis Vuitton” is redundant.

  13. chargernj says:

    @Ash78: can you cite instances in which this has happened? I would like to believe that the criminals/terrorist are shipping all of the contraband together in one container. Maybe they are getting a better rate on shipping? Still it doesn’t make much sense as it would ensure that you lose the entire cargo when one container is found. Better still to distribute your goods among many containers so you don’t lose the whole thing in one random inspection. I know that occasionally the do find an entire container filled with contraband, but more often they will hide the illegal goods with legitimate cargo, and have an inside contact arrange delivery once the goods are in the country. At least that is how it usually goes as far as I’ve heard.

    Seizing a container brimming with guns, drugs, and counterfeits would could make a guys career though.

    Seriously though, if there is money to be made in something people are going to do it. That includes counterfeiting. France and the US should be focusing on real crime and not on trademark violations.

  14. MissPeacock says:

    I was hoping this would be discussed here.

    It seems like I read somewhere yesterday that part of this suit involved LVMH also arguing that eBay could not even sell their (real) originals because they are not an “authorized merchant” or something. Basically, LVMH (and I believe Hermes, who also sued eBay a while back) believes that having their goods on eBay diminishes the luxury cache associated with their brands. (I’m pretty sure I read this, but don’t hold me to it.)

  15. MissPeacock says:

    @MissPeacock: Okay, that was kind of in the posting above anyway. My bad.

    /red-faced

  16. backbroken says:

    Maybe they should sue Toyota because their cars are sometimes used to transport the counterfeit goods. Toyota should be doing more to ensure that no counterfeit purses ae transported in a Camry.

    I think they should also sue leather suppliers and anyone who makes zippers because they aren’t doing a dang thing to make sure their products don’t end up in these purses. (er, I’m sorry, ‘bags.’)

  17. junkmail says:

    @bohn002: No, it’s not just you. It’s been doing that off and on since yesterday.

  18. Mayor McRib says:

    Note to LVMH:
    Maybe you should make a quality product that will be too cost prohibitive to make a counterfeit of? I have seen the real deal right next to the fake. And while it’s distinguishable, the difference is not super obvious. Maybe your luxury brand is grossly overpriced.

  19. shaman66 says:

    Ebay got what their uneven application of “protections” shows them to deserve. Ebay does nothing to protect anyone except itself and gives lip service to everything else. They are a predatory monopoly and I for one am glad to see them have to write a check…

  20. AD8BC says:

    Whether or not I have had any problems with Ebay in the past (I haven’t, in fact I have had nothing but good experiences), Ebay should not be penalized in this.

    Ebay is not listing the items for sale. Individual sellers are. It’s them who are responsible.

  21. MissPeacock says:

    If you want a good read about how the luxury industry has declining standards, read “Deluxe: How Luxury Lost Its Luster” by Dana Thomas. So-called luxury brands now make many of their products in China, using poorly paid workers (not the craftsmen they tout in ads), then ship them to Italy to have a buckle attached so they can put “Made in Italy” on the tag, and so forth. It’s quite eye-opening.

  22. Skiffer says:

    @Ash78: Wait a minute…did you just link fake Louis Vitton handbags with terrorism?!? Bravo…well played.

  23. myprozacdream says:

    I can see LV’s point only from the perspective of how the music/movie industry used to be (many years ago) where if you make profit from the counterfeit or bootleg, they have a right to sue. Ebay is essentially the “napster” of louis vitton, except they are actually making a profit instead of handing it out for free.

    Also, if ebay claims by it’s own policies to shut down auctions that are selling fake goods, and they are not doing it, then there would be even more grounds to sue.

    However, that opens up a whole other can of worms when it comes to the sellers on ebay. Is LV going to sue them next cause they are not “authorized retailers”???

    It seems like a really slippery slope…..

  24. kepler11 says:

    maybe Ebay can just pull out of France.

  25. bravo369 says:

    hmm…ebay claims they provide a service and can’t be held responsible if the users are breaking the law. that seems like the exact defense P2P networks used when they were sued. we know how that worked out for them

  26. aka Cat says:

    @Mayor McRib: What, and cut into their profit margin? Never!

  27. JaguarChick says:

    @Skiffer:

    Actually, there are many instances where fake luxury goods have been linked to terrorism. It’s not a joke. The New York Times has run a number of articles on the matter.

    Harper’s Bazaar has a website:

    http://www.fakesareneverinfashion.com

    If you click on ‘The Buzz on Fakes’ you’ll find a link to a NY Times article from 8/30/2007. Here’s an excerpt:

    “Most people think that buying an imitation handbag or wallet is harmless, a victimless crime. But the counterfeiting rackets are run by crime syndicates that also deal in narcotics, weapons, child prostitution, human trafficking and terrorism. Ronald K. Noble, the secretary general of Interpol, told the House of Representatives Committee on International Relations that profits from the sale of counterfeit goods have gone to groups associated with Hezbollah, the Shiite terrorist group, paramilitary organizations in Northern Ireland and FARC, the Revolutionary Armed Forces of Colombia.”

