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The market for secondhand luxury goods has grown over the past decade. A used Chanel bag - it used to be hard to find - is now sold by lots of online stores, which leads to a question. How do you know if it's real? That question is at the heart of a lawsuit filed by Chanel against the luxury reseller The RealReal. Planet Money's Amanda Aronczyk has the real story.
AMANDA ARONCZYK, BYLINE: This question of detecting real versus fake has been key to the secondhand market since the beginning because the information is asymmetric. The seller knows where the Chanel bag came from, but how's the buyer to know? You can't run a business where consumers can't trust what they're buying.
How core to The RealReal's business model is authentication?
GRAHAM WETZBARGER: I mean, it's in the name twice.
(LAUGHTER)
ARONCZYK: Graham Wetzbarger started at The RealReal back in 2013 and was their first chief authenticator. He discovered as a teenager that he had a knack for detecting the real thing. He grabbed a bag that he had brought to show me his technique.
WETZBARGER: I mean, you got to pick it up and you got to touch it, right? I can feel that this is lambskin. It does not have a synthetic feel to me. I can always smell it to see if it smells like plastic. Mm.
ARONCZYK: Smells authentic. Graham left The RealReal several years ago, but he helped develop the company's criteria for sorting real luxury items from the fake ones.
WETZBARGER: For simplicity, I can break it down into four pillars of authentication.
ARONCZYK: OK.
WETZBARGER: 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'd look at brand identifiers.
ARONCZYK: Identifiers like that classic Chanel logo. Now, Graham developed these techniques because he couldn't just call up Chanel and ask if the bag that The RealReal wanted to resell was authentic.
WETZBARGER: If I asked them to look it up, they would probably, mon dieu, no. And that would be the end of it. Certainly, Chanel has record, but it's not something that they share with the public.
ARONCZYK: In the lawsuit, Chanel argues that the database with all of the details about their bags, including serial numbers, is theirs. This is how they protect their good name and trademark, which is jeopardized if The RealReal sells a fake. Julie Zerbo from Fashion Law says that a counterfeit bag is a kind of trademark infringement.
For Chanel, what is their trademark worth?
JULIE ZERBO: Everything.
ARONCZYK: It's everything.
ZERBO: It's everything. Luxury brands are not really selling products. They're selling their brand, which is embodied in products. You know, the Chanel name means something.
ARONCZYK: By law, if Chanel wants to keep its trademark, it's supposed to protect customers from buying fakes. And Chanel says, The RealReal is just not good at figuring out the difference between fake and real. The RealReal does not agree.
JEANNIE RHEE: Obviously, in this lawsuit, that is a point of real dispute, and The RealReal's position is that is just flat-out wrong.
ARONCZYK: This is Jeannie Rhee, one of the lawyers representing The RealReal. She's a partner at Dunn Isaacson Rhee, and they're arguing that the authentication process has been working. Right now, both sides are gearing up for a possible trial next year.
Amanda Aronczyk, NPR News.
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