What happens when an eBay steal is a fake

A Gucci wallet for $120. A Burberry scarf for $32. A pair of Tiffany earrings for $35. If prices like that for some of the hottest luxury brands seem unreal, it very well may be because the goods themselves aren't real.

The estimated multibillion-dollar counterfeit market has become a major headache for the luxury-product industry - and for unwary consumers. Though many fakes are sold in stores, others wind up listed on auction Web sites such as those of eBay Inc., Yahoo Inc. and Overstock.com Inc., bearing attention-grabbing low prices.

Companies are stepping up their efforts to protect their brands by hiring attorneys and private investigators, and buying software programs to patrol eBay and other sites for fraudulent listings. Some investigations have led to arrests, and many have led to lawsuits. Tiffany & Co. filed a lawsuit against eBay in 2004, alleging that only 5 percent of the Tiffany items it bought through the site were authentic.

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To find out what recourse people have when buying counterfeit goods through an online auction, we purchased five designer items on eBay, the leading auction site, at bargain prices for goods sellers advertised as being authentic: Chloe and Fendi handbags, a Gucci wallet, Tiffany earrings and a Burberry scarf. Finding the items was easy - a search for any designer's name turned up dozens of results, with prices ranging from as little as 10 percent of the retail price to as much as full price. We picked the listings with the best deals from sellers who had mostly positive feedback and who guaranteed the authenticity of the products.

Though our sample was small, four of the five products we purchased turned out to be fakes. (We couldn't determine the authenticity of the fifth one.) We then followed eBay's recommended course of action: First contact the seller, and then file a formal complaint with eBay itself.

EBay ultimately refunded a portion of the purchase price after we complained. The site's policy is to cap refunds at $200 - minus a $25 processing fee. EBay sets $200 as the limit because many of the transactions on the site are under that amount, says spokeswoman Catherine England.

EBay said that experiences like ours are rare. "I don't think that (the test) is representative," says Chris Donlay, an eBay spokesman. "Given the amount of trade that happens on the eBay platform, the large, large, majority of transactions on eBay are satisfactory for both sides."

In our test, the black leather Fendi Spy bag ended up being the most expensive purchase, and also the biggest headache. At $260, the bag was 87 percent below the retail price of $2,000. Yet the bag was sewn together sloppily, with the monogrammed fabric on the inside protruding at some of the edges; and the light, flimsy hardware was suspiciously inferior.

It took three messages and a threat to notify eBay to finally get a response from the seller, in which he promised a refund and asked us to ship the bag to an address in New York. But days later, we found out that the address belonged to his next victim: another defrauded customer, who also paid the seller $40 for shipping charges.

After a month passed since we paid for the bag, we filed a "refund not received" complaint with eBay through a form on the site, and then, at the site's request, an "item not as described" claim. EBay investigated the claim, asking us for proof of payment and proof of return, then refunded $175. Including the shipping costs, we lost about $133 in the ordeal.

We also had to file a complaint and a claim with eBay for the Gucci Eclipse French flap wallet, which retails for $375 and that we bought for $120. The interior of the wallet we received didn't match the real version in style or color. Gucci representatives weren't permitted to authenticate merchandise, but confirmed that our description of the fake wallet didn't match any of their products. The seller was courteous and promised a refund, then disappeared after we paid $29 to mail the wallet back to South Korea. EBay refunded $95 after closing the investigation in our favor, making our loss on this item $71.

The Tiffany earrings in sterling silver, designed in a teardrop shape by Elsa Peretti, retail for $195. The United Kingdom-based seller we bought them from was listing them for $35, or 82 percent off, and said in her listing that the jewelry came from "a Tiffany & Co. manufacturer, due to a family member who works at the factory." The earrings arrived in less than one week, but the packaging was a slightly different color and texture than the normal Tiffany blue box. When we brought the earrings to the Tiffany store in Manhattan, a sales associate compared our pair with a new pair in the store and pointed out that real ones are significantly smaller than the pair we received.

The seller readily offered a refund and apologized for any inconvenience, and we sent the earrings back right away. But a week after the package was sent, we didn't get a refund or hear from the seller - instead, we got a message from an eBay staff member saying that the listing was taken down. Still, the seller refunded the full purchase price, so the whole transaction cost us $26 (the price of sending the item back to the U.K.).

We weren't sure about the authenticity of the Burberry cashmere Novacheck scarf, which retails for $160 and we bought for $32, so we asked Michael Fink, the senior fashion director at Saks Fifth Avenue, to examine it. Fink noticed right away that the scarf didn't feel like the high-quality cashmere that is standard in Burberry scarves, and that the block-letter logo didn't match the real logo either. "The tag looks really bad - it doesn't have the finesse of the (real) logo lettering," he said. The seller promptly offered to refund the money and sent a check a few weeks after we returned the scarf.

The red Chloe Paddington bag looked the most authentic - when we first opened it, we couldn't find any flaws. When we took it to a Chloe boutique, the sales associates said they weren't permitted to authenticate bags, but let us compare our bag with the store's merchandise. The only difference we could find after close examination was the leather used to wrap the brass lock on the bag, which was noticeably thinner and smoother on ours than the rugged pebbled leather on the store's bag. Saks's Mr. Fink said he was impressed by the quality of both the bag and of the tags. "The leather seems fine, the tags look very official," he said. Though for the price, he said, it's unlikely to be authentic Chloe, he couldn't be sure.

Tiffany says it randomly purchased 186 Tiffany items through eBay in 2004 and found that only 5 percent of the items were genuine. That same year, the company sued eBay, claiming that the company was negligent about its anticounterfeit policies, and in some cases even promoted sellers of fake Tiffany products by advertising listings for unauthorized merchandise throughout its site and in Web advertisements on Yahoo and Google. "Tens of thousands of counterfeit Tiffany items are sold through the eBay Web site each year," the company claimed in its suit. The suit is awaiting a trial date in federal court for the Southern District of New York.

EBay's Mr. Donlay says the company was "quite disappointed that (Tiffany) felt they needed to file this suit. ... They can report items and have them taken down at any moment, and continue to do so" through eBay's Verified Rights Owner Program, or VeRO, through which brand owners can report fraudulent listings and have them pulled from the site.

According to its user agreements, eBay, which had 193 million registered users as of March, doesn't permit the listing of counterfeits and unauthorized replicas on its site. Violators of this rule are subject to punishments varying from listing cancellations to account suspension or seller-status demotion. In addition, the site has a rating system in which members can rate each other and leave negative feedback for bad sellers.

Last quarter, clothing and accessories accounted for about 8 percent of eBay's $12.5 billion gross merchandise volume, or the total value of all successfully closed items.

Resource: Wall Street Journal