This is Planet Money from NPR.
If you are looking for luxury, there is no better place than Soho in Lower Manhattan.
“On a recent Tuesday morning, I headed there to meet up with Hanna Chopp.”
She is a self-described shopping enthusiast. Thank you so much for meeting me to go shopping. Yes, an honor. Is it? I didn't excuse to get a shopping.
Hanna is the perfect person for this task. She recently finished her MBA at Columbia and while there, she was one of the VPs of the retail and luxury goods club. Everyone, of course, is a VP of something at business school. Point is, Hanna knows shopping and she knows retail. We walk around and Hanna points out the shops.
There's Louis Vuitton, Gucci, Prada. We're passing Tiffany and Co. We're passing Mulberry, Kennedy Goose. Hanna has been so much time shopping here that she's even developed some tactics. One of my favorite games to play, well it's not a game, but it's like, can you get the sales
associated to give you a sparkling water? And it's a sign of how to seriously, they're taking you as a shopper. Hanna's problem though, and maybe one of the reasons why she can't get that sparkling water,
“is that while she has a taste for luxury, it doesn't match her financial reality.”
If I bought my first luxury bag in 2019, and I paid $1200 for it, and like two days later
I immediately tried to return it. Because you didn't like it? No, it's sticker shock. I was like, what have I done? Hanna really does not love the price of luxury.
We stop in front of Chanel. I wanted to ask her about something that we can see in the window. There are too many Chanel bags on display. Do you know anything about those bags by chance? Well the red one we're looking at is it's a quilted red bag with gold hardware.
The quilting is kind of Chanel's signature on their hand bags and leather. You know your bags. Now comes the fun part. We're going to guess just how much we think that little red Chanel bag costs. What would you guess that goes for?
Like 3,500? Okay.
“I'm going higher just because I've been looking online a lot, and this things are expensive.”
I'm going to go with 5,000. Hanna hands me her ice coffee so she can look up the price on her phone. All right. Similar is coming up. Okay.
So the mini classic hand bag with top handle, it's not quite the same. But it's close. Okay. Does it say a price? 60,600.
60,600. 60,600. 60,600 dollars. Now even though there is a part of Hanna that would love to own it this bag. $6,600 is far above her willingness to pay.
But that kind of money. I don't know if she could get herself like 1100 iced coffees. Maybe pay her rent for a few months. But there is another way to buy this little bag. So in store we saw Chanel top handle red.
Hanna and I are now shopping on the secondary market. She's a big fan of this site, The Real Real, which is a high end luxury reseller. And so we can see what that pulls up. Okay, cue the cute shopping montage, but make it online. This is almost identical to the one that we saw on the window and it's going for $5,000.
So kind of pricey, but there are more bags. I'm seeing one for about $2,000 when for about $3,200. Prices are dropping. This one costs $1,325. Okay.
So that's last. That's not bad.
On any given day, the real real is selling thousands and thousands of second-hand Chanel
bags. The way cheaper than you can get in the store. For someone like Hanna, the real real is the perfect way to indulge your desire for luxury for less. And all that might be in danger because Chanel is suing the real real.
Hello, I'm welcome to Planet Muddy. I'm Amanda Oranchick. And I'm Jeff Quow. Over the past decade, the market for second-hand luxury goods has gotten really big. Whereas in the past, you might have had no easy way to buy that used Chanel bag.
Now, there are lots of online resellers happy to sell it to you. But how do you know if it's real? Some online resellers claim to have solved this problem through authentication. They say, if we authenticate it, then you can trust that the bag you're buying is really Chanel or Gucci or a mess.
Today on the show, the rise of this resale market. And the lawsuit that threatened to bring it all down. This message comes from Odo. If your business runs on five different apps, 12 browser tabs and one spreadsheet that everyone's afraid to touch, it's probably time for Odo.
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Fram Platner is out. On the latest in PR politics podcast, we are unpacking the downfall of a candidate once seen as a standard bearer for Democrats. Plus what Platner's exit from the main Senate race could mean for the balance of power and Congress.
Listen to the in PR politics podcast every afternoon to stay a step ahead of all the latest political news. Wherever you get your podcasts. The question of real versus fake has been at the heart of the resale market from the very beginning.
