Why counterfeit beauty products are booming amid Covid-19

As more customers shop online, fake products are flooding in. Brands, marketplaces, and law enforcement need to work together to stem the flow.

Fake beauty products are on the rise amid Covid-19, as counterfeiters target less savvy and older shoppers who are new to e-commerce.

Haircare brands, cosmetics, and skincare tools have been hit especially hard, according to Daniel Shapiro, vice president of Red Points, a brand protection agency. He has seen a 56 percent increase in counterfeit products sold online across its 700 brand clients in the first six months of this year. Among its beauty clients, including skincare device company Foreo and haircare brand Tyme, counterfeit sales increased by approximately 37 percent.

Why counterfeit beauty products are booming amid Covid-19

“Counterfeiters always seize on opportunities for growth and with e-commerce sales booming, this is one of those opportunities,” says Shapiro. Since the pandemic began, online beauty sales have grown by 20-30 percent, according to research from McKinsey, and marketplaces that are prone to counterfeiters, like Amazon and eBay, are seeing sales gains. “The level of sophistication in searching marketplaces isn’t as good, and counterfeiters know that so they’re flooding the space.”

Counterfeit Makeup

The lack of official oversight over the production of counterfeit goods, which are often made in illicit factories, also gave counterfeiters an advantage at the start of the pandemic when most legitimate brand factories were shut down and running out of stock. Fake beauty products, many of which are made in China and Southeast Asia, according to Rachel Jones, founder of brand protection software Snapdragon, also avoided official import and export channels that were closed off when the pandemic first hit by smuggling products illegally. The US Patent and Trademark Office considers counterfeiting to be the largest criminal enterprise in the world and predicts that fake goods will contribute $4.5 trillion to the global economy by 2024.

Beauty conglomerates, including Estée Lauder and L’Oréal, have dedicated legal and security teams focused on keeping fake goods off the market, but smaller brands are less protected. Red Points has worked with Foreo to take down 11,000 counterfeits sold across 180 marketplaces, amounting to $2 million worth of fake goods.

“Having counterfeit products on the market can really impact a brand’s reputation and the trust of its customers,” says Shapiro, who notes that “if a customer receives a product that doesn’t work, they’re more likely to blame the brand’s manufacturing than to question whether it’s fake.”

Counterfeit Makeup

One in two US consumers, or 52 percent, say they’ve lost trust in a brand after unintentionally purchasing a fake version of its products online, a 2019 report from brand protection agency Incopro found. Sixty-four percent of those consumers say they would lose trust in the marketplace that fake goods were purchased from as well.

Online marketplaces are often criticized for the prevalence of counterfeits. While Amazon and eBay say they have taken a stronger stance against fake products in recent years, experts say there’s still much work to be done. “It’s so easy now for someone to set themselves up as a seller and there’s very little due diligence, so the onus is really on the consumer to do their research,” says Jones. Reached for comment, an Amazon spokesperson said that in 2019 the platform stopped over 2.5 million suspected bad actor accounts from opening Amazon selling accounts before they published a single listing and blocked more than 6 billion suspected bad listings before they were published.

BY JESSICA SCHIFFER

#Why counterfeit beauty products are booming amid Covid-19

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