Professional Scammers Wreck Havoc on the Luxury Goods Industry
Retailers are facing the growing popularity of return fraud for those looking for a quick buck. In 2020, retailers lost over $24 billion to fraudulent returns. The players in these schemes were anything from complex organized crime rings to a few unscrupulous individuals with a taste for the finer things without the means to support their desires. We recently discussed the types of designer fraud facing resellers, and even brand boutiques now Let’s countdown the top designer fraud scandals in recent years:
A 50-year-old Baton Rouge native and boutique owner, Thierno Amadou Diop, has been investigated since 2017 for retail scams where he sold counterfeit designer clothing from his own location. Diop is the owner of Best Buy Fashion, a retail store located in the Sherwood Forest Shopping Center in Baton Rouge, Louisiana. Diop was a primary target of the Louisiana Bureau of Investigations due to the Intellectual Property Rights violations that came along with selling dupes of designers like Gucci and Louis Vuitton by using their trademarked branding without permission. In this elaborate retail scam, counterfeit designer items were sold with poor quality, counterfeit packaging with illegal trademarked branding, and were marked with pricing far below the Manufacturer’s Suggested Retail Price (MSRP). This carefully curated fraud schema was picked up by LBI agents with a video-surveillance operation and transactions. In 2020, LBI agents conducted business transactions at Diop’s retail store and were able to buy a pink Gucci handbag for $45 and a black Versace belt for $40. In February 2022, LBI agents conducted another transaction where they bought a Louis Vuitton purse, a Chanel purse, a Fendi belt, and a Gucci belt for less than $200. Shortly after, Diop was arrested for the illegal use of branded trademarks (BR Proud).
Tisha Collette is the owner of a boutique in Southampton, NY with a reputation for selling counterfeit luxury goods. According to Cathy Silverstein, a former employee of Collette Consignment, Colette would acquire her designer dupe goods at undisclosed retail locations in Queens, NY and resell the products with a branded price tag and without the original packaging. Silverstein noted that Collette would remove the plastic covering and use a new price tag with a designer brand’s name like Hermes or Chanel before reselling the deep dupes to the public. However, Cathy Silverstein was not the only unsuspecting collaborator to fall victim to Collette’s scamming ways. Tara Allmen, a prominent gynecologist, based in Manhattan, sued Tish Collette for selling her a replica Hermes Birkin bag. After her purchase, Allmen discovered that her prized Hermes bag was only worth $75, nowhere close to the $3,425 price she paid for the supposed second hand handbag. Aside from this handbag, Allmen spent approximately $40,000 in unsuspecting transactions over the course of 8 years from 2005 to 2013. Allmen then pursued legal action against Collette to no avail. The receipt that Allmen received for her Hermes handbag replica simply stated the color ‘orange’ and no pertinent information for the type of item she bought. Lawyers could not assist Allmen in her pursuit of legal recourse because there was no direct and apparent paper trail for the items she bought from Collette Consignment, making it difficult to convict Collette of any fraudulent conduct (NY Post).
A CEO and socialite from Coral Cables, Florida (near the Miami metropolitan) developed an elaborate, multiyear return fraud scheme to specifically defraud T.J. Maxx out of tens of thousands of dollars since 2017. To do so, Meghana Rajadhyaksha bought expensive designer handbags that cost nearly $2,000 each and then returned dupes to make a net return. In Meghana’s case, the sources of her designer replicas are unknown, yet the return employees at T.J. Maxx were able to develop their own elaborate scheme to catch Meghana after recognizing her dozens of return transactions. Employees were able to use UV invisible ink to track the merchandise that Meghana returned to the establishment. When Meghana bought a handbag she obtained via credited PayPal transactions, the handbag was printed with UV invisible ink. Shortly after devising their counterattack, employees at T.J. Maxx discovered that Meghana was defrauding the company. The pieces that Meghana returned to the retailer did not have the UV invisible ink printed anywhere on the handbag, noting that the pieces did not come from the original establishment and were likely counterfeit (CBS News). After making a $135,000 net profit from return fraud over 17 months for Gucci and Fendi handbags, Meghana was arrested and charged for mail and wire fraud but spared prison time during her federal court hearing and released on $250,000 bond (NRI Pulse).
Take Praepitcha Smatsorabudh Using an elaborate scheme that involved shoplifting and designer dupes, a Virginia woman born in Thailand named Praepitcha Smatsorabudh was arrested for return fraud for high-end handbags. She would shoplift authentic, expensive handbags with an average cost of $2,000 to then sell on peer-to-peer marketplaces and social media platforms online like eBay or her Instagram account, RichGirlsCollection, where she publicly boasted about her lavish yet a fraudulently-funded lifestyle. However, these return scams from Praepitcha were double-fronted. Not only would she shoplift authentic pieces across brands like Gucci, Fendi, and Burberry, she would return replicas from manufacturers based in China and Hong Kong for the actual cost of the handbag. Over two years, Praepitcha amassed a short-lived wealth of over a million dollars until she conducted a scam with an undercover Homeland Security Investigator. In addition to an incriminating email to an overseas manufacturer, the Homeland agent discovered that Praepitcha sold an authentic handbag from an undisclosed luxury brand that the agent colluded with. Shortly thereafter, Praepitcha’s Virginia home was raided and federal authorities found 572 luxury handbags, some authentic and many fakes. In her early 40s, Praepitcha Smatsorabudh was sentenced to 30 months in federal prison with three months of supervised release. She was also called to repay $403,250.81 in the forfeiture and another repayment in the same amount as restitution to the victims of her fraud (ABCnews).
Always Authenticate Designer Goods
Sometimes it’s true, and sometimes not, but the excuse “I bought this directly from the boutique” is no longer enough. Now, you could very well be the next victim of a return fraud scam even when you buy directly from the brand. Buyers have also been victims of receipt fraud when the seller falsifies they bought the handbag or shoes from a boutique. When buying and selling, why deal with all the stress? Use a proven and reliable authentication service like Real Authentication, regardless of where you have purchased the item.