This is a Gucci Jackie 1961 bag. It retails for around $4,000 in one of the brand’s high-end fashion boutiques. 

This is a fake. You can buy it online for about $50.

This is a real Lady Dior.

This is a copy. It’s so good it’s almost indistinguishable from the original.

But there’s a key difference.

While genuine bags, like this Louis Vuitton Neverfull tote, deliver profits back to the companies that designed and marketed them … 

… cheap knock-offs like this one could be funding organised crime, people trafficking, even terrorism.

It’s never been easier to buy fake designer goods, but many fashion hunters would be shocked to learn where their money goes.

In an upstairs warehouse on the outskirts of Liverpool, in northern England, Ben Gallagher buried his face into a handbag and sucked in a whiff of air. To detect a fashion fake, sometimes you have to trust your nose. And something wasn’t smelling quite right with the Louis Vuitton limited edition Epi Kabuki Speedy bag on the table in front of us.

A genuine Louis Vuitton often has an unmistakable odour, Ben said — strong, pleasant, and with a prominent note of cheese. “It’s a nice smelling smell,” he said, grinning as a wince shot across my face. “I mean, nice in the bag world. I don’t know if it’s the glue they use or the type of stitching they use, but it does smell of cheese quite a lot.”

A fake Louis Vuitton, on the other hand, can smell of pungent glue, or may have no odour at all. Both are clues that not everything is as it appears. He handed me the bag for a sniff. Even to my nostrils, this one was suspicious. No cheese, just chemical glue.

Our suspicions aroused, Ben took a closer look, and the other telltale signs of a counterfeit started popping out: hardware that’s too shiny; an internal heat stamp logo in the wrong spot; stitching that’s asymmetrical, when it should be even and precise. Tiny details that would escape an untrained eye combine to form an overwhelming impression of fakery.

At 24 years old, Ben Gallagher is the co-founder of Luxe Collective, a Liverpool-based fashion reseller that verifies and sells more than 20,000 “pre-loved” designer items every year. He’s built a multi-million-dollar business on his knack for spotting a fashion fake. It’s taken hours upon hours poring over designer fashion items – mostly the real deal – to learn how to read the little tells others can’t see.

It’s a skill that’s increasingly in demand, too, as a deluge of counterfeit fashion goods made in places like China, Hong Kong and Turkey flood the global marketplace. Sales of all counterfeit goods have tripled since 2013 to an estimated $7 trillion annually and the counterfeiters’ top target is fashion goods, according to research by the OECD. In 2020, the fashion industry lost an estimated $76 billion to fake products.

“I think the number of fakes is definitely increasing at a very fast rate,” said Ben, whose team of authenticators spend their days sifting through an ever-growing glut of imitation fashion items. It’s a trend that’s being supercharged by social media platforms like TikTok and Instagram, where influencers flaunt luxury brands to a mass audience, and buying a designer bag or a pair of sneakers is only a click away.

The copies are becoming more convincing, too, with highly sophisticated “superfakes” further blurring the lines between what’s real and what’s not. “Even the luxury labels have accidentally accepted a fake as a return without realising it,” he said. 

Buying a fake might seem like little more than a harmless fashion splurge, but the stakes are much higher than many shoppers might realise. It’s almost impossible to know what dark enterprises are lurking behind the counterfeit items for sale online, or in shops and market stalls across the globe. Each year, counterfeit fashion funnels billions of dollars to international crime syndicates, funding everything from human trafficking to terrorism. These networks are often also involved in money laundering and the illicit drugs trade.

It’s a popular crime because the profits on offer are so staggering, said Singapore-based Risikotek CEO Elke Biechele, who has been investigating money laundering and financial crime for two decades. Counterfeiting is “one of the most lucrative crimes” going, she said. With the hard investment in product development and marketing already done, there’s “easy cash” on offer, she said. “We all need to be so aware of … where does your money go when you buy a nice handbag?”

