Luxury goods are more likely than not to be counterfeit if you encounter them in the wild.

That’s just how prevalent the problem of fake stuff is and it takes an expert eye and a true sense of what a person is looking at to spot a knockoff.

Perhaps that’s why so many luxury brands are stepping up to the plate when it comes to consumer awareness about counterfeit goods and also why so many people are increasingly skeptical of “that new bag” or pair of shades someone is wearing.

How common are counterfeit goods?

Let’s just say that it is an issue that not only involves illicit factories and suppliers but even company employees as well.

That’s right, brands like Hermès and Louis Vuitton have to watch their own staff as much as they do the street vendors in order to find who is leaking what and where.

How much money do counterfeit products cost luxury goods companies every year?

One of the most famous cases involves none other than Hermès and their famous Birkin bag.

A conspiracy that roped in employees, vendors, and more, the fake bag scandal ended up costing that brand a whopping $20 million alone.

To put that into context, the people that were making fake Hermès bags basically had the infrastructure and capital to front their own boutique luxury brand.

That’s how much money people like this can make from selling a fake bag and it is reason number one why Hermès is keen on protecting their trademark.

The question remains, however, and that is: How did they do it? The answer to that is just as surprising as the price tag on a Birkin itself.

It’s actually much easier than the average consumer knows, and therein lies the problem. Luxury brands spend millions every year to imbue their brands with unique, unobtainable statuses that drive consumers wild.

This fervor might be less palpable if consumers were aware that luxury brands, like any other company, depended upon complex chains of logistics and suppliers, some of who even vend materials to mass-market brands and stores.

No luxury company in their right mind wants their brand to lose its “mystique” and putting a price on every little bit and part of a purse does just that.

So how do luxury brands stop counterfeit goods from being made while still maintaining an aura of exclusivity?

It’s often easier said than done.

The most famous case involving Hermès that we referenced above was nothing less than a conspiracy within and outside of the company.

What is even more astonishing about the fake bags made by this operation is not only their quality but how difficult it is to distinguish them from actual Birkin bags.

To control demand and keep them at the top of must-have lists, Hermès artificially limits its supply of Birkin bags for sale every year.

While enterprising in its own right, the illegal counterfeit Birkin bag operation capitalized on this low volume/high demand situation and started producing items virtually indistinguishable from the real bags being produced in Paris just down the road.

When most people thing of fake luxury goods and products, they think of something from China or something that is obviously a fraud upon first glance.

Yet these bags were made just down the road from the actual thing, using the same materials and suppliers. How would a consumer know the difference?

They weren’t supposed to know and that’s the point. It’s also why luxury brands take fake and counterfeit goods seriously.

After all, when you are selling a bag that costs thousands of dollars, you better make sure it is real. Using online Hermes authentication service is just one of the options. More than a few instances of high-value clients getting screwed out of their money and you will have a full-blown brand crisis in the rarefied world of luxury retail.

The incident proved to be a moment of reflection for the company.

As we outlined earlier, the previous assumption that fake bags could be easily spotted in the market was completely undermined by the participation of Hermès own employees in the scheme.

Hermès’ longtime former CEO Patrick Thomas said of the situation regarding fake bags, “It’s an absolute disgrace…[some] 80 percent of objects sold on the Internet under the Hermès names are fakes.”

The problem has become so widespread that France has some of the strictest laws around making – and buying – counterfeit goods anywhere in the world.

Even purchasing a fake Hermès can get you a criminal record in the country or, as The Fashion Law quotes one poster, “Buy a fake Cartier, get a genuine criminal record.”

In fact, the idea that a Birkin bag is fake is such a common notion that one country club in New Jersey in the United States questioned the authenticity of an item a member says was destroyed by a waiter spilling red wine.

Given that the price of the bag at retail is $30,000, and that the country club was being asked to pay for a replacement, insuring and determining the authenticity of the item in question is not only prudent, but it is also financially necessary.

Further, the fact that authenticating the bag is a process itself and not something as simple as showing paperwork regarding the item should speak volumes to anyone who knows nothing about the problem of counterfeit luxury goods.

As technology becomes more sophisticated – and global markets become more intertwined – it is likely that counterfeit goods and products will continue to pollute the stream.

That is why the savvy buyer not only knows their sources but has them verified as well.

Experts skilled in detecting fakes from real bags can help avoid a costly purchase, especially if buying a second-hand or used bag.

While the days of surety in the authenticity of a luxury good might be well behind us, that’s no excuse for settling for second rate fake work yet spending money like you’re buying the real thing.