A counter-productive trade

Visitors to New York City's Canal Street or Los Angeles' Santee Alley know they can snag a few deals on the designer knockoffs that flood the street corners and back rooms.

These deals, though, cost U.S. businesses $250 billion annually, according to the FBI.

Faux designer bags have made their way into the Shoals and are marketed as either "designer-inspired" or replica pieces that sell at a fraction of the retail cost.

Dubbed the "drug trade of the 21st century," the sale of counterfeit goods is directly responsible for the loss of more than 750,000 American jobs, according to the U.S. Customs and Border Protection.

"As people started becoming more brand-conscious in the '80s, we started seeing people say, 'Hey, I can make that and make money off it,' " said Michelle Moore, spokesperson for the International Anti-Counterfiting Coalition, a Washington, D.C. based nonprofit organization devoted to combating product counterfeiting and piracy.

Dennis Oakley, owner of The Purse Guy in Florence and Muscle Shoals, carries accessories bearing the logos of Coach, Fendi, Prada, Kate Spade, Dooney & Bourke, Chanel, Dolce & Gabbana and Louis Vuitton at prices below manufacturer-suggested retail value.

Oakley was indicted in U.S. District Court in March and was charged with trafficking in counterfeit goods, according to a Department of Justice news release.

The five-count indictment charges that Oakley trafficked in counterfeit handbags, wallets, earrings, necklaces, sunglasses and footwear.

Immigrations and Customs Enforcement seized $343,560 in counterfeit goods from both Shoals stores this spring, according to ICE authorities.

Federal guidelines state that the value of counterfeit goods must be estimated at the cost of the authentic items.

Trafficking in counterfeit goods carries the risk of up to 10 years in prison and no more than $2,000,000 in fines, according to the FBI. The FBI and the Department of Homeland Security are responsible for pursuing counterfeiters.

Billy Underwood, of Tuscumbia, Oakley's attorney, believes that his client's case is not something that the government should be that concerned with prosecuting.

"Homeland Security is so interested in making busts on purses, and I'm sure that 60 to 70 percent of people would be hoping that Homeland Security is protecting our borders instead," he said.

Underwood said he intends to go to trial with his client.

"I don't believe a jury will convict this guy of hurting Prada's and Chanel's and Louis Vuitton's business," he said.

Barbara Kolsun, senior vice president and general counsel for luxury denim company, Seven For All Mankind, and formerly for a handbag and accessory company, Kate Spade, disagrees.

"He's stealing, and he's part of the problem by selling fake or stolen merchandise," said Kolsun, who oversees the company's anti-counterfeiting program.

It's difficult to put a number on the amount of lost profits from fakes because counterfeiters do not keep records or books, she said.

"Mr. Underwood is undereducated on the subject," she said. "This is a global economy. Prada is not just an Italian brand. It was born in Italy, but it is sold all over the world."

She compared the counterfeit market to selling drugs and stealing. "It's pure and simple theft," she said. "Our brand is cheapened."

At a business in Tuscaloosa, Husain Abdul Alim, owner of Husain's Fashions, pleaded guilty in August to charges of trafficking in counterfeit goods, according to court reports.

He was sentenced to 37 months in prison and a $25,000 fine.

Faux designer goods are part of a $600 billion industry, and some of that money supports illegal activity, according to the IACC.

Recovered al-Qaida terrorist training manuals revealed that the organization recommended the sale of counterfeit goods as a way to raise money to support terrorist activity, according to Interpol, the world's largest international police organization.

A counterfeit T-shirt operation sent money to an Egyptian sheik to help finance the 1993 World Trade Center attack, according to documents with the U.S. Chamber of Commerce.

"You're buying into and supporting things that you may not want to support," said IACC's Moore. "It seems glamorous, but that bag has baggage."

American companies suffer approximately $9 billion in trade losses because of international copyright piracy, according to the International Intellectual Property Alliance, a private coalition that represents U.S copyright-based industries.

Fake products also rob states and cities of tax revenue, according to the IACC.

"They have no advertising, no marketing, no quality standards," Moore said. "The real companies already spent the money to do that. They (counterfeiters) don't pay fair wages, benefits or any normal costs of business."

Florence business owner and renowned fashion designer Billy Reid sees both sides of the counterfeit market when it comes to brand recognition.

Although the people who make counterfeits are stealing property, he said that it is a hard case to prove.

"It's free advertising when there are more people walking around with the bag," he said. "But the skill and artistry are at a totally different level."

That free advertising has negative effects on the integrity of companies that manufacture quality products, he said.

"It causes erosion of the brand," Moore said. "If you see another girl with a designer bag and the workmanship is horrid, then it impacts your attitude toward the brand."

Reid said the difference with high-end designer goods stems from developing an idea, purchasing European fabrics and investing in quality workmanship.

"You go through several samples. It's very costly to get it right," he said. "If someone else takes your idea, they knock off 75 percent of the process."

Some vendors stand by the their products, saying that designer goods are inexpensive because the machine-stitched replicas are brought in from overseas.

But designers note that the inexpensive prices of these knockoffs is related to the unfair wages that overseas manufacturers pay their workers.

"People are very driven by price," Reid said. "That's more important to them than where it is made and who made it."

Kolsun said legitimate companies "play by the rules" and pay their fair share of taxes and wages, unlike counterfeiters.

Brands such as Coach do not offer their merchandise for sale through individuals, street vendors, unauthorized retail locations, Internet auctions or at home parties, according to the Coach Web site.

"People come in here occasionally and ask us to tell them whether the purse they bought at some other vendor is real or not," said Wanda Skitworth, Coach sales associate at Dillard's. "Most of the time, (the purses) are not."