The ‘democratisation’ of fashion

It’s a topic the fashion industry has been reluctant to talk about, according to Ben Gallagher. “It’s like the elephant in the room,” he said. “When you sell glamorous products you only really want to be talking about glamorous things.” A few years ago, Ben decided to break that taboo. Then he built a business around it.

The idea for Luxe Collective, which sells second-hand designer fashion, came to him after watching his sister buy a pair of second-hand designer shoes. He was intrigued by the fact she paid only £100 for shoes that retailed for £500 new. “I just became obsessed with it,” he said. Within months, he had started selling “pre-loved” designer shoes, bags and clothing with his older brother Joe out of a small shop in Liverpool.

Early on, he learnt the hard way what it’s like to fall victim to a convincing fake. “I really had to learn through my mistakes when I first started because we couldn’t resell [a fake]. And because I was seeing real and fake luxury goods every day, you just start to know how to tell the difference.”

It wasn’t until he started sharing that knowledge on TikTok, with videos breaking down the differences between real and fake luxury goods, that the business really started taking off. “Most people feel like luxury fashion is inaccessible,” he said. “Really, the reason people don’t feel involved is a lack of education.”

Ben had stumbled on an audience hungry for advice on how to navigate a market awash with fashion fakes. His TikTok page has since amassed 1.6 million followers.

Out in the Liverpool industrial park, Luxe Collective might seem a long way from the epicentre of the luxury fashion world. Ben himself – with his black hoodie and northern accent – is nothing if not an outsider. “I’m from Liverpool and I’m a guy talking about women’s handbags,” he said. “Liverpool’s not known for its fanciness … we just talk directly to people. And I think our audience, which is a lot of Gen Z and Millennials, like that.”

But Luxe Collective’s rise mirrors seismic changes in the global luxury fashion market brought on by social media. A world once hidden behind the doors of glimmering boutiques and in the pages of glossy magazines is now just a swipe away for billions of smartphone users. It’s a phenomenon Ben calls the “democratisation of fashion”. Luxury fashion “now feels like it’s for everyone,” he said. “It’s readily available and accessible for everyone to see.”

Even the big brands are getting in on the act, with fashion houses such as Prada, Loewe and Jacquemus seeing spikes in bag sales as a result of their mass appeal on platforms like TikTok.

TikTok and Instagram have helped make luxury fashion more accessible to a mass audience.

Foreign Correspondent: Harriet Tatham 

Fashion’s social media boom has fuelled a rise in the global second-hand market for luxury goods, where consumers can pay a fraction of the price for even the most coveted brands. Sales of used bags are growing, Ben said, while the used apparel market is also surging, with sales grow projected to top 125 per cent in the next two years. That’s 16 times faster than the broader retail clothing industry. Gen Z and Millennials are driving the growth, according to research by online second-hand fashion platform ThredUp.

At the same time, the world’s growing luxury fashion obsession has spawned a burgeoning shadow marketplace for fashion fakes. Counterfeiting is a “highly, highly profitable business,” said financial crime investigator Elke Biechele. Over the past decade, she said, it’s estimated the total market value of counterfeit goods has grown to exceed the GDP of large economies like France and Germany. “The amounts of money involved in counterfeiting are just completely mind blowing,” she said. “Nobody knows.”

Europe’s counterfeit capital

Just an hour’s drive from Liverpool, the city of Manchester was once the epicentre of Britain’s manufacturing revolution. Today, it holds the dubious honour of Europe’s “counterfeit capital”.

Social media influencer Sophie Hinton, who calls the city home, has watched the TikTok trends come and go with dizzying speed. But luxury brands remain a fashion staple. Right now, she told me, it’s the Prada nylon bag – “Everyone had that out” – and the Chanel classic flap – “Everyone seems to want that as well, which is quite crazy because that’s probably one of the most expensive bags, so it’s the least attainable.”

The majority of people she sees online have designer items. “Do I think the majority of them are real? Probably not,” she said. “I think it is because it’s so accessible these days and there’s so much pressure where one person’s got it, then the next person’s going to go in. It’s a vicious cycle.”

