Salvatore Ferragamo Is Battling Counterfeits with Microchip Technology

April 9, 2016

Italian fashion house Salvatore Ferragamo has been vocal about its commitment to preventing the sale of counterfeit versions of its products. Chairman Ferruccio Ferragamo explained that such efforts served “both to protect our intellectual property rights and to defend our customers.”
In recent years, the brand has partnered with the Chinese government to stop the sale of knockoffs. In 2014, Ferragamo targeted both Chinese websites online and marketplaces such as trade fairs offline to prevent the sale of $7 million dollars of counterfeit versions of its goods. In 2015, the brand assisted authorities in seizing and destroying $17 million dollars of knockoffs, mainly comprised of counterfeit belts made in China. Ferragamo’s latest tool to battle counterfeiting consists of inserting microchips into its products. By embedding microchip tag devices into certain accessories, the brand aims to both reduce the sale of counterfeits and preserve the resale value of its goods.
Radio Frequency Identification (“RFID”) microchips were inserted into Ferragamo accessories, specifically shoes, small leather goods, luggage, and handbags. Generally, RFIDs have the capability to “store information about whatever item they are attached to and, when prompted, emit that data via radio signals to a scanner.”
Supporters of RFID technology praise the devices’ ability to provide specific data about tagged items, resulting in improved efficiency for businesses. RFID devices have been internally utilized in various industries from ensuring the freshness of plates at conveyor belt sushi restaurants to monitoring the security of electronic equipment at large corporate institutions. Large retailers such as Zara and J.C. Penney have employed microchip technology to help with inventory needs for years. By incorporating RFID microchips into removable tags, retail employees can easily ascertain which products are in need of restocking.

However, the use of microchip technology in Ferragamo products is not without privacy concerns, such as fear of tracking or surveillance.

Furthermore, such issues are amplified considering that consumers do not have a choice in the matter, and presumably cannot turn off or remove the microchips in their Ferragamo products.
In 2004, the Electronic Privacy Information Center (“EPIC”) urged the Federal Trade Commission (“FTC”) to implement privacy protections for RFID technology, in order to promote consumer safety. EPIC provided recommendations to the FTC regarding the use of RFIDs in private, commercial settings. These guidelines included companies providing notice of the technology, allowing for the removal of the RFID tags, limiting the collection of personal data associated with the tags, and taking measures to secure any data collected from the tags. EPIC urged companies against tracking individuals using RFID without written consent, as well as coercing individuals to keep RFID tags on for purposes such as loss recovery. In 2005, the FTC issued a Workshop Report on the implications of RFID technology for consumers, stressing the goal of transparency.
In 2010, Privacy advocate Katherine Albrecht, who founded Consumers Against Supermarket Privacy Invasion and Numbering, expressed concerns over covert uses of RFID technology, “The inventory guys may be in the dark about this, but there are a lot of corporate marketers who are interested in tracking people as they walk sales floors.”
Ferragamo assures that the chips cannot be tracked, and that they can only be read from a distance of less than 4 centimeters. Due to such limited capabilities, alongside the fact that no data is being collected from consumers, Ferragamo’s implementation of microchips into some of its accessories likely does not pose a formidable risk to customers’ privacy. In this situation, such technology effectively acts as a scannable barcode with a serial number. Should other companies take advantage of RFID microchip technology, it is imperative to follow the FTC and EPIC’s recommendations to ensure that consumers’ privacy is protected. Building privacy considerations into the design of the RFID microchips is critical to avoid invasive implications for consumers.