Hermès Faces Lawsuit Over Unfair Business Tactics Blocking Birkin Bag Sales

The luxury brand Hermès has come under fire in a class action lawsuit for allegedly employing unfair business practices in the sale of its Birkin handbags.

Hermès Birkin Controversy

According to the lawsuit filed by two individuals from California, customers are reportedly required to buy other products, including shoes, scarves, belts, jewelry, and home items, as a precondition for the opportunity to purchase the elusive Birkin bag, available in limited editions and only sold at Hermès boutiques.

Earning Your Way to a Birkin

The lawsuit contends that to qualify for the chance to purchase a Birkin, customers must first establish a considerable buying history with the French luxury brand. The suit further alleges that those who meet this criterion are then invited to a private room to view and purchase the Birkin, a bag not displayed publicly. 

Hermès’s Grip on the Luxury Market

The attorneys argue that the combination of the bag’s unique appeal, high demand, and limited availability grants the defendants substantial market power.

Market Abuse?

Filed on Tuesday, the lawsuit alleges that Hermès is in violation of US antitrust laws through its supposed tying sales tactics, accusing the luxury retailer of creating a strategy to abuse its market dominance.

This strategy, the suit claims, artificially inflates the price of Birkin bags and boosts the company’s profits. 

Birkin vs. Other Items

The plaintiffs also draw attention to the payment structure for sales staff, who reportedly earn commissions on non-Birkin items and other products but not on the Birkin bags themselves. 

FTC on Tie-In Sales

The Federal Trade Commission notes that such tie-in sales can restrict consumer choice, compelling buyers to acquire additional, potentially unwanted items to obtain the primary product they desire.

Class Action

Tina Cavalleri and Mark Glinoga, who initiated the lawsuit on Tuesday, are pushing for class action status, alleging that Hermès unlawfully compels customers to buy thousands of dollars worth of other items to access the sought-after Birkin bag. 

An Investment Icon

Known as the ultimate handbag icon since its debut in 1984, the Birkin maintains its allure amidst the ever-changing fashion trends, considered by many as a solid investment akin to high-end jewelry.

Investing Thousands

Both Cavalleri and Glinoga are familiar customers at Hermès boutiques, with Cavalleri having invested tens of thousands of dollars in the brand’s non-Birkin items prior to finally acquiring a Birkin bag. 

Repeat Purchasing Policies

When Cavalleri inquired in September 2022 about purchasing another Birkin, she was informed that such bags were reserved for clients who consistently support the business. 

She did not secure another bag during that period, deterred by the prospect of needing to spend even more. 

Unanswered Questions

The details regarding whether Cavalleri later purchased another Birkin or the total number of Birkin bags she owns remain unspecified. 

Hermès has yet to comment on the lawsuit.

Scarcity Fuels Demand

The lawsuit targets a prevalent tactic among luxury brands: prioritizing customers with a history of purchases for exclusive items. The Birkin bag’s allure largely comes from its scarcity.

The Secondary Market Surge

The scarcity and allure of the Birkin have prompted consumers to turn to the secondary market, where bags can command sky-high prices, often including brand-new items bought by those who received an unwanted variant but felt obligated to accept it.

Luxury Brand Diversification

It’s common for luxury fashion brands to suggest their customers diversify their purchases across the brand’s offerings, including high-end products like porcelain, clothing for men and women, towels, furniture, and other luxury accessories. 

Chanel’s Approach to Customer Loyalty

Chanel patrons, for example, have shared experiences of receiving preferential treatment and product offerings when their purchases extend beyond handbags to include apparel.

Louis Vuitton’s Access Strategy

Similarly, Louis Vuitton has been reported to condition access to exclusive items from Pharrell Williams’s menswear line on the purchase of other goods from the brand. 

Legal Debate on Luxury Practices

Despite these practices, legal experts are divided on the lawsuit’s potential impact, noting that Hermès’s control over its merchandise doesn’t extend to general consumer harm. 

The Irregularity and Discretion Debate

Experts further observe inconsistencies in Hermès’s sales tactics, suggesting such irregularities provide the company considerable discretion in how it allocates its products, thereby diluting the lawsuit’s ability to target a specific, actionable policy.

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