    So not only are you being tacky buying a fake bag, but you are supporting a variety of very very bad things.

    Everyone on here likes to tout the ‘don’t buy crap you can’t afford’ line, and that same line should apply to designer crap as well. I often question why people feel the need to carry a fake designer bag. In my opinion, you are trying to be someone that you are not. If you really want a bag, wait for a sale or save up…coach AND kate spade have sales ALL the time. Neiman Marcus has tons of sales and I have seen Prada, Gucci, and Dior for half price. Hermes and LV NEVER go on sale, so if you really want it…suck it up, budget for it, and buy the real thing.

  28. alstein says:

    What Ebay should do is just stamp a lawsuit charge on French Ebayers.

    I’ve always wondered what would happen if an online company said we’re not paying cause you can’t make us. It’s not like French stormtroopers are going to go into Ebay, and I doubt US courts would make Ebay pay.

  29. barty says:

    @WarOtter: However, eBay has already opened the door for this. I collect/trade railroad memorabilia and on more than one occasion eBay has acted on the behalf of a company to shut down auctions because someone was selling a 20 year old “proprietary” timetable or other items that had the company logo on them.

    eBay can’t have it both ways. They either need to address the problem of counterfeit/unauthorized resale of items across the board, or not at all. While I agree that it is difficult for them to police every auction, this isn’t new news. I first heard of this being brought up about 3-4 years ago. I suspect eBay probably just took the typical “we’re getting our cut, so who cares what they’re selling as long as it isn’t illegal,” stance and ignored requests by these companies to keep a closer eye on some of these sellers. I

    @Mayor McRib: Ethically I believe counterfeiting is wrong, you hit it right on the head as to why it takes place. Ditto with software piracy and movie/music sharing. There are obviously enough people out there that think the item is overpriced.

  30. Skankingmike says:

    @JaguarChick: anybody that uses the word Terrorism is an idiot in my book so you just lost me.

    Everybody is a terrorist to somebody and until 9-11 that word just wasn’t in our vocabulary.

    You think not buying fake products is going to stop any of those things is just stupid.

    and besides Ebay already has rules up about selling fake items. So i don’t under stand this suit? You can get banded if you’re reported.

  31. NumberFiveIsAlive says:

    “EBay can appeal the decision, or simply click the “Pay It Now!” button.”

    Hahaha. I guess since selling on eBay is my livelihood, this joke appeals to me more than others. Bravo.

  32. JaguarChick says:

    @Skankingmike:

    I’m not using the word terrorism. I’m citing the article which states that counterfeit luxury goods have been linked to groups like Hezbollah. As for everyone being a terrorist to someone, that is the biggest load of crap I’ve ever heard. That word was in our vocabulary WAY before 9/11. According to the oh so reliable wikipedia, the word terrorism was first used during the French Revolution.

    @barty: @Mayor McRib:

    LVMH is and was extremely profitable selling high-priced luxury goods. There is a market for the real thing. Is it overpriced? In my opinion, overpriced is a very subjective and relative measurement. If you are Bill Gates, you could poo in a LV bag every day if you felt like it.

  33. Concerned_Citizen says:

    Isn’t it up to the customer to notify ebay that a counterfeit item was sold to them? All ebay could really do is put a hold on paypal funds for a month to give the customer a chance to validate the purchase. But then you are going to run into problems when people start to lie or mail a fake back in the place of a real one. Really, there is nothing ebay can do except place weird restrictions that make it so no one wants to sell real ones over ebay. Then you will have to deal with any other manufacturer asking for the same restrictions just to help discourage ebay resales. Basically the french courts are stupid. They had no right to force ebay to implement anything beyond simple user reporting and locking bad seller accounts. Those methods work perfectly fine and would prevent anyone from building a large business as the first fake sold should get them shut down.

  34. MeOhMy says:

    @Skankingmike:

    Everybody is a terrorist to somebody and until 9-11 that word just wasn’t in our vocabulary.

    Uhh…the word terrorism dates back to the 18th century and it was at least commonly used since the 1970s. It’s only become *overused* since 9/11.

    That said, if actual terrorist groups really are trying to fund their activities by the sale of knockoff handbags not liking the word “terrorism” won’t change the reality of the situation. Would you prefer if they were called “freedom fighters”?

  35. Skankingmike says:

    @Troy F.: yes I know how long the words be around.

    And no it was never used commonly as you put it.

    And it’s used wrongly still.

