The Beginning and Key Details of the Controversy

The ‘customer background check’ allegations came to light through a report by the French fashion magazine Glitz. According to the report, Hermès employees, without customer consent, used Google searches to verify home addresses and assess the economic and social environment of those areas. Furthermore, they reportedly accessed customers’ SNS accounts to examine the nature of their posts and online reputation, and even observed customers’ speech, attitude, manners, and attire during store visits.

• Residential Address Verification: Customers’ home addresses were identified via Google search to determine if they resided in a prestigious area deemed worthy of purchasing a Birkin or Kelly bag.
• SNS Account Analysis: Customers’ SNS accounts were scrutinized to assess the nature of their posts, online reputation, and to check for instances of reselling purchased bags.
• Taste and Attitude Evaluation: Customers’ speech, attitude, manners, attire, and even the brand of watch they wore, became evaluation criteria. For example, it was alleged that customers wearing Audemars Piguet or Richard Mille watches were deemed acceptable, while those wearing Rolex were judged as ‘flashy and vulgar’.
• Purchase History Review: Customers’ long-term and consistent purchase history of Hermès products was also subject to review.

Hermès is suspected of attempting to prevent the resale of its products and maintain brand value through these ‘customer screenings’.

The Shadow of the Scarcity Strategy

The ‘customer background check’ controversy at Hermès largely stems from Hermès’ unique scarcity strategy, which makes its products difficult to acquire even with money. The annual supply of Birkin and Kelly bags is limited to approximately 120,000 units, leading to extreme shortages with waiting periods of 2-3 years for purchase. Due to this, the ‘pre-spend’ structure, where customers must consistently purchase other products to build ‘trust’ with sales associates to buy a bag in-store, is well-known to consumers.

• Extreme Scarcity: The annual supply of popular products like Birkin and Kelly bags is limited.
• Long Purchase Waiting Periods: A waiting period of 2-3 years is required to purchase desired products.
• Pre-Spend Culture: An implicit culture exists where customers must first purchase other products to buy popular bags.
• Resale Prevention Efforts: Attempts were made to prevent resales by checking customers’ resale history.

This strategy has led to Hermès being perceived as a ‘luxury item that appreciates in value,’ driving robust sales growth even during economic downturns. However, beneath this success lay practices fraught with controversy, infringing on customer privacy.

Consumer Reactions and Legal Responses

Consumers have strongly protested Hermès’ ‘customer background check’ allegations, citing ‘privacy invasion’. In particular, the unauthorized collection of personal information and its use in evaluating purchase eligibility has drawn significant criticism. This controversy has even led to legal disputes. Last March, two customers in California, USA, filed a class-action lawsuit against Hermès, alleging unfair business practices.

• Privacy Invasion Controversy: Strong criticism has been raised regarding the unauthorized collection and use of customers’ personal information.
• Allegations of Unfair Business Practices: Claims have emerged that the ‘pre-spend’ practice, which forces customers to purchase other products to buy a specific item, is unfair.
• Class-Action Lawsuit Filed: Customers in California, USA, filed a class-action lawsuit against Hermès.

At the time, Hermès stated in court documents that it does not require the purchase of other products to offer famous bags, and the court dismissed the lawsuit. However, this controversy raises important questions about the ethical standards and consumer trust that Hermès, as a top-tier luxury brand, must uphold. Efforts to maintain brand value should not come at the expense of customer dignity.

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