Auction websites are back under fire this week following a report from US-based National Retail Federation (NRF) that said stolen beauty products resold online may pose health dangers, listing Cover Girl, Olay (both Procter & Gamble) and RoC (Johnson & Johnson) products among the most common targets of “e-fencing”.
The report comes as the battle against e-fencing is accelerating, particularly in the US, where law enforcement and legislators have been tackling the problem. In January, police in Florida cracked down on a theft ring that stole up to $100m worth of health and beauty products from supermarkets and discount stores, reselling them on auction sites including eBay and at flea markets. And in Colorado this month, legislators attempted to pass a bill that would hold auction sites accountable for the traffic of stolen goods. The bill did not pass, but states including New Jersey and Illinois have already introduced similar laws. According to the US Federal Bureau of Investigation, e-fencing costs the US retail industry $35bn a year.
While beauty players have been proactive in confronting the problem of counterfeit and gray market sales—L’Oréal and LVMH both sued eBay last year for damages—e-fencing seems to be emerging as a growing problem.
Ohio-based Procter & Gamble points to raising consumer awareness as a weapon. “Consumers should be extremely cautious […] if an online deal looks too good to be true, it probably is. Thieves and other illicit market operators often use internet sites to dupe consumers into buying sub-standard, stolen or counterfeit goods,” the company said in an email statement.
Professor Joshua Bamfield, director at the UK’s Centre for Retail Research, tells CosmeticNews that manufacturers and retailers need to cooperate more closely with online auctioneers. “[They] need to be aware of the e-commerce gray channels of distribution, how they work, and monitor these channels regularly. They [also] need to establish good links with the auction site security people and provide them with quality information about criminal users of the site so action can be taken,” he says. Bamfield nonetheless says that repeated offenses from online auctions should lead to their shutdown.
Scott Slavick, an attorney specialized in counterfeiting and the gray market at US firm Brinks Hofer Gilson & Lione, says beauty players should privilege advanced tracking technology. Bar codes, microlabels or radiofrequency identification (RFID) are ways of monitoring the movement of merchandise.
But Joe Loomis, president of brand protection at online monitoring firm Net Enforcers, argues that many are reluctant to embrace technological advances. “You would be amazed how many companies do not have the open-mindedness or willingness to consider [using the latest] technology. [They find it] intimidating and outside of their comfort zone […] Until corporations listen and make change, nothing will change,” he tells CosmeticNews. Food for thought.
The report comes as the battle against e-fencing is accelerating, particularly in the US, where law enforcement and legislators have been tackling the problem. In January, police in Florida cracked down on a theft ring that stole up to $100m worth of health and beauty products from supermarkets and discount stores, reselling them on auction sites including eBay and at flea markets. And in Colorado this month, legislators attempted to pass a bill that would hold auction sites accountable for the traffic of stolen goods. The bill did not pass, but states including New Jersey and Illinois have already introduced similar laws. According to the US Federal Bureau of Investigation, e-fencing costs the US retail industry $35bn a year.
While beauty players have been proactive in confronting the problem of counterfeit and gray market sales—L’Oréal and LVMH both sued eBay last year for damages—e-fencing seems to be emerging as a growing problem.
Ohio-based Procter & Gamble points to raising consumer awareness as a weapon. “Consumers should be extremely cautious […] if an online deal looks too good to be true, it probably is. Thieves and other illicit market operators often use internet sites to dupe consumers into buying sub-standard, stolen or counterfeit goods,” the company said in an email statement.
Professor Joshua Bamfield, director at the UK’s Centre for Retail Research, tells CosmeticNews that manufacturers and retailers need to cooperate more closely with online auctioneers. “[They] need to be aware of the e-commerce gray channels of distribution, how they work, and monitor these channels regularly. They [also] need to establish good links with the auction site security people and provide them with quality information about criminal users of the site so action can be taken,” he says. Bamfield nonetheless says that repeated offenses from online auctions should lead to their shutdown.
Scott Slavick, an attorney specialized in counterfeiting and the gray market at US firm Brinks Hofer Gilson & Lione, says beauty players should privilege advanced tracking technology. Bar codes, microlabels or radiofrequency identification (RFID) are ways of monitoring the movement of merchandise.
But Joe Loomis, president of brand protection at online monitoring firm Net Enforcers, argues that many are reluctant to embrace technological advances. “You would be amazed how many companies do not have the open-mindedness or willingness to consider [using the latest] technology. [They find it] intimidating and outside of their comfort zone […] Until corporations listen and make change, nothing will change,” he tells CosmeticNews. Food for thought.
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