Louis Vuitton window displayLuxury brands around the world were no doubt ecstatic over Louis Vuitton’s $63 million win this past Monday in France. A Paris court ordered eBay to pay damages to LVMH (a Paris-based conglomerate owning luxury brands Louis Vuitton, Dior, and Givenchy, among others) for facilitating the sale of counterfeit products. California-based eBay claimed to have spent $20 million annually to prevent counterfeit products from being sold on its web pages, but after discovering that 90% of the Dior and Louis Vuitton brand goods sold on the site were counterfeit, LVMH decided that eBay’s efforts were insufficient.

While the ruling applied French national law, it has far-reaching implications. The case is likely to be studied by luxury goods brands with similar cases pending such as Tiffany’s & Co., which claims to lose $30 billion annually due to counterfeit and unauthorized sales of its products.

eBay asserts that it will appeal the decision, suggesting that LVMH’s real intention is to micromanage product distribution and prices, not combat piracy. It also argues that this decision will end up harming law-abiding consumers.

eBay has a valid point. If online auctioneers and outlets decide that the cost of rooting out the counterfeit products is too high for the return, they may cease auctioning and selling luxury goods altogether. This would lead to fewer sales outlets for law-abiding citizens who wish to sell their used luxury goods, therefore leading to fewer products available for consumers. Hopefully, we can find a middle ground where luxury brands are protected and online auction sites are able to carry all legitimate goods.

– Carrie Frondorf

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2 Responses to eBay Paying Lavish Fine for Luxury Counterfeits

  1. HH says:

    Couple of things:
    The 30B figure is doubtless inflated. If it’s computed anything like the “losses” for the music industry are, they’re overstated: sales that happen with low prices on eBay wouldn’t necessarily happen at retail prices, so every sale on eBay isn’t a lost sale in a store.

    Second, there is a huge economic fallacy at the center of this discussion. Prices at eBay are so cheap precisely BECAUSE there is a high risk of fraud. The bidders discount their bids because they probably know there’s a good chance the item they’re bidding on is flawed in some way. EBay’s doing their duty if they simply put “you’re probably buying a fraud” at the top of every page.

  2. Jordan 00 says:

    point of clarification: Tiffany & Co. does not itself claim to lose $30B annually due to counterfeit and unauthorized sales of its products; that’s an industry-wide figure.