F for Fake – cosmetic counterfeiting and piracy
Time was when counterfeit personal care products were commonly crude fake perfumes pedalled in markets and workplaces during Christmas and other festive periods to bargain hunters who knew they were buying rubbish. Not any more. Counterfeit packaging and products of varied cosmetics, creams, soaps and scents are now often so hard to detect that only manufacturers can really spot a fake. Add to that the growing grey market of personal care products designed for one country’s regulatory regime that end up in another; outright smuggling; the apeing of popular brands; and other scams, and you have a sector that is increasingly under pressure from organised crime.
Time was when counterfeit personal care products were commonly crude fake perfumes pedalled in markets and workplaces during Christmas and other festive periods to bargain hunters who knew they were buying rubbish. Not any more. Counterfeit packaging and products of varied cosmetics, creams, soaps and scents are now often so hard to detect that only manufacturers can really spot a fake. Add to that the growing grey market of personal care products designed for one country’s regulatory regime that end up in another; outright smuggling; the apeing of popular brands; and other scams, and you have a sector that is increasingly under pressure from organised crime.
Complex litigation brought by cosmetics manufacturers against internet auction house eBay has recently highlighted the difficulties posed to the sector by commercial crime in general and counterfeiting in particular. With packaging and production technology becoming ever more sophisticated, especially in regard visual design, spotting fakes is so tough for some retailers they can argue they should not be held responsible.
This is the argument made, largely successfully, by eBay in its court cases. A Paris tribunal recently rejected a L'Oréal action against the US-based web company for alleged counterfeiting, claiming damages of €3.5m. The court accepted eBay’s plea that it only "helped" internet-based clients to sell their products and did not control the content. However, this ran counter to a similar French tribunal ruling in 2008 where eBay was fined €20,000, where judges maintained that by taking a commission from each sale, the internet auction house had actually profited from a trade in counterfeits, and so actively participated in this crime rather than being a passive host for wrongdoing. Interestingly in April London local newspapers reported that a British eBay seller was actually found responsible for selling £26,000’s worth of counterfeit goods on the site, including cosmetics, and received a community service order after being convicted by a magistrates court in the British capital. Clearly there is a long way to go before any kind of legal consensus is reached regarding legal liability over the sales of counterfeiting, especially online.
However, there is a far greater consensus over the fact that counterfeiting of personal care products is a growing problem and that it poses a threat to the sector and its consumers. And it’s not just developed world markets such as the UK where these potential health risks are acknowledged.