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Counterfeit cosmetics costing businesses and killing jobs

Posted by Branddy Spence on Jun 17, 2015 8:59:00 AM
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Sometimes makeup doesn't cover up blemishes. Sometimes a retailer accidently stocks the shelves with batch of counterfeit products, and when that happens, the unfortunate customer who purchases a knock-off could end up dealing with serious health-related consequences, rather than just an easily covered pimple or scar.

A recent report from the Office for Harmonization in the Internal Market found that counterfeiting is a significant issue in the European cosmetics market. Perfume, makeup, sunscreen and shampoo are just a few of the items counterfeiters are pumping into the product line. The study from the EU's largest intellectual property agency found that knock-off products are heavily cutting into the industry's profits. Determining product authenticity is often tough until it is too late, and a customer has purchased and used a potentially dangerous fake cosmetic product. 

Every year counterfeiting hurts job creation.

Counterfeit cosmetics a detriment to the EU economy
The cosmetics industry is a significant contributor to the overall EU economy. The various sectors observed by the agency represent €60 billion ($64.89 billion) in consumption annually or approximately €120 per person in the EU. However, the OHIM estimated that 7.8 percent of legitimate cosmetics sales in Europe are lost to counterfeit goods. That amounts to €4.7 billion in trade and 50,000 jobs lost in the cosmetics sector every year. When the cosmetics industry as a whole is making less money, it isn't able to hire as many workers. Every year counterfeiting hurts job creation in manufacturing, wholesale and retail trade sectors. A very real effect of these fake beauty products infiltrating the market.

The knock-off cosmetics trade market isn't just financially detrimental to legitimate sectors in the EU economy, it's also dangerous for the consumers who eventually purchase the fake products. Counterfeit cosmetics also pose health risks for people buying the shampoos, perfumes, make up and other fake goods trafficked into the supply chain. Even when cosmetic goods seem legitimate, product authenticity is often very difficult to determine. These fake goods often contain carcinogens or are riddled with bacteria that can cause skin infections. 

Knock-off cosmetics can have hazardous health effects. Knock-off cosmetics can have hazardous health effects.

Fake beauty products have potentially hazardous health effects
Susan Moreira, a women who once bought counterfeit cosmetic products, explained to CBS New York that the knock-off item she bought online ended up causing a very bad rash one or two days after using it. Prior to that she had used the legitimate version of the product for months. And Mandy Lanham told The Daily Mail that her skin began flaring up shortly after she bought and used a product she purchased off of eBay.

As you can tell by Moreira's unfortunate purchase, the counterfeit cosmetics issue isn't limited to the EU. Just over a year ago a massive knock-off health and beauty goods ring was busted in New York.

The counterfeit cosmetics issue isn't limited to the EU.

Two brothers were accused of running the operation that distributed counterfeit products as far as Pennsylvania and Florida.

One manufacturer noted that the knock-off cosmetics ring was the largest such known enterprise in the U.S. There were five manufacturing facilities distributing the potentially hazardous fake products. The haul from locations in Franklin Square, Oceanside, Freeport and Valley Stream required four tractor-trailer trucks to transport and was valued at over $2 million.

To determine an item's legitimacy, police at the time advised consumers look for strange labels, colors or typeface. Another sign of a knock-off is an unusually low price. Counterfeiters have found a lucrative supply chain in the cosmetics industry, and as the effects of the business bubble to the surface, businesses should take note and follow through with steps to ensure product authenticity. 

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Topics: Counterfeiting, Health and Beauty, In the Headlines, Brand Protection