    Terrorism is suppose to be illegal acts that further political or ideological views onto people. Like 9/11 attacks were terroristic attacks.

    But just because some Chinese mafia men have illegal prostitution (and in their country underage doesn’t exist) in this country and various other forms of illegal activities their not pushing their propaganda onto us.

    so no i don’t see how it’s terrorism.

    Unless you’re saying that the Italian Mafia are now terrorists as well in which case you have to get rid of all Italian Mafia movie’s because you’re celebrating terrorism.

  36. KatieKate93 says:

    I buy a lot of bags on eBay, and I’d say at least half of the listings are fakes. There are several brands that I know well, LV being one, and I frequently report fakes through the “Report This Item” link at the bottom of the page. The most egregious fakes often stay listed no matter how many of us report them, while the person selling one or two real bags has her auctions pulled for no reason.

    I’ve come to believe that the criteria eBay uses to pull auctions is purely political. Many eBay power sellers have attained that status through the sale of counterfeit goods. Maybe this will change things.

  37. Hobz says:

    Here’s another example of an industry not understanding their market.

    @Louis Vuitton

    Flood the knock off market with your cheap to make in china bags and profit. Deny that you are doing this so that the rich folk still get their rocks off thinking they have the real thing hanging from their arms.

    Problem solved…

  38. We will fight this ruling on their behalf

    Right — not on behalf of eBay’s $61M

  39. @Meshuggina: eBay has a responsibility to take down counterfeit goods when it’s made aware of them, but how is the company supposed to police every auction? Sites like eBay provide a service; why should it be held responsible if someone abuses that service?

    LVMH Moët Hennessy Louis Vuitton Moet Vuitton Hennessy Louis doesn’t care. They’d be happy to sue eBay out of existence, if even bona-fide customers have a legitimate first-sale right. As far as they’re concerned, a secondary market leads to lost revenue.

    For instance, consider the answer to the question: How does LVMH know an auction is counterfeit? (I’m guessing they don’t care. File a VERO complaint for everything, especially if the poster missed a comma somewhere. eBay trusts the rights owner’s word in these cases and usually pulls the auction immediately.)

  40. WarOtter - I went to Japan and all I got was this tumor. says:

    @bravo369: You really have no concept of what the p2p cases involve do you? STFU and die from it!

  41. windycity says:

    @KatieKate93: Agree. Seems that ebay only follows their maxim “When counterfeits appear on our site we take them down swiftly” when large companies lean on them to do so, not when consumers make the reports.

  42. highmodulus says:

    Ebay’s terrible, they know and they simply don’t care. They happily lie about the fraud levels, get caught, shrug their shoulders and start the same lie over again. Entire categories are not longer safe to sell or buy in at all (Laptops for one).

  43. rellog says:

    @highmodulus: I agree. No sympathy for an evil empire. Now I just wish the US govt would do something to put the smackdown on Paypal and their tactics.

  44. rellog says:

    @WarOtter: The comparison seemed fairly reasonable to me. Both camps offered a “I’m not responsible for what happens on my server…” Granted, it is a loose comparison, but I see the point. You need to step back and take a chill pill, dude…

  45. lauy says:

    Gotta side with eBay on this one…

    Several years ago, during a cash crunch, I tried to list an authentic LV speedy and cosmetic case for $150.00. This was an extremely low price, but, the speedy was used, and the cosmetic case had a broken zipper.

    Within hours, the auction was ended by eBay because it was a VERO violation and a law firm representing LVMH demanded its be yanked. I was accused of listing counterfeit items. I emailed eBay for contact info for the law firm, and in an auto reply email from the law firm (whose name I have forgotten) I was told I had to provide proof of purchase before they would allow eBay to reinstate the auction. When I queried what one was to do if the items had been a gift, I was told I had to contact the buyer and get proof of purchase from them.

    Well, F that – the gift was over 10 years old and I was not going to tell my grandmother I was selling the gift she had given me (although she probably still had the receipt!). Since then I have not and will never buy anything from LVMH. In general I am opposed to counterfeit merchandise, but I would consider buying fake LVMH products if I found a good one just to stick it to them. They are an entity quite similar to Walmart in my opinion…and will never see a dime of my handbag splurge money!

  46. MeOhMy says:

    @Skankingmike:

    And no it was never used commonly as you put it.

    Oh really? Never heard of Lockerbie? Oklahoma City? The FIRST WTC bombing? The IRA? The Munich Massacre?

    All were described as acts of terrorism at the time – WELL before 9/11. Yes, it was used commonly. People were scared shitless about terrorism at various places and times in the 20th century, and terrorism was the word they used to describe their fear.

