We Went Inside Beauty's Black Market & It’s Worse Than You Think

This story was originally published August 14, 2017.

When Haven Cruise woke up on a scorching July morning in Florida, it felt like shards of glass were tearing through her fragile undereye skin. She ran to the mirror and was shocked to find that the area around her cheeks and temple were raw, bumpy, and painfully dry. "It was almost like something had entered my pores and was hanging out in there," she remembers. "It was so gross."

The office manager noticed that the reaction was in the exact spot where she had "baked" her concealer with Ben Nye powder — a trick she learned from the beauty vloggers she follows on YouTube. The only problem? The product she used wasn't legit; it was a cheap knock-off that she found for $6 (originally $22.50) online. “I just hit ‘add to cart’ excitedly and didn’t do my research,” she says. “I was so excited to try it — it even said in the title of the posting that Kim Kardashian uses it.”

Cruise's rash was in the same spot she used fake Ben Nye powder. Photo: Courtesy of Haven Cruise.

Cruise abruptly stopped using the powder and, after some Googling, realized she’d been tricked into buying a counterfeit. “I started doing some research and it turns out a lot of people have been fooled,” she says. “I had never heard of fake [Ben Nye] products before; I only found out about the problem once I looked into it.”

Cruise’s story is far from unusual. L.A.-based beauty vlogger Sarah Tanya woke up with a severe eye infection the day after trying a $6 Kylie Cosmetics Ky Shadow Palette she found online. Teen vlogger Jordan Byers suffered "a painful chemical burn" from fake Anastasia Beverly Hills Liquid Lipstick. And Canadian YouTuber Missy Chrissy says her lips and tongue went numb after testing three knock-off Lime Crime matte lip colors.

So what’s actually going on here? And just how bad is the counterfeit beauty trade in the U.S.? We went undercover in Los Angeles, New York City, and Guangzhou, China to get to the root of the problem — and it turns out, it’s even scarier than you might think.

Tanya's eye infection after using fake Kylie Cosmetics shadows. PHOTO: COURTESY OF SARAH TANYA.

Beauty Counterfeiting: How The Hell Did This Happen?
All the women we spoke to claimed that they ordered the sketchy products from popular online marketplace sites, but tabletops sales are becoming a massive issue, too. If you travel to Downtown Los Angeles’ infamous Santee Alley shopping district, you’ll find dozens of displays bursting with hot-ticket cosmetic items like Kylie Lip Kits, Anastasia Beverly Hills highlighters, and MAC lipsticks. Ten years ago, this stretch was the place to go for knock-off handbags — and if they weren't already out in the open, all you had to do was ask. Today, there isn't a fake purse in sight; they've all been replaced by contouring palettes.

A tabletop in Downtown Los Angeles. Photo Courtesy of Lexy Lebsack.

Mary*’s display is the biggest, and seems to be one of the most successful, because she's learned how to let the in-demand products come to her. "I never go to stores to see what's hot. I just listen when people ask for things, and then I order it," she says, while adjusting a stack of Too Faced eyeshadow palettes. She says that she orders her products from an undisclosed website in China, and tells us that sometimes the packages get seized, but most get through customs just fine — and the raids in Santee Alley are so rare that it’s worth the risk for her to sell right out in the open.

When we ask Mary about the horror stories from consumers, she doesn't mince words. "I've heard people [have been] having reactions," she tells us, "But complaints [from my customers]? No." In fact, even she buys into the idea that her products aren’t really that different from the originals. “I use it myself," she says. “I think everything is just a lie, I think that everything comes from the same warehouse... it’s just the same stuff, that’s what I think.”

Another seller in Santee Alley, who preferred to remain anonymous, told us that her clientele are all aware that they're buying fakes, and they simply don’t care. What’s more, they aren't always using the products on themselves — many people buy in bulk, presumably to resell them online. And it gets worse: "A lot of people who come down here are makeup artists," she says. She says that the finishes and textures are a far cry from the originals, but it's not about that — her customers only care about the label.

Her top seller is anything with Kylie Jenner’s name printed on it, with one cult product coming in second: "Everyone buys this one," she says, holding up a fake jar of Ben Nye's cult powder.

