NYC debates crackdown on counterfeit goods

NEW YORK -- Bargain hunters from around the world flock to Manhattan's Chinatown for bags, jewelry and other accessories bursting onto sidewalks from storefronts along Canal Street.

Among the goods are luxury items labeled "Prada" or "Louis Vuitton" or some other brand -- counterfeits sold for a pittance. In some cases, handbags going for $2,000 on Fifth Avenue can be had downtown for, say, $20.

They're seductive fakes.

Until now, the law enforcement focus has been on catching the sellers. But if a proposed bill passes the City Council, customers caught buying counterfeits could be punished with a fine of up to $1,000, or up to a year in prison.

The New York City legislation, if passed, would be the first in the United States to criminalize the purchase of counterfeits.

Council member Margaret Chin, who introduced the bill, said at a public hearing Thursday that counterfeits deprive the city of at least $1 billion in tax revenue a year that could support community improvements. What's more, she said, the counterfeit trade has been linked to child labor and the funding of organized crime and terror groups.

"For tourists, it's fun, it's a bit of adventure," Chin said. "We have to let people know that if you engage in this activity you are committing a crime."

On the street, day after day, sellers press their hard-sell routines.

"Rolex. Chanel," a man on a street corner whispers to someone walking by. "Get this before the police do," he adds with a grin.

Buyers are walked to a designated spot where they're quietly shown photos of the desired goods. Choices are then signaled to another person who disappears to an undisclosed location -- a vendor's backroom, a nearby apartment, the back of a van.

The item arrives within minutes, and cash exchanges hands.

The counterfeit vendors are also a hassle for those who live in the area, said John Hagen, a resident there for the last 30 years. He says the counterfeit vendors have ruined his block.

"I walk out of my house every day into it," he said. "I'm sick of what this has done to our neighborhood."

Some at Thursday's hearing were concerned about how the new law would be enforced and whether it would hurt both businesses and buyers.

Among them was Kathleen McGhee, director of the Mayor's Office of Special Enforcement and the official in charge of the sting operations that have closed down 40 illegal stores in Chinatown since 2006. She testified against the bill, saying that showing a customer had knowledge that the goods were counterfeit will be difficult to prove in court.

Council member Peter Vallone Jr. said he would not support the bill in its current form. Vallone said "a year in jail seems a little tough" for buying fake goods.

Ashley Hunter, 30, of Kewshaw, S.C., shopping in the area, asks, "How would I know I'm not supposed to buy something, that there's a fine?"

Melissa Kirkpatrick of Salt Lake City wasn't too concerned about the legality of the items selling on Canal Street, where she was with her family. She was looking for a Rolex for a friend at home. "If I can buy it for $50, I will, real or fake," she said.

Chin said city officials would launch a visible campaign informing the public and tourism companies, distributing fliers and posting signs.

In France, everyone seems to know that buying or carrying fakes is a crime, said Valerie Salembier, a former publisher of Harper's Bazaar magazine who also testified at Thursday's hearing. She now runs the not-for-profit Authentics Foundation dedicated to consumer education about the counterfeit industry.

Air France warns tourists to stay away from fake goods, because anyone in the country "risks fines of up to 300,000 euros" -- that's more than 478,000 U.S. dollars -- "and up to three years in prison for the mere possession of a counterfeit item."

"It's why they don't have a big problem with counterfeits in France, Salembier said.

The next hearing on the New York City proposal has not been scheduled yet and is at least a few months away, said Amy Varghese, a spokeswoman for Chin.

For years in Chinatown, logo-bearing items were openly displayed, spread across sidewalks in burlap scooped up by vendors who'd run if police appeared.

Only the most daring do that now, since city raids resulted in the elimination of whole blocks of shops and the demolition of a building used as a warehouse.

Some shops now use stealth tactics to keep sales rolling.

Asked if he carries "designer bags," one merchant points to a knockoff on a shelf, explaining that he "can make it into a designer bag if you wish."

He steps behind a curtain, emerging with a metal plate bearing the name "Prada." He said he'll put the label on whichever bag a customer picks.