    After that you’re just deflecting. I have no idea if the money spent on knockoffs is channeled to actual terrorism or the mafia. It really doesn’t matter much as neither are organizations to which I would want to contribute. Of course if you think the Mafia doesn’t care to further political or ideological views per your own definition of terrorism, you are sadly mistaken.

    But as I said, if it IS going to actual terrorist organizations like Al Qaeda, your disdain for a certain 9-letter word would not change the reality of the situation.

  47. MeOhMy says:

    @Skankingmike: PS: Hezbollah, FARC and paramilitary organizations in Northern Ireland – mentioned specifically in the NYT article are pretty much categorically terrorist organizations.

  48. cjovalle says:

    I don’t believe this is particularly good news, actually. The case also states that E-Bay isn’t allowed to host sales for the genuine products- completely contrary to the doctrine of first sale in the U.S.

  49. quieterhue says:

    I’ve done lots of “window shopping” for designer bags on ebay, and I hardly ever see fakes. Ebay customers of designer product are a discerning, well-educated bunch and they can spot a fake a mile away. Any fakes I’ve seen have been really obvious fakes (like with a “Parda” logo); if they sell at all, they sell for maybe $12. The people who buy cheap fakes are not potential LV customers, so those aren’t the people LV is losing money on. They’re more concerned about the people who choose to pay half price for last season’s bag, rather than pay full price for a new one.

    I really hope Ebay does choose to fight this one–LV is obviously in the wrong.

  50. peter_in_paris says:

    In France you can be fined just for BUYING one of these bags – not the case in the US. Why haven’t they gone after the buyers?

    And watch out at airports in France if you are traveling with any counterfeit goods. They will confiscate and fine.

  51. LJKelley says:

    What I think alot of people are not getting is that the brands in question have certain distrubtion rights with various stores and has not authorized eBay or its sellers as proper distubuters. A part of the court order was to inform eBay to stop selling Dior perfumes.

    Now obviously I don’t think used products apply here (though who sells used perfume) and eBay is probably hurting their lucrative deals with existing retailers. I’m doubtful eBay would have listened to requests that only authorized dealers can sell Dior perfumes or use that Trademark to sell a perfume and thus they lost the case.

  52. WarOtter - I went to Japan and all I got was this tumor. says:

    @rellog: Sorry I was being over zealous in my sarcasm. I don’t actually care. Just been a long day at work.

  53. LUV2CattleCall says:

    kepler11 at 09:41 AM Reply *
    maybe Ebay can just pull out of France.

    @kepler11:

    Maybe France should take Yaz?

  54. mikelotus says:

    @WarOtter: Policing? how about ignoring when brought to their attention? consistently? no one is asking them to police, just do something about it when the community sees the problem.

  55. cccdude says:

    Block every French user. We’ll see who cries the most then..

  56. Tankueray says:

    I’m with Ebay on this one. I’ve bought a few LV items off of ebay and they were all real. LVMH just doesn’t like the secondary market. Ebayers can spot fakes and turn them in. I just bought two new bags from LV in Saks, but if they try to enforce not allowing people to sell their used LV stuff on Ebay, then I will not buy anything from them again. And that means Sephora too, shit. Not that I would try to sell any of my stuff on Ebay, they won’t protect you when a buyer rips you off, in fact, I think the way Ebay and PayPal are set up they encourage it. Damn, I’m boycotting so many companies for various reasons I have nothing left but Dr. Pepper, they’re still cool right?

  57. Concerned_Citizen says:

    @peter_in_paris: Interesting. It is odd to think someone can get their bag confiscated if they purposely bought a knockoff because they didn’t want to pay for the real thing. It would appear France just is a country not worth doing business with. Ebay should just block any LV auctions from french ips. Problem solved. These auctions will no longer have anything to do with France.

  58. lucindamc123 says:

    No it is not true that Ebay tries to cut down on the counterfeit – and a good example is Louis Vuitton merchandise. Several people who love Louis Vuitton handbags religiously search the listings and report all counterfeits. Rarely are they removed. The people – all volunteers who do this are quite good at what they do and quite diligent. Ebay has been ignoring them for quite a long time. They won’t even allow people to warn a buyer that what they are buying is counterfeit. The problem is that now with Super Fakes – the counterfeit ones are identical in every way to the real ones – materials used, stitching, date codes, proper alignment of monogram. Not a lot of those have seen the resale market yet and most of those came out this year, but wait a bit, they will be all you will see on aucton sites. And these super fakes bring as much money on online sales on auction sites as the real thing.

    Ebay was much too lax with just this one item and that one was policed by Ebay users, not Ebay but Ebay did nothing. And even after the announcement of the law suit final determination, there are still fakes there.

  59. Jackasimov says:

    That’s like fining the Post Office for allowing shipping of counterfeit items.

    PS I hate Ebay.