So why is makeup a counterfeiter's dream? To understand the epidemic, you first have to know a few things about the beauty industry. In the past year, the makeup category exploded with 12% growth in 2016, according to research firms NPD and Allied. And beauty sales have proven to resist economic downturns (some even call the industry "recession-proof"). Because makeup is often inexpensive to make in bulk, the margins are high — especially when the marketing is just right.

At the same time, the world of counterfeiting has also grown: In 2013, it was estimated that 2.5% of the world's trade is made up of fake goods — and Foakleys aren't paying the bills anymore. "If there is money to be made, they will counterfeit anything," Deborah Parker, Homeland Security's Deputy Special Agent In Charge tells Refinery29. That includes airplane parts, construction supplies, fine art, handbags, shoes — you name it, they'll knock it off. The Center For Disease Control And Prevention (CDC) reports that up to 30% of all the medicine in the developing world is counterfeit, and that number gets much higher in certain countries. We're talking life-or-death prescriptions like malaria and heart medication, which have caused the spread of preventable diseases.

Suffice it to say, counterfeiters couldn’t care less about anyone they hurt while trying to make money. That carries over to makeup, too — which is especially scary considering how unregulated the beauty industry already is. "Beauty plays a big part of the pie," Parker says. "In 2015 alone, we had about 2,000 seizures of counterfeit cosmetics and beauty products. It cost the industry about $75 million dollars — and that was just one fiscal year."

The tremendous growth in both industries has created a perfect storm for beauty counterfeiting to explode into the U.S. economy — and the sellers appear to be targeting millennials and Gen Z consumers because of their unique demand for name-brand cosmetics and their online shopping habits (including their never-ending hunt for sales items and discounted products). Sellers aren't focusing on Armani, La Mer, or even Chanel – they're filling their shelves with Instagram favorites like Kat Von D, Lime Crime, Tarte, and Benefit. Even niche brands only familiar to YouTube fans (like Ben Nye) are a popular item.

Why Fake Beauty Products Are Worse Than Fake Bags

While every generation has had its cult knock-off item — from Oakleys in the ‘90s to Louis Vuitton bags in the ‘00s to Yeezy Boosts today — this influx of beauty counterfeiting is inherently different. Like fake medication, these items look pretty good on the outside, but have troubling ingredients inside, which makes putting them on your face way scarier than just carrying them on your arm.

The FBI reports that its agents have found aluminum, human carcinogens, dangerous levels of bacteria, and even horse urine in the products they've seized. "Some of these products have caused conditions like acne, psoriasis, rashes, and eye infections," the report states. "It actually poses a national health problem," Parker adds. Brands like MAC and Anastasia Beverly Hills have also conducted their own investigations, and found even more deadly ingredients, including lead, arsenic, and mercury.

Of course, none of these ingredients or adverse reactions are surprising when you see where these fakes come from. "If I could paint a picture of what it's like in one of these [counterfeit factories in China]..." says Gregg Marrazzo, Senior Vice President, Deputy General Counsel of the Estée Lauder Companies. "If you took the most disgusting frat house bathroom, it looks like a surgical suite compared to these conditions. It’s filthy, there’s bacteria everywhere... it’s disgusting."

A Chinese factory that was making fake MAC products. Courtesy of Estée Lauder Co.
The unsanitary conditions pose a national health risk to consumers. Courtesy of Estée Lauder Co.

So, What’s Being Done To Stop This?

MAC is one of the most-counterfeited brands in the world, and parent company Estée Lauder's Global Security division is leading the fight from the private sector. It seized over 2.6 million pieces of fake MAC makeup in 2016 by working closely with numerous government agencies.

"Our team has an accumulated 500 years of law enforcement experience," says Lewis Rice, Senior Vice President of Global Security for the Estée Lauder Companies. "We know how to conduct an investigation." Lauder's former cops are skilled in developing an airtight case independently before delivering it to active police officers on a silver platter, as you can see in the video above. In it, former detective and now private investigator, Jim Ricaurte of the Allegiance Protection Group, spent weeks tracking just one tabletop seller.

"It's like Wack-A-Mole," Marrazzo notes. "You get one and two more pop up."

As the problem worsens, other brands (even smaller indie ones) are stepping up their efforts. Remember Cruise, the woman who got duped into buying the fake Ben Nye Banana Powder? That’s only a blip compared to what the brand has seen. “This came to our attention about a year and a half ago,” Patricia Saito-Lewe, Executive Vice President of Ben Nye says. “At the onset, it was pretty difficult to tell [what was real and what was fake online]; it was amazing how they copied our label almost identically.”

