Blockchain – The Final Solution to Counterfeits in the Fashion Industry

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Counterfeiting in the fashion industry has been nothing less than a plague for both high-end luxury brands and popular sportswear brands: Nike, Rolex, Chanel, Louis Vuitton to just name a few. The counterfeit fashion clothing industry is on the rise today mainly because selling fake products online is much easier than doing it offline. There is less chance of getting caught and fleeing away if the authorities even try to approach you and there is no real way to check the authenticity of an item until it reaches the customer.

According to Organisation for Economic Co-operation and Development (OECD), the fashion industry is facing a loss of around $450 billion due to the presence of fake and lookalike products. Add the figures for counterfeited top brand products and pharmaceuticals, and that’s a gigantic figure of $1.8 trillion of counterfeits in the global market.

Just in 2016, the estimates revealed that 2.5% of all the global trade was in the form of counterfeits. What makes matters worse is that counterfeiting is rising. Shedding light on counterfeiting in the fashion industry in Europe, 10% of the sales being made are nothing but counterfeit. UK, Spain, and Italy remain the biggest targets of counterfeit products.

The Existing Solutions Are Just Not Good Enough

The existing solutions and many introduced in the recent past have proved to be nothing but failure. High-tech labels and uniquely marked serial numbers are some of the solutions that many top brands have tried. For example, Ferragamo, a luxury footwear brand, has used RFID tags in its products to distinguish its products from the fake ones. Even Gucci has taken some steps to avoid the impact of counterfeiting with some criticism for its move in Hong Kong consumer markets. As high-tech as these solutions may sound to someone, they have failed over and over.

The biggest problem with these solutions is their limitation and lack of globalization. It’s the high-end brands taking measures on their own. To tackle counterfeiting of fashion wearable items, there has to be a global solution, a global standard that would solve it for all the brands, not just one. Not to mention, when a brand comes up with its solution, it adds to its manufacturing costs as well. First, they will have to create these tags. Secondly, they have to maintain records, worry about the maintenance of the systems carrying those records and take measures to avoid cybercriminal activities to hack their systems.

The Consumers Are Buying Fakes

A consumer has no way to check the authenticity of a product, especially when they are purchasing the items online. Not to mention, many of the consumers have no idea that they are buying fakes. In their minds, they are on a website that helps consumers buy expensive items at affordable rates. One must keep in mind that consumers are greatly affected by how their favorite brands take measures to put an end to counterfeiting. It seems that not all the brands are interested in controlling counterfeit products around the world. A good example of such a brand is Coco Chanel—a brand that is not interested in taking measures against counterfeiting.

One of the issues of counterfeits in the fashion industry is its impact on the overall economy. When manufacturers of fake items make fake goods, they hurt the economy by putting jobs at risk. Taking into consideration the effects of counterfeits and pirated goods in the global economy, by 2022 there could be more than 5.4 million jobs at risk according to the International Chamber of Commerce.  However, a consumer has to think on many different levels before endorsing or doing nothing to support the efforts against counterfeits. For example, according to a survey by Apple’s Investigators, approximately 90% of the products being sold on Amazon were fakes. How did the consumer suffer? They paid top dollars for these products that Apple had not made. In addition, the quality control was non-existent which resulted in the need to replace it soon after the fake product was purchased.

Group Project Comes up with a Solution

The only viable and most sensible solution that has been proposed today is by Group Project. Group Project, and tech start-up based in Los Angeles, California, has created Crypto-Tags, their trademarked product, to give every product a unique identity that can be matched and validated in the blockchain. Scanning the crypto-tag is as easy as using the smartphone application to know whether a product is real or not. The good news is that these tags are as simple as stickers and can be manufactured for be used on a variety of materials — even though they carry digital information, they don’t require any batteries or cells to work.

What makes these crypto-tags even more useful is the small size that would allow them to go on electronic items, fashion goods, and pharmaceutical products with ease. How does that solve the problem? Group Project’s crypto-tag will serve as an industry standard, and once there is an industry standard, the brands and consumers will benefit in the same way. Brands will be able to prevent piracy and counterfeits while managing everything within their budgets and customers will receive the exact branded item they pay for—not some fake and low-quality item at an exorbitant price.

Finally, Group Project’s solution will completely revolutionize peer-to-peer selling which is increasing in popularity. With the ability to easily authenticate a product using a mobile app, sellers of fake products will be at a disadvantage and the buyers will be protected.


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