While Alibaba’s chairman, Jack Ma, may have made headlines last year when he said counterfeit bags are of similar quality to the real thing, but this almost never the case when it comes to cosmetics and other beauty goods. As the sale of counterfeits continues to rise – accounting for up to 2.5 percent of world trade, or as much as $461 billion – and the consumption of cosmetics grows rapidly as of late, a look at the counterfeit beauty industry is particularly apt.
While the sale of counterfeit beauty goods was once held to be the result of small scale, more individualized operations of sorts, the counterfeit cosmetics industry has grown to include multimillion-dollar rings frequently tied to larger criminal organizations. This time last year, the U.S. Immigration and Customs Enforcement agency (“ICE”) arrested and charged five men with Conspiracy to Traffic in Counterfeit Goods, Trafficking in Counterfeit Goods, Trafficking in Counterfeit Packaging, and Smuggling Goods into the U.S. as a result of their elaborate scheme to peddle counterfeit versions of branded fragrances throughout the U.S., including those branded as authentic Chanel, Polo Ralph Lauren, Lacoste and Calvin Klein products.
In connection with the bust – which was the result of a two-year effort by ICE - a spokesman for the government entity noted: “We are seeing more counterfeit beauty products and cosmetics, and that specific area is an area where we’re aggressively targeting the individuals who sell those goods. In general, it’s all profit motivated. Anything that can be counterfeited is a potential profit for the individuals or group who are selling these inferior goods.”
This came on the heels of another large U.S.-specific bust in 2014, in which brothers Pardeep and Hamant Mullick were busted for running an enterprise whose products – including ChapStick, Johnson's Baby Oil, and Vaseline – turned up in states ranging from New York to Florida, according to the Nassau County District Attorney's Office.
According to numbers from the Department of Homeland Security, DHS made 2,301 seizures of pharmaceuticals or personal-care products in fiscal 2015, up from 1,841 in fiscal 2014. Those items were valued at more than $75 million retail for fiscal 2015, up from $73 million retail in fiscal 2014.
The City of London Police Intellectual Property Crime Unit has similarly stepped up its efforts to fight counterfeit cosmetics, as a result of the ever-increasing number of fakes circulating in commerce.
A May 2015 campaign, entitled, “Wake up - don’t fake up!,” the police revealed that “in the UK it is estimated that consumers spend at least £90 million every year on fake goods and as we move towards a more digital world, checking the authenticity of a product is proving to be a lot harder, as consumers cannot gauge the look and feel of a product as they did before. Generic stock images are also frequently used to deceive consumers into believing they are buying the real deal.”
The Dangers of Fake Beauty Goods
Unlike authentic cosmetics and beauty-related goods, counterfeits are almost always removed from the traditional supply chain, and thereby, are not subject to the strict quality testing required by law for the sale of authentic goods.
Laboratory tests have consistently revealed that counterfeit perfume often contains poisonous chemicals, including cyanide, human urine, and rat droppings. While fake cosmetics, such as eyeliner, mascara, lip gloss and foundation, have been found to contain toxic levels of chemicals and harmful substances such as arsenic, mercury and lead.
All of these can cause allergic reactions, including but not limited to skin irritation, swelling, rashes and burns, in addition to other longer term health problems. Counterfeit sunscreen is also particularly hazardous in that it has been found to contain little or no SPF at all, and as a result, offers little – if any – protection against harmful UV rays, which could lead to long term skin damage.
Similarly, fake electrical beauty good - such as Clarisonics (and other cleansing brushes), hair curlers, dryers, straighteners, and LED masks - are not subject to the same vigorous safety tests as genuine items. This means that the bogus products are often very dangerous. Past cases have cited electrocution, overheating and fires.
Finally, online shoppers need to be aware that by purchasing counterfeit goods online you are running the risk of having your financial and personal details being compromised and being used for other fraudulent scams.
In releasing its most recent counterfeit cosmetics-specific campaign, the City of London Police Intellectual Property Crime Unit provided the following guidelines aimed at facilitating the purchase of authentic and safe cosmetics online:
1. Trust your instincts – if an offer looks too good to be true, then it probably is. Legitimate designer items are rarely discounted, so do not rush and be fooled into believing you are getting a good deal.
2. Check the spelling and grammar on the website and of the URL – often the people behind these sites do not pay a lot of attention or care to this detail. Fraudsters may also try to deceive you by slightly changing the spelling of a well-known brand or shop in the website address.
3. Look to see where the trader is based and whether they provide a postal address - just because the web address has 'uk' do not assume the seller is based in the UK. If there is no address supplied or there is just a PO Box or email, be wary.
4. Only deal with reputable sellers - only use sites you know or ones that have been recommended to you. If you have not bought from the seller before, do your research and check online reviews. People will often turn to forums and blogs to warn others of fake sites. If you are buying an item online you can check to see if the website is a legitimate stockist by visiting www.brand-i.org.
5. Ensure the website address begins 'https' at the payment stage - this indicates a secure payment.
6. Keep security software and firewalls up-to-date. Regularly update your internet browser when a new patch-security update is released.
7. Do not access links in unsolicited emails - fraudsters will design these, along with websites, to look genuine to trick victims into entering personal information, when in fact they are fraudulent. Always type in the website address or use a search engine to find a site.
8. Ask the trader if there is a returns policy or guarantee. Most rogue traders will not offer this.
9. If you are not sure whether the items are genuine, do not enter your payment details - it is not worth the risk.
10. Watch out for pop-ups appearing asking you to confirm your card details before you are on the payment stage. Never enter your PIN online.