To combat the issue, the brand went to an extreme: “We changed the packaging completely, so anyone who buys a current, authentic Ben Nye product knows it’s not the same as the ones being sold for $5.” Ben Nye also registered its trademark with Customs and Border Control, so the agency has a better chance of intercepting products on their way through U.S. entry ports. Now Saito-Lewe gets emails when the government stops shipments. “On average, [I get] one or more notifications per month,” she says. “The ports are all over the country: East and West Coast, Texas, Minnesota, Florida, and they’re always counterfeit.”

Marketplace sites are also trying to cut off counterfeit sellers — as it’s ultimately bad for their business reputation, too. An eBay rep tells us that the company prides itself on its proactive stance on the subject. "We consider ourselves a leader in counterfeits," a rep told Refinery29 over email. "We utilize a combination of sophisticated detection tools, enforcement, and strong relationships with brand owners, retailers, and law enforcement agencies to combat bad activity and present our customers with a safe, trusted shopping experience." The company also notes that "less than 0.025% of all listings hosted by eBay in 2014 were identified as potentially counterfeit products."

Amazon says that it's also dedicated to protecting consumers from counterfeit goods. "Amazon prohibits the sale of inauthentic and fraudulent products," the brand wrote to Refinery29 in a statement. "We remove items in violation of our policies as soon as we become aware of them and block bad actors suspected of engaging in illegal behavior, such as counterfeit. If merchants sell counterfeit goods, we may immediately suspend or terminate their selling privileges and destroy inventory in our fulfillment centers without reimbursement."

A tabletop in Santee Alley, Los Angeles. Photo Courtesy of Lexy Lebsack.

Consumers can help by flagging suspicious postings on sites, but here's the issue: When most fakes are selling for only a few bucks, it's easy to imagine why a consumer might simply call it a loss, not wanting to go through the embarrassment of admitting they got duped or the hassle of filing a claim. That's what happened to Cruise, who didn’t report the reaction she had from the fake Banana Powder. "It was $5, so I didn't think it was worth the time or effort, ya know?" she says. "I thought about reaching out to the seller, but it was my fault for gambling on the purchase, so..."

And, because skin reactions can sometimes take a few days to surface, many counterfeit products don’t get the blame. "If you are highly allergic [to the unsafe ingredient], you may see reactions quickly, but most take several days to show up and irritant reactions can take much longer," Michael Swann, MD, Board Certified Dermatologist says.

Kylie Jenner and Jeffree Starr have both taken to social media to warn their fans (Kylie even made counterfeit Lip Kits the focus of a recent episode of Life Of Kylie), but both of their brands declined to officially comment on how they're combatting the issue. Of course, there's no denying that it's an expensive endeavor with nominal payoff: Estée Lauder's team is arguably one of the best in the business, but the process is still complicated, cumbersome, and labor intensive.

How Can You Protect Yourself?
The Department of Homeland Security is continuing to double-down on its investigative strategies, but warns that consumers ultimately need to be more vigilant and cautious in the products they choose to buy. “If you eliminate the demand, you address the supply,” says Ricaurte.

But what does that look like in real life? As a rule, don't buy from tabletops or unauthorized mall kiosks or websites (often called "gray market" sellers because it's a gamble on authenticity). Stick to verified retailers and sites you trust. If you must buy from a third party site, you can always email the brand first to check if the seller is legit. “If customers have any questions, [we ask that they] just contact us before they buy it to verify,” Ben Nye’s Saito-Lewe says. “We want to do that for consumers. I hate to hear stories that they bought and then they had a reaction.”

Admittedly, that’s a tall order when it comes to the big guys, so when all else fails, just buy from the brand directly — or spend a few minutes researching a drugstore product that’s affordable, will give you a similar result, and, most importantly, won’t give you an infection on your face. It's both as complicated and as simple as that.

Sure, you can buy a knock-off liquid lipstick for a few bucks, but when you crack open that packaging and find the odor is disgusting (trust us, some of these fakes smelled worse than you could imagine), the color is far from what you expected, the finish is totally off, and you could even risk lead exposure, you have to wonder: What's the name on the tube really worth?

*Names have been changed to protect the source's identity.