Exclusivity and craftsmanship are core attributes of luxury brands, however the rise of counterfeit and deepfake can undermine brand allure.
Picture this: a fashion enthusiast on Instagram or TikTok is captivated by a brief video featuring an A-list celebrity with a luxury handbag. A link promises exclusive sales on authentic designer items supposedly endorsed by the A-lister. But the video is a deepfake, the endorsement fabricated, and the website a counterfeit haven designed to mimic legitimate luxury platforms. Attractive pricing, uncanny product resemblance and 5-star reviews from "real customers" might lure the viewer into a purchase, but both the product and the sale are frauds, steering consumers directly to a sham website. This scenario reflects recent events: In January 2024, a deepfake video featuring Taylor Swift "endorsing" Le Creuset products populated across social media, and in 2023, Christian Dior took legal action against online counterfeiters.
While the counterfeit market has persistently plagued the luxury sector, the stakes are increasingly higher as luxury brands are not only competing with physical counterfeits but now combating sophisticated online marketing campaigns that exploit celebrity likenesses unlawfully to boost fake product sales.
This surge in online counterfeiting, spanning multiple platforms simultaneously, signals a dire need for luxury brands to enhance their cybersecurity measures significantly. Without robust preventive and detective controls, the problem of "The Fakes" will only escalate, undermining consumer trust and brand integrity—and this is just the beginning.
A $2 trillion challenge: understanding the sophisticated evolution of the counterfeit market
According to the U.S. Patent & Trademark Office (USPTO), counterfeiting is the largest criminal enterprise globally. The National Crime Prevention Council reports that what was a $30 billion issue in the 1980s has mushroomed into an industry disruptor worth an estimated $2 trillion today.
The counterfeit market has evolved from basic copycat tactics to a complex, layered industry proficient in leveraging technological advancements to manufacture a spectrum of fakes—from obviously cheap knockoffs to nearly undetectable high-end "super fakes." This grading system caters to different consumer demographics, focusing on highly sought-after product categories that are most susceptible to counterfeiting, such as leather goods, footwear, and watches.
The proliferation of e-commerce and social media platforms has further facilitated anonymous, extensive marketplaces and innovative advertising avenues, significantly complicating detection efforts. Moreover, advanced production technologies like 3D printing and the covert integration into legitimate supply chains have rendered some counterfeits virtually identical to genuine products.
This escalating complexity necessitates that luxury brands continuously innovate their anti-counterfeiting measures through cybersecurity, legal strategies, and international cooperation to safeguard their reputation and consumers.
In the complex battle against counterfeits, robust cybersecurity emerges as a key defense
Luxury brands have traditionally implemented measures to combat counterfeiting, including embedding tags or microchips into their products. However, there exists a significant untapped avenue for combating counterfeits, and that's where cybersecurity plays a crucial role. The luxury brand market is presently responding to counterfeits by conducting authenticity checks, rather than prioritizing proactive measures like identifying insider threats or preventing the leakage of critical data from their environments (figure 1).
In this era of deepfakes and synthetic reality, the reputation and value of luxury brands are at greater risk than ever before. Deepfakes involve the use of artificial intelligence to produce text, videos, images, and real-time streaming to likeness of a character (e.g., celebrity or influential figure) with a general purpose of deception or spread of misinformation. Given the nature of social media, instant gratification, and quick-rolling ad placements between short-form content, the propagation of a counterfeit may be further perpetuated through a deepfake resembling a brand ambassador.
Creating a counterfeit product involves several interconnected aspects that must align for successful production. This entails potentially reverse engineering the luxury product, acquiring insider knowledge about the product, analyzing production processes (including trade secrets), and disrupting the supply chain (such as material sourcing).
Wouldn't it be advantageous to tackle counterfeiting and deepfakes before they reach the consumer? There are a number of cybersecurity-focused measures luxury brands can implement to promptly mitigate brand erosion and revenue loss:
- Enhance threat intelligence:Traditionally,
threat intelligence takes the form of a business running continuous
scans on its brand over the internet. What people hear, say, and
believe can be controlled by enhancing threat-intelligence
capabilities. Threat intelligence is generally extended through
partnerships with entities (government, consumer protection, law)
and by using threat intelligence tools.
Identification of deepfake content, such as text, images, videos, and real-time streaming content can be performed by using threat intelligence to uncover fake websites selling counterfeit luxury products, misinformation text regarding the luxury brand, false images of luxury brand products and removing them from the internet.
This can be achieved through the deployment of automated and AI-powered threat intelligence solutions. These utilize natural language processing algorithms to scrutinize visual and audio cues, flagging dubious content for deeper examination. Additionally, image and video analysis algorithms are employed to discredit counterfeit content. Put plainly, luxury brand companies require AI-driven cybersecurity tools to counter deepfake AI threats.
- Supply chain security reviews:Typically,
significant vulnerabilities can exist within the product supply
chain, which can result in data leakage concerning the luxury
product. With high demand and significant resources, threat actors
may be strategically placed across different sections of this value
chain, collecting information required on designs, popular
articles, materials used, and manufacturing processes. Supply chain
security is integral to protecting trade secrets from designs at
the headquarters, material handling, assembly, and final delivery
of product to the customer. This includes communication of assembly
instructions to the factories.
Luxury brands should focus on performing vendor diligence—which includes a vetting process involving questionnaires, interviews, and data gathering to understand a vendor's cybersecurity gaps, associated risk levels—and a robust action plan to protect secrets throughout the relationship. Additionally, a verification step should be performed by cybersecurity teams visiting vendor sites to inspect the implementation of proper security procedures.
- Secure mobile devices and endpoints:Data about
the organization follows the user. Cameras may allow for quicker
leakage of sensitive information of upcoming releases, roadmap, and
designs. Employee may be using mobile devices to take pictures of
confidential data or screen-capturing confidential emails. Mobile
device management is exactly as it sounds, managing devices
provided to employees to control access and data leakage.
Luxury brands should mandate the utilization of corporate-owned mobile devices or effectively configured mobile device management (MDM) solutions on personal devices to thwart data leakage. This practice enables luxury brands to monitor user activities such as access, modification, and data transfer. By governing mobile devices and regulating the types of devices users can employ for business purposes, organizations can manage data flow and minimize the risk of sensitive intellectual property loss.
- Pay attention to insiders:Insiders are
employees and can also be partners, vendors, contractors, and other
third-parties of the luxury brand that have access to confidential
information. This may include confidential product releases with
the most "in-demand" celebrities or access to
intellectual property on what makes the luxury products special.
Insiders are capable of sharing sensitive information and trade
secrets outside of the organization whether through regular
curiosity or even bribery.
Luxury brands can strengthen their data security and data protection programs by mapping the sensitive data in the environment, requiring data labeling and classification, focusing on access control, and enhancing data loss prevention tool configurations. Further, security tools can be used to centralize data and metrics about users, assign behavior levels and ultimately, add risk scores based on insider user activity. With different job titles, different risk levels may be assigned and require further review to continue employment at the organization.
The scale of counterfeits and deepfakes is rapidly advancing, bolstered by the ubiquity of the Internet. Nevertheless, the ongoing cat-and-mouse dynamic presents opportunities to enhance brand reputation and value, and potentially increase revenue by simply strengthening cybersecurity as the terrain evolves.
Luxury brands must assert control and fiercely protect their brand identity amidst escalating counterfeiting threats, particularly as advancements in generative AI models substantially heighten the stakes. In a rapidly evolving technological landscape, proactive measures to secure the end-to-end product value chain are not just necessary—they are critical for survival, safeguarding brand equity from dilution and ensuring brand integrity remains uncompromised.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.