The counterfeiting epidemic continues to spread, and virtually no product category is immune. Broken, a new Netflix docuseries highlights how prevalent “negligence and deceit are in the production and marketing of popular consumer items.” The counterfeiting crisis is especially problematic in the cosmetics industry, where “it’s like the wild, wild west online.”
The episode laments the rampant counterfeiting of cosmetics products, and warns consumers about the inherent risks—including cosmetics that have tested positive for the presence of carcinogens and heavy metals and bacteria caused by unsanitary production, among other things.
It also explores how the business of counterfeiting cosmetics became so lucrative. For the last several years, social media has provided a platform for consumers (colloquially referenced as influencers) to share makeup tips, tricks, and recommendations. This phenomenon has helped to spur the rise of niche makeup companies, whose products target specific audiences, sell out quickly, and are primarily sold online. The boom in the makeup industry, coupled with the ability to buy and sell cosmetics on online marketplaces like Amazon and eBay, has created the perfect storm for counterfeiters. Counterfeiters can produce cosmetics cheaply and sell them for a steep profit because demand for the products is so high. By selling online, they can also do so anonymously.
As a result, consumers desperate to buy popular products often unknowingly buy counterfeit versions at a discounted price, assuming that they are purchasing legitimate products from Amazon and not from a third-party seller. Consumers buying online obviously have no ability to inspect the products for signs of counterfeiting, like differences in packaging, smell, consistency, and color.
Although the series emphasizes that it’s important for consumers to be aware of the signs of counterfeiting, it’s equally necessary for brands to take action to detect and limit the counterfeiting of their products. Brands can detect counterfeits of their products using skilled cyber investigators. Counterfeit sellers often fall within one or more of the categories below:
- They sell products substantially below retail price;
- They have a large volume of product available;
- They have short domain histories;
- They have low-quality websites; and
- They have been known to sell other counterfeits.
Cyber investigators can search for and identify counterfeit sellers online. Once a brand has identified counterfeit sellers online, it can work with attorneys skilled at pursuing these bad actors using various legal techniques. These include sending cease-and-desist letters and filing complaints with the marketplaces on which the counterfeits are sold. If necessary, this also can include escalated legal action against the counterfeiters. Sellers of counterfeit products can be liable under trademark law for actual damages, ill-gotten profits, potential treble damages, attorneys’ fees, and statutory damages.
Brands can also combat counterfeit products by registering their trademarks with the United States Patent and Trademark Office and with the U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement offices. By doing so, these offices can identify shipments of counterfeit products arriving at U.S. borders, confiscate them, and track down their sources.