Why Are Counterfeit Goods Booming?

The lipstick effect is an economic theory that claims that when consumers are amidst a recession or economic downturn, they still spend money on small luxuries, like lipstick. Well, we’re in one of the biggest economic downturns in recent history, so what’s the lipstick? A case is to be made about the current state of counterfeit goods.

It makes sense why counterfeit goods are booming right now. The illegal industry is expected to reach a colossal $2.8 trillion by 2022,. With more and more sites going online selling counterfeit goods and the social impact of sharing expensive purchases on social media, it’s not surprising that consumers are willing to spend on faux. Because of the growth of the market, luxury factories are able to sell incredibly high-quality counterfeit goods at a marginally lower price than the real deal.

The growth of e-commerce, especially in the time of the pandemic, has expedited counterfeit sales as online fashion sales have increased over 30%, with beauty increasing approximately 20-30%. Sites like AliBaba and even Amazon have come under recent fire for selling unverified branded products. The ease of selling counterfeit goods online has resulted in a boom for this market, as companies struggle to keep up with lawsuit infringements.

What’s needed online is simply higher verification practice. Counterfeit goods being sold online is not a deep-web market. In fact, it’s incredibly easy to find and purchase. However, the counterfeit industry is responsible for a variety of ethical and environmental violations, as well as infringement on design integrity. As luxury brands continue to beef up their legal and security departments, companies should continue to push for regulation for the production and selling of these illegal goods.

By Adi Shoham