Quality fakes are easy to get. Many are sold directly over social media platforms via links on the videos flaunting them. What you get depends on what you’re willing to pay, said Sophie. “If you pay quite a bit – still a fraction of the [real] price – you get real leather. It even has the tags on as if you bought it from the brand.”

Manchester fashion influencers Sophie Hinton (top) and Benny Greenstein.

Foreign Correspondent: Tyler Freeman Smith

While owning a fashion fake might have been stigmatised in the past, there’s evidence it’s becoming more socially acceptable, especially among Gen Z. A survey by the European Union found nearly a third of Gen Z respondents had deliberately purchased a fake designer item in the past year. “Nearly every young person has a fake,” another Manchester influencer, Benny Greenstein, told me. “Some of the fakes are really good.”

“I think people are open about buying fakes [among their friend] groups,” Sophie said. “We can all have a little laugh at it or be like, ‘oh wow, this quality is amazing’. [But] I don’t think a lot of people would outwardly go on and announce it to the world.”

In a sign of just how prevalent fake fashion has become in Manchester, just north of the city centre is a road known as “Counterfeit Street”, in the suburb of Cheetham Hill. According to local police, this area once accounted for more than half the supply of counterfeit goods across the UK.

“You’d see five, six hundred people on the streets at any one time looking for what they perceived to be that counterfeit bargain,” said Greater Manchester Police detective superintendent, Neil Blackwood, as we walked through past rows of boarded-up shops and dilapidated warehouses. “The counterfeiting problem in Manchester is the largest in Europe,” he said. “Counterfeiting and intellectual property crime costs the UK economy £8.4 billion ($16.3 billion) a year. Cheetham Hill was responsible for half of that.”

In one strip of shops alone, around $700 million of fake goods were sold in a single year. 

ABOVE: A real Chanel bag. BELOW: A fake. WHAT TO LOOK FOR: The thickness of the padding, lustre of the hardware and clarity of the heat stamp foil logo are all details authenticators check when determining a fake.

Supplied: Luxe Collective

Two years ago, Blackwood was appointed to head up Operation Vulcan, a specialist police task force with the job of shutting down the underworld counterfeit racket taking root in the city. It was a tough assignment. More than 30 organised crime groups had established counterfeiting operations in Manchester, many with links to criminal supply chains reaching across the globe.

Even with his extensive background in counter-terrorism and policing organised crime, Blackwood was shocked by the sophistication of the fake fashion networks he was uncovering. “These groups were able to move tons – we’re talking metric tons – of goods and sell them in such a way, it’s unheard of.”

Criminal gangs were bringing shipping containers full of counterfeit products into the city through the ports. “They’ve got some really good, strong networks clearly to be able to do this,” he said. “They’ve got people working abroad, they’ve got people working at the ports. So as an organised crime group, they’re very, very, very sophisticated. This is not a one-off bit of crime. They’re committed.”

Police have carried out more than 100 raids to break up Manchester’s counterfeiting networks, seizing over 1000 tonnes of goods in the process, all destined to be sold on the streets in the UK and abroad. Some were found to be involved in other crimes too. “To think they just do counterfeiting is naive,” said Blackwood. “The same networks … bringing in clothes, trainers, jewellery, they would start bringing in drugs, prescription drugs from all over.”

‘The crime I’d get into’

In Cheetham Hill, the rows of empty shops – once bustling with knock-off fashion retailers – seemed to suggest Operation Vulcan has succeeded in cracking down on the city’s fake fashion underworld. A few days later, it was clear the problem hasn’t been completely stamped out just yet.

Early one morning, Blackwood and his team raided a warehouse in the heart of the suburb, uncovering what appeared to be a counterfeiting operation above an otherwise legitimate-looking textiles warehouse. Rows of sewing machines and printers for designer labels were still switched on when they stormed the building. They looked to have been running all night, Blackwood noted.

