WeChat Being Used by Counterfeiters to Build up their Fraud Chain

Cashing in on the price difference between luxury goods sold in China and overseas, Daigou (代购) – aka. overseas purchasing agents – have long bought goods on behalf of consumers in China. But, as the Chinese government puts in place new measures to boost domestic spending, many luxury brands have lowered their prices in China, bringing them in line with global price points. Consequently, the role of a middleman like Daigou has been threatened, and a career as an overseas buyer has become increasingly unsustainable.
Now, the overseas purchasing business is evolving in a different, darker direction, coined “Daigou 2.0″. Targeting consumers who are looking for luxury goods at a steal, counterfeiters from China are now providing fake goods under the guise of authentic Daigou vendors.


According to an investigative report by the Chinese state media People’s Daily on August 7, which was trending on China’s social media platform Weibo, luxury goods counterfeiters employ a variety of techniques to disguise the true origin of their products, such as paying insiders for production batch codes to reprint onto packaging, giving consumers the illusion they will be able to verify the authenticity of the item
Another common trick, according to the People’s Daily report, is known as ‘gold plating (镀金)’, referring to a practice of shipping the counterfeits abroad first to obtain overseas shipping documents and entry certificates, in an attempt to prove the product has been bought overseas.
Earlier this year, Jiangsu policemen seized more than 80,000 pieces of counterfeit luxury makeup from WeChat vendors in the city of Suzhou, who had been creating products imitating brands like Dior, MAC and Fresh. The total worth of these products was more than 1.5 million USD (approx. 10 million RMB), according to the local police.
In Jiangsu’s case, the main suspect confessed to purchasing barrels of cheap fragrance from Guangdong province, bringing the manufacturing costs to only 15 cents (1 RMB) per 50 ml bottle of counterfeit perfume. These fake products are then labeled with luxury brands, and sold at upwards of 30USD (200RMB) per bottle, leaving room for a huge profit margin.
The presence of trusted Daigou agents in this process can add a layer of credibility to the counterfeiters. In turn, the high profitability offered from selling fake luxury goods has motivated many traditional Daigou agents to participate in this illegal business. In recent years, the livelihood of Daigou agents has been adversely affected, as the Chinese government implements measures such as lower import tariffs on luxury goods, encouraging international brands to lower their China prices.

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An overseas Chinese student, Li, who admits to helping to sell fake luxury goods on WeChat, told Jing Daily, “the profitability now is attractive, and it’s hard to recognize the difference between counterfeit and real goods.”
She continued, “we don’t handle the manufacturing process of any product, but deliver them to clients. We then keep a certain percentage of the profits from every client we bring in.”
The intimate nature of WeChat as a one-on-one private messaging tool now serves as a shortcut for counterfeiters to strike deals.
“There is a huge loophole in the current law enforcement for the punishment of WeChat vendors” commented one Weibo user. “Wait, I think I might have bought a counterfeit product,” said another, demonstrating the widespread distrust shoppers now have for buying luxury goods via WeChat.
Both luxury cosmetic brands and WeChat itself are taking actions to prevent counterfeiting. Many high-end cosmetic brands like Estée Lauder, SK-II, La Mer, and Sulwhasoo now offer to recycle their customers’ empty skincare bottles for small rewards, leaving less room for Daigou to collect empty packaging. WeChat also claims to have punished more than 72,000 vendors selling counterfeit goods and shut down 875 counterfeit-related mini-programs.
Tencent did not immediately respond to a request for comment.

$70M of fake Nike Air Jordans seized in Newark from China

They looked like thousands of generic shoes without any logos or labels.
But that was just the start of the ruse.
Federal authorities on Tuesday arrested five individuals charged in a scheme to import more than $70 million in counterfeit Nike Air Jordans through Port Newark from China.
The sneakers were manufactured to resemble various editions of Jordans, which typically retail for $190, but without any identifying markings so they would not be flagged by customs officials, authorities said. Fake logos were allegedly added to the shoes after they came through the port, and then the footwear was sold to people throughout the U.S.

Real Air Jordans. (Nike)

The five -- Miyuki Suen, Jian Min Huang and Kin Lui Chen, all of New York, and Songhua Qu and Fangrang Qu of Hicksville, N.Y. -- are accused of importing at least 42 shipping containers between 2016 and 2018, bringing in an estimated more than 380,000 pairs of sneakers. If convicted, they face up to 20 years in prison.
It is not an uncommon scam, officials say.
U.S. Customs and Border Protection last year seized $1 billion in counterfeit goods, and inspectors say they frequently come across shoes, handbags and other consumer goods that appear generic because there are no identifying brand names affixed to them. Those logos and names are then added after the items pass through customs, they said.
In one case, a shipment of Timberland boots had an insert glued over the logo on the bottom of the boot. An inspector discovered the ruse with a flick of a knife on the heel-side of the shoe.