This was clear to Julie Wayne right back in 2011 when she launched the real real. She knew people wanted to own luxury items, the bags and clothes and shoes, and that
there were all these people who no longer wanted to own their luxury bags and clothes and
shoes. And yet they were just sitting in someone's closet or they were sitting in a story area not being used. This is Julie Wayne right in an interview with her alma mater produced business school. Now, at the time, you could have sold your used, say, Louis Vuitton, Pochet, Pochet, Bag
on eBay. But how could the buyer trust that what you were selling was real, and worth the $1,700 you wanted for it? eBay is fraught with fakes, and regardless of what they say, they really any self-posting site.
It just happens and do they take them down to share, but our fake sold to share. So you have that problem and the key is an authentic. Is it authentic? This was the big problem that Julie noticed that there was this huge and growing market for
a second-hand goods, but people were worried if the thing that they were buying was fake.
This is very hard for a buyer to discern. The information is, as we say, asymmetric.
“The seller knows where the bag came from, but how's the buyer to know that for sure?”
You can't run a business where consumers can't trust what they're buying. How core to the real real business model is authentication? I mean, it's in the name twice. That was a joke we used to say a lot. This is Graham Wetzbarger.
He started at the real real back in 2013, and he was their first chief authenticator. He left several years ago, but he agreed to talk with us about the real real authentication process that he helped build. Now, Graham arranged for us to meet at this high-end luxury reseller Manhattan, called "Into Archive."
And the space is stunning. We sit down on a low, slouchy couch beside a fireplace where surrounded by hills and bags and vintage items that have been organized by color. And if it was not clear already, this is not a place anyone can just walk into, unless you happen to be Kim Kardashian or Sabrina Carpenter or Cardi B and you have your stylist
call and book you an appointment. Graham has been buying vintage luxuries since he was a teenager. He used to save up his paychecks from his job at the gap. He discovered that he seemed to have a knack for distinguishing between real and fake.
“I think freshman year of college probably after a happy hour somewhere and at a vintage shop”
and there was that Louis Vuitton speedy bag and the tags at $50 fake. I said, "I don't know if it's fake. I don't think it is." So I bought it and I ended up bringing it to Louis Vuitton and they said, "Yes, this is genuine."
Yeah, that fake bag turned out to be very real. And I was pretty stoked. Graham eventually turns his knack for identifying authentic luxury goods into an actual job job. When Graham started at the real real in 2013, they were already receiving hundreds of items
a day and the problem was getting customers to trust the thing that they were buying. So Graham was responsible for figuring out criteria for telling what's real from what's fake. So how does one tell the difference? For simplicity, I can break it down into four pillars of authentication.
We look at the materials that it's used. We look at the construction techniques, how it's put together. We look at hardware components and then we look at brand identifiers. To show us what he means, Graham has brought to his very own Chanel bags for us to look at.
He brought a vintage, it's called a classic, maxi flap with a twist lock closure and a smaller contemporary mini flap with a zipper. Jeff, you don't own any Chanel I'm gathering. I don't know, one piece. Yeah, me neither.
So I would describe this bag as small and black with some gold CCs on it. How would you describe this? Yeah, this is a very mini flap. This is landscape leather. You can feel it's soft and buttery, kind of like love leather.
It has a two tone chain.
I don't know, I saw, I had double points day at Nordstrom, still loyal, I'm a...
boy. And so she came home with me from a work trip. And I mean, I've worn it as a cross-body, I've just carried it in my hand. I've worn it as a necklace like Mr. Tea or something. But it's just a fun little, a fun little guy.
Grant thinks that this fun little guy would sell for about $2,000 on the real real. So fun, so expensive. Love it. And he showed us the authentication process using this bag. He starts with the first pillar, the materials.
“I mean, you got to pick it up and you got to touch it, right?”
I can feel that this is lamb skin. It does not have a synthetic feel to me.
I can always smell it to see if it smells like plastic.
Lamy. No. It doesn't smell like lamb. It doesn't smell like lamb. It smells like nothing.
To be honest, it would smell like plastic. You would know the smell. It was plastic. It'll probably smell like plastic, kind of like a foot locker, or a palest. A lot of plastic and a lot of adhesive glue, scent.
And then different luthers, depending on how they are tanned, if they're tanned with fish oil, it smells like fish for quite a while. Mmm, fishy. Now, the second pillar of authentication is the construction of the piece. So is the whole thing well made.
