THESE DAYS, EVERYONE

from rap stars to suburban moms is dripping in designer goods. But with luxury handbags, watches and the like easily retailing for thousands of dollars, knockoffs have become a major industry in their own right, albeit an illegal one.

What separates the real from a fake? To find out, we went hunting at one of the most notorious destinations for knockoffs: Canal Street in New York City. Here, backroom shops are loaded with fakes of the most popular high-end brands, including Prada, Gucci and Rolex.

We'll show you what differentiates a luxury item from its cheap counterfeit version. (Come on, you know you're curious.) And if the real deal is out of your price range, we'll also suggest legitimate alternatives to the fakes. Trust us, you'll feel a lot better carrying around one of these substitutes, rather than a cheesy knockoff.

Next:

• Handbags

• Watches

• Sunglasses

• Movies

• The Wrist Wars

Handbags

"As soon as something becomes an 'it' bag, it's got a replica on the street," says Brenda Kauffman, fashion director for Bag, Borrow or Steal, a company that rents designer handbags. Case in point: The Louis Vuitton Globe Shopper Cabas MM (see photos below). The legit item, which has been sold out at Louis Vuitton stores across the globe since March, retails for $1,280. That price may seem a bit steep for a bag that's primarily canvas, but the antique brass hardware combined with the venerable Louis Vuitton name means folks will happily pay the price. Today, copies are prolific and, because the canvas bag is trendy, even the knockoff isn't particularly cheap. On Canal Street, the going rate was roughly $50.

While some knockoff designer bags are easy to spot (think "Pravda" instead of "Prada") others are tougher many times, they are produced after-hours by the same factories making the real bags, says Kauffman. To most observers, the bags are nearly identical. Spotting a fake comes down to knowing the intimate details of the real bag:

Left: Louis Vuitton Globe Shopper Cabas MM. Right: Knockoff version.

Even if your budget is low, you can find a good quality bag in your price range. We dug up some legit alternatives to this $50 knockoff:

Watches

Nothing boosts your ego quite like flashing a trendy timepiece, but the fakes are all flash and no substance. In the real thing, watch connoisseurs are paying for what's inside the hundreds of individual handcrafted components that keep the timepiece tick-ticking along and enable a host of special functions. The Breitling Navitimer Heritage, for example, is prized for its ability to time successive events without the need to restart at zero. A real model regularly retails for $5,250, indicating intricate design and complex capabilities. The knockoff went for $45.

It can be difficult to spot a fake watch without wrenching open the back, says Terry Betteridge, owner of A.E. Betteridge, an estate jeweler in Greenwich, Conn. Still, there are a few telltale sings to look for before you visit your jeweler for an analysis:

Left: Breitling Navitimer Heritage. Right: Knockoff version.

You won't find a designer watch in the $50 range, that's for sure. But these watches are certainly of better quality than that knockoff and come with a manufacturer's warranty, to boot:

Sunglasses

At $5 a pair, these knockoff Armani glasses are a cheap way to get in on the summer big-glasses trend. Never mind that the weak plastic frames don't come close to the real Emporio Armani EA 9241/S, which retail for $160. With the real deal, you're paying primarily for the design, but also for quality. Cheap sunglasses are simply tinted plastic, which absorbs few UV rays. They don't actually protect your eyes. Better glasses offer a protective coating to block those rays, and may also have special tints or shapes to further protect your eyes.

* Top: Emporio Armani EA 9241/S sunglasses. Bottom: Knockoff version.

Spend your money instead on a similarly priced pair from your local drugstore. Look for a pair with the AOA Seal of Acceptance or a label that says it blocks 100% of UV rays (may also be written as 400 UV protection).

Movies

The idea is tempting: Why pay big bucks and endure the hassle of watching a film at the theater during opening weekend when you can just buy the knockoff DVD and watch it at home? These knockoffs turn up on Canal Street within a day of a movie's opening day.

To test the wares, we picked up Will Ferrell's new comedy "Talladega Nights: The Ballad of Ricky Bobby," which was released Aug. 4. The results? Not good. To create the DVD, someone used a hand-held camera in the theater. So not only is the image quality poor, but a person's head obstructs your view.

Left: Movie poster for "Talladega Nights." Right: Knockoff DVD cover.

For more, see our column Cheap Seats