By Ted Sherman

tsherman@njadvancemedia.com

NJ Advance Media for NJ.com

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Customs seizes HK$10 million in fake products at popular Hong Kong street market in largest counterfeit haul in years

Watches, handbags and leather goods said to have sold at Ladies Market at five to 20 per cent of genuine products’ price

An investigation revealed the syndicate sold counterfeit goods at four hawker stalls in the market and used computer tablets to show clients photos of the products.

“Some clients were taken to its upstairs showroom nearby, which was packed with about 600 counterfeit products,” Fong said, adding that four nearby flats were used as warehouses.

He noted the investigation uncovered a female ringleader who went to the mainland regularly to purchase the fake products while a male mastermind was responsible for selling them locally.

After a month-long investigation, about 90 customs officers on Thursday swooped into action and raided the four hawker stalls, the secret showroom and the four warehouses.

Seven men and three women, including the two ringleaders, were rounded up in the operation. More than 10,000 fake products were seized, including watches, handbags and leather goods.

Fong said it was customs’ largest seizure of fake products in a single operation in the past three years.

“We believe the syndicate stocked up the large amount of goods to sell during the Christmas and New Year period,” he said.

On Friday afternoon, the 10 Hongkongers, aged 24 to 38, were being held for questioning. None of them had been charged.

Fong said the department would enhance its enforcement activities against counterfeiting during the holiday season.

He reminded traders that the sale of counterfeit goods was a serious crime, carrying a maximum penalty of a HK$500,000 fine and five years in jail.

$1.5M in Counterfeit Goods Seized & 5 Arrested in Nassau County

Photo: Alyssa Reichel, Fern Ciraolo, Jack Huzarsky and Elsa Bonilla
Search warrants conducted Monday morning led to five arrests and the recovery of an estimated $1.5 million worth of counterfeit designer pocketbooks, watches, jewelry and clothing, law enforcement officials said at a Tuesday press conference.
Among the many items recovered during the Nassau County counterfeiting sting, a Hermes birkin bag, which retails for $21,000, was being sold for only a couple hundred dollars, police say.
The birkin, along with a Chanel bag were some of the fake designer items recovered from a Woodmere location. Alyssa Reichel, 49, of North Woodmere, was arrested for the second time for selling fake merchandise out of Ego Trip inside the Cheveux Day Spa and Salon, located at 964 Broadway, police say.

A Chanel bag, which retails for $3,000 to $4,000, and a birkin bag were being sold by Reichel out of a North Woodmere location for a couple hundred dollars each, police say.

The recovered goods, taken from locations in Hewlett, Woodmere, Syosset and Westbury, were being sold out of homes, businesses and cars, police say.
Fern Ciraolo, 53, of Hewlett Harbor, was arrested after police conducted a search warrant at her home. “When we executed that warrant, there was a strong odor of marijuana in the house,” Nassau County Det. Sgt. Patrick Ryder said.
Police say they recovered marijuana, MDMA and acid from the home.

Fern Ciraolo’s 21-year-old son, Justin Ciraolo, was arrested and charged with felony drug possession.

Justin Ciraolo via NCPD

Others arrested during the search warrants were Jack Huzarsky, 74, of Syosset, and Elsa Bonilla, 31, of Westbury. Police also conducted a search warrant in the Hempstead area, but the woman was not at home at the time. An outstanding warrant has been issued for her arrest.

Recovered goods from the Syosset location.

Recovered goods from the Syosset location.

Recovered goods from the Hewlett location.

Recovered goods from the Westbury location.

Recovered goods from the Hempstead location.

Selling fake merchandise is a nonviolent, “housewife” crime that isn’t normally viewed by the public as a serious crime.
However, Nassau County District Attorney Madeline Singas says counterfeiting is not a victimless crime. In fact, counterfeiting is a felony and those convicted face up to four years incarceration.
Counterfeit products are often synonymous with child labor and deplorable conditions, officials say. Fake goods are not tested and may contain toxic materials. Fake electronic equipment have been known to explode or items that people put on their skin or lips have caused burns, Singas says.
Counterfeiting also costs American businesses, including mom and pop stores, more than $250 billion annually, Singas says.
Homeland Security Inspector Jason Molina says all the goods recovered from these search warrants will be destroyed.
“The holiday season is prime time for counterfeiters,” Singas said. “The message for consumers is to be vigilant and buy only from trusted retailers.”

How do you know if a good is counterfeit or not?

• High-end brands do not sell their items out of cars, houses or on the street.
• Check for stitching and the quality of the goods.
• Logos may be blurred out or have subtle spelling errors, such as a "Bolex" watch instead of a Rolex watch.
• “If it’s too good to be true, it is,” Singas says.

Fern Ciraolo was charged with two counts of second-degree counterfeiting. Huzarsky was charged with second-degree counterfeiting. Reichel was charged with two counts of second-degree counterfeiting. Bonilla was charged with four counts of second-degree counterfeiting.
All four who face counterfeiting chargers were issued a desk appearance ticket returnable at First District Court in Hempstead. Justin Ciraolo, who was charged with four counts of third-degree criminal possession of a controlled substance and fourth-degree criminal possession of marijuana, will be arraigned Tuesday at First District Court.