There's the lining fits snugly inside the bag, is the stitching any good. The third pillar is about the quality of the hardware on the bag. So this is about functionality and style. Are the zippers zipping or the clasps clasping, and is everything looks stylish while doing its little job.
And then there is the last, and arguably the most important of the four pillars, the brand
identifiers. Here, Graham, is not just talking about, is there a big CC on the front of the flat bag. Once you start looking really closely at a Chanel bag, you realize there's a wears wall though situation with the logo just hiding in a million different places. If you look at the backside of the zipper poles, in fact, they say have a CC on the back as
well. Oh, on the actual zipper. On the actual zipper mechanism. Oh, yeah. Since 1984, there's also one other thing that makes every Chanel bag unique.
Graham points to it on his bag. There's a little leather, black leather tab that's tonal to the black leather lining.
“And only when you lift it up, do you see the little serial number on there?”
So it's really discreet and subtle. This tiny little number is a very big tell.
And for Graham, it is probably the most important clue when he's trying to authenticate
an item. Not because the mere presence of a serial number proves the bag is real. You know, sometimes an owner will take out the serial number. I mean, he didn't think it was important. And sometimes a fake bag will have a serial number.
Either way, Graham is not necessarily looking at what the actual numbers are, but how the numbers look? They are hardly ever perfect when counterfeit. And they are always perfect when genuine. I'm sorry, what's perfect?
The font, the placement, the style of the serial number, the art of it, the layout. You'll notice that there's small flecks of glitter throughout, which oftentimes you don't see on counterfeits. Or they're using really chunky glitter that you get at a, I don't know, craft shop. It's glittery.
Yeah.
“Some developed these techniques and, you know, the four pillars of authentication for”
the real real in part, because he can't just look up that serial number to see if a bag is real. None of us can. Only the people in the house of Chanel have access to that company database. Uh, let's say you want to check with Chanel to discover if that number was a real number.
No. No. Let's say you called Chanel headquarters. I think I'd be on hold for a long time. And I'm not.
My French is not that great. No, I digress. If I asked them to look it up, they would probably want you to know, and, and that would be the end of it, certainly Chanel has record and has access, but it's not something that they share with the public.
If Chanel were to share that info, then maybe the authentication process for the real real and for people like Graham would be a lot easier. But instead, the real real had the four pillars, which helped them stand behind their marketing claim, a hundred percent the real thing. Graham left the company in 2019 to start his own business, it's called luxury appraisals
in authentication. Since then, the real real has grown a lot. They've developed their own proprietary database. They've also been using AI, which who knows how accurate that is, but they say it helps their human authenticators sort real from fake more quickly.
And the core remains the same. The real real believes their process works. Chanel, however, disagrees. When they filed their lawsuit against the real real, they argued that quote, "only Chanel
Itself can know what is genuine Chanel.
That and many other allegations coming up after the break.
“President Trump says the ceasefire with Iran is over.”
This week on Consider This, a former high-ranking U.S. diplomat shares his thoughts on what could happen next. The rulers and tear on clearly believe they have a stronger will than the United States. I don't think they're any good options. That's this week on Consider This, you can get the full story behind the headlines every
afternoon, listen on the NPR app or wherever you get your podcasts. This is Tanya Mosley, co-host to fresh air. From mail in ballots to racial gerrymandering, a lot is at stake for America's free and fear elections. I spoke with journalist Ari Burman about what he calls a final blow to the voting rights act.
My fear is that we are returning to a politics of Jim Crow in the South. Listen to fresh air on the NPR app or wherever you get your podcasts. So you've decided you want to be more active. Exercise scientist Keith Diaz says, "Put away the smartwatch.
“Start by noticing your body's natural cues."”
For us to build a habit to check back in with our bodies, that behavior is much more likely to stick. Tracking with the body needs. That's on the Ted Radio Hour podcast. Listen on the NPR app or wherever you get your podcasts.
By 2018, the online resale market for luxury goods was becoming bigger and more established. Along with the real real, there was fashion file and rebag and what goes around comes around. And the luxury brands were probably wondering, "Are these resellers cannibalizing or sales?" And if so, what should we do about it? That very same year, Chanel started investigating the real real.
