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Trying to spot a real Chanel from a fake? Deep learning tech can help

Counterfeits are a painful thorn in the side of luxury fashion brands but they can be even more of a headache for digital re-sellers.

Consumers on the hunt for high-end clothing at a cheap price often seek out well-preserved second-hand pieces online but hunting for legitimate goods in the global $460 billion counterfeit industry — according to OECD data — is no easy task.

A shop selling counterfeit Chinese made luxury brand ladies bags at an outdoor market in the Golden Triangle, situated along the Thai- Burma border in Tachiliek, Myanmar. Chinese copies boasting well known brands flood this market allowing Thai shoppers and tourists to travel over the border to buy everything from fake iPhones, designer purses, watches and sunglasses.
Paula Bronstein / Getty Images
A shop selling counterfeit Chinese made luxury brand ladies bags at an outdoor market in the Golden Triangle, situated along the Thai- Burma border in Tachiliek, Myanmar. Chinese copies boasting well known brands flood this market allowing Thai shoppers and tourists to travel over the border to buy everything from fake iPhones, designer purses, watches and sunglasses.

Given the ubiquity of fakes among re-sellers, buyers often examine pre-owned fashion to deduce authenticity, often analyzing the stitching, font size and interior labels. But sometimes, a copy is just so well-made that the human eye can't tell it from the original.

That's where technology can help.

Entrupy is a portable scanning device that instantly detects imitation designer bags by taking microscopic pictures that take into account details of the material, processing, workmanship, serial number, and wear/tear. It then employs the technique of deep learning to compare the images against a vast database that includes top luxury brands and if the bag is deemed authentic, users immediately get a Certificate of Authenticity.

After launching as a paid service in September 2016, the New York-based venture now has over 130 paid customers, almost all of whom are American businesses drawn to the 97.1 percent accuracy rate, explained Entrupy CEO Vidyuth Srinivasan.

Other investors include New York University, deep learning pioneer Yann LeCun, and Japanese venture capital firm Accord Ventures.

"We're choosing to start with second-hand re-sellers initially as we see a huge lack of trust in the luxury goods space, especially online," Srinivasan told CNBC.

In 2015, Singapore-based e-tailer The Fifth Collection, which specializes in secondhand luxury fashion, became one of Entrupy's early investors.

At the time, founders Nejla Matam-Finn and Michael Finn were self-funding The Fifth Collection and hadn't even paid themselves a salary but they called the Entrupy investment a no-brainer.

"Authentication is core to our business and we have always strived to be at the cutting-edge of the field," the husband and wife duo explained. "This (Entrupy) was consistent with that vision and we felt it was worth the risk both for us and for the betterment of the second-hand luxury ecosystem."

The sole player in Asia to possess Entrupy, three-year old The Fifth Collection says it has always guaranteed product authenticity thanks to an in-house curation process so it wouldn't be fair to charge customers for the verification service.

"This technology adds a new scientific dimension to our authentication arsenal but the fundamental promise remains unchanged – why would we charge more for continuing to do exactly what we said we would do?"

Instead of an immediate return, The Fifth Collection gains an opportunity to become a leader within a new generation of luxury re-sellers committed to combat piracy, explained Matam-Finn and Finn.

Entrupy isn't the sole authentication technology on the market but its simplicity and ability to learn from every scanned item was a major draw for The Fifth Collection.

But what happens if Entrupy falls into the hands of a counterfeiter?

Street vendors, known as 'manteros' display their goods in Sol on February 16, 2017 in Madrid, Spain. The 'manteros', mostly African immigrants who offer counterfeit handbags, cheap t-shirts and shoes, engage in a continuous hide-and-seek game with the police trying to prevent their illegal activity.
Horacio Villalobos / Corbis / Getty Images
Street vendors, known as 'manteros' display their goods in Sol on February 16, 2017 in Madrid, Spain. The 'manteros', mostly African immigrants who offer counterfeit handbags, cheap t-shirts and shoes, engage in a continuous hide-and-seek game with the police trying to prevent their illegal activity.

"We have mapped significant parts of how, where and when authentic goods were made (so) for fakers to beat the system, they need to use the exact same specs as the authentic goods made in the last 100 years," said Srinivasan. "I wouldn't completely rule it out, but it is incredibly hard."

Still, technology can only do so much in the global fight against replicas.

State support and consumer awareness about unethical manufacturing practices are key, according to Matam-Finn.

"Government need to take a zero tolerance approach to counterfeiting in general, especially in places like Singapore that trade on their reputation for transparency, trust and strong rule of law."

The island-nation regularly conduct raids and arrests individuals found selling or distributing goods with falsely applied trademarks but despite the threat of police action, fake goods remain pervasive in various retail areas.

All forms of intellectual property theft should be crushed in an effort to brand Singapore as the first counterfeit-free country, said Matam-Finn.