The counterfeiters had been importing blank clothing items to avoid detection, detective chief inspector Jen Kelly said at the scene. “So if they’re intercepted, they’re just blank caps,” she said. “And then they’re being embroidered and counterfeited here in Cheetham Hill.”

Upstairs, police found rooms stuffed with counterfeit goods – Gucci, Prada and Fendi – with an estimated street value of more than $1.5 million. In another room, scales and bags for concealing the smell of drugs from sniffer dogs were found. Blackwood suspects the counterfeiters were using them to ship out drugs.

Manchester police found rooms full of boxes packed with fake designer goods when they raided a warehouse in Cheetham Hill.

Foreign Correspondent: Tyler Freeman Smith

The crimes funded by fake fashion can be even more serious. The terrorists behind the 2015 Charlie Hebdo attacks were funded through the sale of fake sneakers. According to Elke Biechele, they raised 8,000 Euros, “which funded them enough to buy all these weapons, and then they went out and just go on a killing spree”.

“Some of the things counterfeiting is funding is, in particular, terrorism financing,” she said. “So we know Hezbollah have used it heavily. First they sell counterfeits and counterfeit fashion and then they buy weapons from it. We’ve seen it with the IRA and we’ve seen it with many other terrorist organisation that use the sales of counterfeiting in order to buy weapons.”

The consequences are often less severe than for other crimes. In one case Biechele has followed closely, a Manchester-based counterfeiter caught holding stock with a street value of £2.5 million ($4.8 million) was fined just £11,500 ($22,300). “And we looked closer, what was his annual return? It’s like £6.9 million ($13 million) annual return,” she said. “The fines are a drop in the ocean.”

Tracking the money can be almost impossible, too. The profits are often laundered through legitimate-looking businesses, from restaurants to luxury car dealerships, and declared as income.

“Once you commit to the counterfeiting, once you send your goods and once you receive money, and then it leaves that jurisdiction … often enough it becomes just invisible,” she said. “It’s very, very hard to track it. It can go across the globe two times, three times, and it’s very difficult to find it again.”

Even amid a police crack down, Manchester’s criminal networks continue to take the risk. Blackwood can understand why they do it. “The reward versus the risk, it’s in counterfeiting,” he said. “If I were that way inclined, that would be the crime I’d get into.”

The devil’s in the detail

Back in Liverpool, Ben Gallagher weaved between rows of metal shelves stacked high with shoe boxes – red, brown and orange, labelled Valentino, Prada, Alexander McQueen, Jimmy Choo – until we stopped at a row marked “B”.

He pulled down two boxes and set them on the table. Inside were identical-looking pairs of beige Balenciaga-branded sneakers, one real, the other fake. “I want to know if you can tell the difference between these two,” he said, handing me one of each.

With designer shoes, it’s not smell, but touch, that often proves the best guide, Ben advised. “The materials are the biggest one on the shoes because they feel a certain way,” he said. “The fake ones are just really hard, really firm.”

To my hands, at least, the differences were almost imperceptible. Whichever was the knock-off, it was incredibly convincing. Taking a wild stab in the dark, I guessed – correctly. Beginner’s luck, perhaps.

Ben’s approach was more methodical. Flipping the shoes over, he pointed to the black rubber spine running down the underside of each sole. “See how shiny this is and how sticky it looks?” he said. He flipped them again to reveal the heels. “And the Balenciaga label is bolder here compared to the real one. It’s the little details that give it away.”

He cautions would-be buyers to be on guard and do their research before tapping “buy” on their next piece of designer fashion, “because it’s not just money you’re putting into the pockets of the person you’re buying the fakes from, it’s who are they giving their money to? I think there’s got to be a lot more awareness that needs to be spread around who this is affecting.”

Watch Foreign Correspondent’s Faking It on ABC iview or YouTube.

Credits

• Reporting: Naomi Selvaratnam
• Design: Emma Machan / Alex Lim
• Photography: Harriet Tatham / Tyler Freeman Smith
• Digital production: Matt Henry