They were, I don't know, online shopping, I guess, and they found seven allegedly fake Chanel bags that had been posted on the real real site and sold to customers. When Chanel investigated further, they claimed that those seven bags didn't seem to be as high quality as real Chanel bags, and some didn't have all the markers of authenticity. So Chanel filed a lawsuit.
They accused the real real of trademark infringement counter-fitting false advertising unfair competition and more. And while the case in part centered on those seven possibly fake bags, really this lawsuit
was over the future of the second-hand luxury market.
“And who gets to say whether an item is authentic or not?”
Now we asked Chanel for an interview and they declined to comment on this real real lawsuit. So we went looking for a neutral party. And we found a lawyer and respected expert in fashion law. Her name is Julie Zerbo, Julie founded and runs a site called The Fashion Law. It covers the law and business of retail.
Are you doing that end, like representing clients at the same time or is this like your full thing? No, God, that would be a massive conflict of interest. No, no, this is my full-time job, it has been for quite a few years now. Julie says that there were three main allegations in Chanel's case.
First, that the real real sold some counterfeit bags.
Second, that the real real shouldn't have been using Chanel's trademark logo on their
site because that was confusing for customers and implied that there was some kind of relationship between the two companies. And third, Chanel argued that if some of these bags were fake, then the real real's marketing claim, you know, 100%, the real thing was false advertising. Basically, Chanel was seeking monetary damages and they wanted the real real to stop selling
anything with Chanel on it because of the possibility of counterfeit items. Julie says that some of these claims made sense. Chanel is known for selling high quality well-made products. Counterfits undermine that. And a knockoff bag is a kind of trademark infringement.
For Chanel, what is their trademark worth? It's everything. It's everything. It's everything. Luxury brands are not really selling products.
They're selling their brand, which is embodied in products. They can charge the prices that they're charging because they're branding their trademarks. That means something to consumers. You know, the Chanel name means something. Yeah, by law, if Chanel wants to maintain its trademark, it has to protect customers from
buying fakes. And these fakes, they've been getting better and better. They're even super fakes out there that sometimes cost hundreds of dollars to make. And Chanel says the real real is just not good at figuring out the difference between fake and real.
Chanel has in more than one filing said, and I'm paraphrasing, your expert authenticators are not experts at authenticating our products. So, we have superior knowledge and skills to authenticate our products.
Yeah, Chanel argued that Graham and the real real's authentication process co...
all the fake Chanel's.
“This argument, it called into question the real real's entire business model.”
So what do you think about that argument that only Chanel itself can know what is genuine Chanel? Well, obviously in this lawsuit, that is a point of real dispute. And the real real's position is that is just flat out wrong. This is Genie Rhee, a partner at Dunn, Isaacson Rhee.
Her firm is representing the real real and this is the first time that they've gone on
the record to talk about this case. Genie says that the real real argued that their authentication process was working. It was rigorous. It was state of the art. They also argued that people have the right to resell something that they've bought.
This is something called the first sale doctrine, which exists to protect consumers. And the real real argued that they weren't just splashing Chanel's trademarked logo all over their site. They were using it so that customers would know what they were buying. Lawyers for the real real will also pointed out that if Chanel won this case, the real
real wouldn't be able to distinguish itself through authentication. Like in other words, it would turn the real real into an a Facebook marketplace where nothing is verified. Being able to authenticate a luxury item was the real real's business model. This lawsuit was an existential threat.
The way that Chanel originally brought this lawsuit was to attack the very business of authenticated resale writ large, right? The real real's lawyers argued that Chanel's case should be dismissed. At the motion to dismiss hearing back in March of 2020, a judge weighed in. He does not totally dismiss the case.
This is a preliminary ruling and it's kind of a win kind of a loss for both sides. The judge says, yes, the real real can use the Chanel trademark on its website, you know, within reason when they are selling a Chanel product. And yes, the first sale doctrine protects the real real's right to sell second hand items. But if Chanel ends approving that these seven bags are counterfeit, well, you know that
thing where the real real said everything on the site was 100% the real thing, that would be literally false according to the judge. And notably the real real has changed some of the language on their site to say, and you'll hear the subtle yet important distinction.
Now they say we always keep it real and they promise that 100% of the items have been
authenticated. Yeah, you see what they did there, right? Yes, but the case was still not over. The judge narrowed down the number of claims, but he did not totally dismiss them. Nell's accusation about those seven possibly fake bags was not resolved.
