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About a year ago, Wende Zomnir, the founder and executive creative director of makeup brand Urban Decay, was called into the company general manager's office. She was told she'd be getting the first look at the new packaging on the latest run of the company's popular Naked Palette. But Zomnir was underwhelmed when she saw it. It looked cheap. The packaging was off and the printing on the label was cockeyed. The velvet paper inside was scuffed up. "He asked what I thought of it, he said this was a way to make it more cost effective. I totally freaked out." Zomnir explained. "And then he told me it was fake." She was relieved to hear it was a joke.
Zomnir and the Urban Decay team, as well as other popular makeup and beauty brands, are increasingly dealing with counterfeiters who sell fake products on eBay. "You hear about Prada handbags being counterfeited, but I never thought about it as something that would happen to us," said Zomnir. "In a way I was proud, I felt like we'd joined the big leagues. But then I got mad." These counterfeit beauty products, the company has learned from working with U.S. Customs as well as eBay and Amazon, are mostly manufactured in China and then shipped in bulk to the U.S. and bought through online wholesale marketplaces like Alibaba and DHGate. As wholesalers, they sell to distributors, not directly to customers, but those sites give counterfeiters a huge platform for reaching U.S. shoppers. Due to the volume of the trading and laws that differ from country to country, it's incredibly hard to regulate the transactions that occur on these sites. On its blog, DHGate has a post describing the company's policy toward dealing with counterfeiting: "Your payment for an item will not instantly be released to the seller until you confirm that you’ve received the order and are satisfied with it." If buyers didn't want the counterfeit merchandise, this might be effective — but in many instances, the buyers actually want the fakes. Alibaba also has a page outlining its counterfeit policies, pointing out that "Many foreign companies have done little to protect their IP rights in China, leaving their products vulnerable to counterfeiting."
When wholesale customers stateside get ahold of the items — sometimes for as little as $10 a piece— they often try to resell them on eBay or Amazon. According to the Urban Decay's treasurer, John Ferrari, the products tend to be listed at about half retail price once they hit eBay or Amazon. The Naked Palette retails for $50 while the fake ones often go for $20 to $25. The systems in place to catch counterfeiters don't work that well, Ferrari contentds: "We have a program in place with U.S. Customs that intercepts these shipments from time to time but it most likely catches only a fraction of the amount eventually shipped into the U.S." While the government tries to stop counterfeiters, much of the onus is on the company itself. For example, eBay's VeRO (Verified Rights Owners) program allows copyrighted brands to report fakes they find for sale. But sorting through the listings to determine what might be fake and what might be real is a laborious task.
"Once a week we go through the thousands of eBay listings for Urban Decay products and note the item numbers that appear to be fake and/or inappropriately use Urban Decay trademarks," Ferrari explained. "We send those listings and they are usually delisted immediately. There is no process in place to hold eBay sellers accountable, although eBay does state they go after repeat offenders. In short, eBay is relatively easy to work with but the results are only temporary and there are no real deterrents." Amanda Coffee, an eBay rep, said in an email statement that the company "proactively remov[es] suspicious items" along with "items reported as counterfeit by brand owners." She adds that the online marketplace works "closely with law enforcement to prosecute offenders, enforc[es] selling limits on some items, restrict[s] seller activity in certain categories, provid[es] free tools for rights owners to efficiently identify and report items to us for immediate removal, and partner[s] with brand owners and industry initiatives to bring attention to and combat the issue worldwide." With Amazon, the process is a much bigger hassle; brands must actually purchase the products, verify that they are counterfeit, and then report the listings to Amazon. (Amazon did not respond to a request for comment.) Even on sites like eBay and Amazon, the incentive to police fakes isn't that great, said Susan Scafidi, the Director of the Fashion Law Institute at Fordham Law School. "Even blatant fakes like '100 percent authentic replica perfume' are legally considered outside the expertise of the online marketplace," she wrote in an email. "I'm always concerned that this doesn't give the online marketplace enough incentive to police fakes — after all, eBay and Amazon get the same fee for a fraudulent sale as a legitimate one — but from each marketplace's perspective, they're eager to have consumers trust the site and thus want to discourage counterfeits." Copying may be the sincerest form of flattery, but Zomnir said it's become nothing more than an expensive annoyance: "Now we have to pay people to put energy into stopping it." Beauty products are just one part of the global pandemic of counterfeit goods thriving in online marketplaces. As of this year, more counterfeit goods — everything from electronics to handbags — are sold online in the U.S. than on the street.
Beauty bloggers say customers are attracted to buying counterfeit products online because they're so cheap. Also, falling for a fake is easy when you can't see the product first-hand. "I suspect that many customers don't realize they've purchased a counterfeit at all, or only [do] when they get it home and see it up close in person," Karen Monterichard of Makeup And Beauty Blog wrote in an email. "Maybe they hop on eBay thinking they're getting the real deal at a deep discount. Sometimes the prices are so low that they're hard to resist." The problem extends from smaller, middle-range brands like Urban Decay to big ones like MAC, Chanel, and NARS. Representatives from those companies declined requests to comment. Of the many brands reached out to for this piece, Urban Decay was the only one that agreed to speak about the matter . Christine Mielke, who runs the popular makeup blog Temptalia, says counterfeits are most damaging to brands when customers don't realize they're using a fake. "It doesn’t diminish the value of a brand in a big picture way, but a customer who purchases a counterfeit and never realizes it, may base their experience on that one counterfeit item," she wrote in an email. A search on eBay for Urban Decay's Naked Palette brings up some legit-seeming products with legit-seeming photos, but the average shopper might not be able to spot the fakes from the real stuff. Urban Decay employs Regulatory Coordinators like Lauren Jacobson, who are trained in spotting fakes. "All of our palettes have the shade name perfectly centered within the rectangle pan – fakes usually are unable to replicate this," Jacobson explains. "I also look at the picture of an opened Naked 1 Palette to see if the lettering lines up with the creases. Our palettes have the horizontal line of the 'A' in Naked perfectly lined up with the folding crease in the component." She added that Urban Decay fakes often use a cardboard box, while genuine products come in a transparent plastic packaging.