Luxury Brands Develop Digital IDs to Combat Booming Counterfeit Market

High-end fashion houses are turning to new technologies like digital IDs, AI detection, and blockchain tracking to help combat the explosion of counterfeit goods sold online and normalized by social media. But human expertise remains essential as "superfake" knockoffs become harder to distinguish from originals.

Powerful AI-driven apps like Entrupy and Ordre's Authentique system can purportedly spot fake bags and shoes by analyzing a few images. Ordre's technology creates a unique digital "fingerprint" for each item based on minute manufacturing details. The fingerprint is then registered via blockchain, making it secure yet traceable across an item's lifecycle.

The Aura Blockchain Consortium, founded by luxury giants LVMH, Prada and Richemont, is spearheading efforts to create scannable digital passports for millions of products. This would allow consumers to instantly verify authenticity. Some brands are also inserting NFC chips with unique codes into items like shoes. These tactics aim to curb counterfeiting as knockoff trading migrates online.

Once peddled discreetly on street corners and shady storefronts, fake goods now proliferate openly on social media platforms and e-commerce sites like Instagram, Facebook and AliExpress. Their quality can sometimes rival genuine products, hence the term "superfakes." Online communities discuss and seek out replica items, viewing the purchase of luxury knockoffs as a savvy financial move.

But purchasing counterfeits raises ethical issues around transparency, working conditions and profit beneficiaries in the illegal supply chain. Sympathy for large luxury brands losing sales to fakes may also be declining as prices for authentic goods continue to soar out of reach of most consumers.

Nonetheless, counterfeits still represent lost revenue and diluted brand integrity. Digital IDs provide an additional layer of security to reassure luxury shoppers while dissuading knockoff traders. But implementation has challenges, from registering millions of products to interfacing with secondary resellers.

Though AI detection aids authentication, experts concur human insight remains essential, especially for new items algorithms haven't yet catalogued in databases. Fashionphile, a leading reseller of pre-owned luxury items, abandoned its own AI authentication plans in 2017 after finding the technology insufficiently reliable when processing the high volume of goods it receives daily.

While scannable digital product IDs and blockchain tracking show promise, a standardized industry-wide solution is still needed. Until then, resale platforms and retailers will need to keep improving anti-counterfeiting methods as "superfakes" get even harder to spot. New apps and blockchain provide useful tools but human expertise in spotting frauds through detailed forensics honed over thousands of training hours remains invaluable.