So we’re going to meet the undercover operative right now. Make the buy. Walk away. Hand me the products that they’ve purchased. If anything happens, I’m supposed to go into the bank immediately. Is this the black market? It’s counterfeit goods. It’s illegal activity. It’s black market. This is shady. This winter, I got a tip that made my jaw drop. Car cables on the street in Downtown Los Angeles lined with just released, in demand beauty products at a fraction of the retail price. Things that just hit stores. And even to a Beauty Editor, they looked totally authentic. So what’s the deal? I headed downtown to see for myself. This is fake, but the good kind. Oh we can cut through the alley, do you want to? Alright so we just wanted into Santee Alley and we’re going to look around. The prices in Santee Alley are astounding. It appears that MAC lipstick is going for $2. Urban Decay palettes for $15 instead of $50. So what’s the catch? So she says that makeup artists come down here and buy a lot of this stuff. The majority of the people we’re talking to down here don’t want to be on camera, but we found one woman who might talk to us. So we’re going to try to find her. So you have every brand that everyone wants. You have Too Faced, MAC, Kylie. How much for example is it for a Kylie Lip Kit here? It’s $6. $6 and then how do you sell them for so much less than you would find them on Kylie’s website for example? Well not lying, everything’s from China. How do you get it? Where do you order it from? Online. Okay. A lot of people cannot afford $30 lipstick. You know? So $5, $3, they prefer to pay that. I heard people have reactions and things, but complaints? No. I use it myself. Oh you do. Do you ever get scared that you don’t know what’s in it or what the conditions are like in China where they make it. Me? I think everything’s just a lie. I think everything comes from the same—same thing. So you think a lot of the stuff that you’re buying from China is replica—they’re just the same stuff? They’re just the same stuff. That’s what I think. Because I use it. I see the original. I see the fake. And I don’t really see a lot of things that are different. You just save more money. Yeah. According to sellers, this is the secret to getting cult products at rock-bottom prices. But are they really the same? To find out, I headed to the beauty capital of the country. If it feels like the beauty industry has exploded overnight, it’s because you’re right. The makeup category grew by 12% in 2016. And the $445 billion dollar per year industry is growing at a steady rate of 3% per year. And has proven to be recession-proof. To fulfill the demand, conglomerates like Estée Lauder and L’Oréal are purchasing indie brands at a record rate. The result is a palpable demand for expensive luxury beauty products, an atmosphere perfect for counterfeiting. It’s a huge problem and it seems to be getting bigger. I would compare this industry to say a drug-trafficking organization. Some of the items we’ve examined have been found to contain lead, arsenic, mercury, even horse urine. How are the products getting into the country? They usually come into our seaports and then from there, they’re off loaded and taken to various distribution points. We run investigations and work our way back and for the most part, it takes us to China. To find out just how easy it is to get the goods in bulk, we sent an undercover reporter into a cosmetics market in Guangzhou, a major manufacturing hub in China. It turns out, it’s as easy as walking into the right store, which was the first one we tried. Actually, what's inside is very different. The FBI reports that counterfeit cosmetics have been found to contain dangerous levels of bacteria. And reported reactions include acne, psoriasis, serious skin rashes, and eye infections. What’s more? These reactions can take days to show up which means the counterfeit products don’t always get the blame they deserve. Estée Lauder seized over 2.6 million counterfeit MAC products in 2016 alone. Back in New York, we met with the man in charge of its global security team. What does the dark underbelly of this look like? I traveled to China, to Guangzhou, a couple of years ago and my team took me around to some of the locations where these products are made. And it’s just unsanitary conditions. I mean there’s no quality control. There’s no list that isn’t right. Meet the test, let’s take it off the line. You wouldn’t eat there, let alone make products there for distribution. This is just a taste of the kind of conditions that Estée Lauder’s global security team finds when raiding counterfeit factories both overseas and in the U.S. MAC has such a massive problem with counterfeiting that they actually have an entire division that’s set up just to combat it. And they have a private investigator who sort of heads finding the people who are selling it on the streets. So we are going to meet with this person now. Go. Driving in New York for the first time so I’m going to try to get us there. This is Jimmy, Estée Lauder’s private investigator. He’s the real deal and not just because people compare him to Tony Soprano. He’s ex-Military, served 20 years in the NYPD, and now he’s hired by huge corporations to get knock-offs off the street. He’s going to be showing us just how they fight counterfeiting here in New York City. A company like Estée Lauder will reach out to me. They have an anti-counterfeiting program. What we’ll do is investigate leads and determine if they’re counterfeit and conduct an investigation and we send it to the police. I’m going to guess that you’re not on the streets buying beauty products from the counterfeiters. I do not think that I’ll be effective in my world to buy beauty products. In order to deliver a counterfeiting case to the police on a silver platter, Estée Lauder does the legwork. For example, MAC gets tipped off about suspicious products, often by consumers through social media. The global security team develops the leads. Then they often hand them over to a private investigator. A case is developed using undercover operatives, often criminal justice students who fit an average buyer’s age. Undercover footage seals the deal and the products are inspected by a brand rep who completes an affidavit that they’re counterfeit before it’s all turned over to the cops. All this just to get a single seller off the corner. Hi! Hi. So Lexy this is is Nancy Gordon with Estée Lauder. Hi, it’s so nice to meet you. Nancy is the expert is authentication so she’s coming out with us to actually examine the products that we’re buying to confirm that they’re counterfeit. They can become agitated. They can become confrontational. They can escalate it to a physical altercation. So those are all the risks that are involved with doing an undercover operation. Alright, listen. I don’t know who the undercover is. You’re the undercover? Uh huh. The girls are just going to play—just act like you’re dating their brothers like you’re from college. Because you’re not going to fit here. I’m going to stay here. I can see that. And we’re going to get closer as a matter of fact. And remember be careful. If anything happens, I’m suppose to go into the bank immediately. Alright, bye guys. They literally bought all of this for $120. And this just at the store would be hundreds of dollars, easily. That’s wild. I also got a couple things too. So now Nancy does her thing. Can you tell if it’s counterfeit yet? You didn’t even open it yet. You just know. I didn’t need to. I can tell by the packaging. Nancy, what do you think about that one? It’s pretty obvious. The label. Take a look at how “sheertone” is spelled. It’s “sheertione.” You guys, they spelled “tone” wrong on the packaging. “Tone.” T-I-O-N-E is how they spelled it. So what is the final verdict? It’s counterfeit. All of it? So far. Yeah. But, I’m sure they will be. What is going to happen to this guy? Well after the police conduct their investigations, then they make their determinations of our findings as what we see here, that he is selling counterfeit goods, he broke the law. So, he’ll be arrested. Jimmy was right. The New York seller got arrested by NYPD using the evidence Estée Lauder collected and his goods were seized. But he pledged down to lesser charges to avoid jail time. It’s hard not to think it was all just a drop in the bucket. All that work for one tabletop of products. So what’s the long-term solution? Awareness. The consumer must be aware of the counterfeit ingredients, of the products of inferior quality that are out there. Ultimately, if you eliminate the demand, you address the supply. Some may say that’s easier said than done, especially when the efficacy of our cosmetics seem to be growing less valuable than the name on the package. So what’s more important? Your skin or the name printed on your makeup? Thanks for watching Refinery29. For more videos like this click here and to
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