Not long after the judge is preliminary ruling in 2021, the real real decided it was time for a counter strike. The real real started arguing that Chanel wasn't really worried about its brand or the fake bags that instead, the case is a kind of Trojan horse that inside this trademark case, there really was another much more sinister plan, it was just hiding inside waiting to
leap out. Yeah, so the real real is arguing that Chanel is engaged in anti-competitive conduct
“in order to kill legitimate competition and what are some of the examples of that?”
Yeah, the examples that are set out in the counter claim are pretty start. The real real is making an anti-trust argument, it's claiming that Chanel's real motive
is not to just protect its trademark, but to try and smother the second hand luxury market
completely. Perhaps with a silky monogrammed luxury pillowcase, because now that resale is no longer a small niche industry, it's grown into a fierce competitor, Chanel is trying to shut it down through litigation. And the real real says that's not all Chanel has done.
The real real is alleging that Chanel forced some big retail landlords to deny the real real leases near Chanel stores that they got nemen markets and sacks to shut down consignment programs with the real real, and that Chanel used its power to get the industry magazine women's wear daily to not run their ads. Now, Julie from Fashion Law says that, look, at this point, the resale market is too big,
it's too robust to smother. We are not going back to the days of your when old Chanel bags just collected dust and storage, and consumers could only buy Chanel directly from Chanel. And Chanel's response to the real real's argument is that they are just policing the rights
“to their trademarks, as for how the case is going, where does it stand right now?”
It is still underway. It is still underway. It is still underway. It is later. I know.
Julie says this case might even end up going to trial. Now, of course Chanel is not the only luxury brand that is trying to figure out a strategy
For dealing with this big and growing resale market.
The responses from brands have run the spectrum from hostile to friendly.
“Brands like Balenciaga and Burberry and Stella McCartney have all partnered in some way now”
with resellers like the real real. Gucci's parent company even bought a 5% stake in the French reseller, the stear collection. Rolex now says people can bring them in old Rolex watch, and if it is real, they can certify its authenticity and buy it from you to resell. And in Europe, some major luxury brands like Cartier and Prada have been working together
to require many items to have this digital product passport, which is essentially a microchip that you put in the luxury item that you can scan with your phone and find its providence. At the other end of the spectrum, there are other brands that are filing lawsuits.
Putting pressure on sellers in the second hand market in other ways.
And there's a lot of instances where brands are taking action behind the scenes where it doesn't lead to a lawsuit, but it might just be like a letter about a lawsuit. A letter that a lawsuit might be coming. It might be a good lawsuit, but think about it.
“Because honestly, it is just not obvious if all of these new resellers are good or”
bad for luxury brands. Like will that discounted mini-regional at the top handle cannibalize a sale at the actual Chanel store, or will making that bag more affordable. Now, create brand loyalty that could last a lifetime. Recently, a lot of people have gotten in touch with us to see that they have missed out on
some of the fabulous things that we offer, like discounts for the NPR shop or the poster that came with our book pre-sale or our live events across the country. Well, you know the way to solve that, and that is to follow us, follow us on all the socials,
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other places like LinkedIn and Blue Sky. I don't know where we are, we're everywhere. Follow us on all of the platforms we would love to keep you up to date on all the things we're doing. Today's episode of Planet Money was produced by James Sneed with help from Charlotte Isadora, who also fact-checked this episode, was edited by Jess Zhang and engineered by Sino LaFredo.
Outskilled Mark is our executive producer. Special thanks this week to Professor Paula Valente and everybody from Cluster A. Apocalypse Forever. I'm Amanda Arunchick. I'm Jeff Quot, this is NPR.
Thanks for listening. This week on sources and methods fresh strikes between Iran and the United States is the war back on. What Iran wants is to basically charge a toll or insurance fees to go through the straight of her amuse, that may be the way out of this.
Plus President Trump's surprise promise to Ukraine. Listen now on sources and methods on the NPR app or wherever you get your podcasts. On NPR's wildcard podcast, writer Terry Tempest Williams on what it means to be a woman with a big voice and big ideas in our culture.
I don't know if we have to prove we're not crazy, but we're always being asked if we are.
Watch or listen to that wildcard conversation on the NPR app or on YouTube at NPR wildcard.
