July 10, 2018
Beautycon is back again this week, this time bringing the famed festival filled with creators, brands, and celebrities to Los Angeles (July 14-15). In honor of the popular event, we’re taking a look at the original Beauty “con”: fraud. Especially now, as beauty brands are booming, fraudsters want a piece of the industry’s $445 billion action. Here are several notorious cases where fraudsters exploited the beauty industry.
- Facial Fraud: Sometimes the price of beauty is much more than you bargained for, but that was especially the case for Fraudulebrity honoree Jennifer Aniston. When Aniston was undergoing spa treatments, a spa owner saved Aniston’s credit card number from her spa treatments, along with those of many other of her famous clientele, and ran false charges on the card at a later time. America’s sweetheart’s experience proves that everyone is susceptible and that it’s easy to be scammed anywhere and everywhere.
- Counterfeit Cosmetics: In 2014, Nassau County District Attorney’s Office busted a fraud ring hawking counterfeit beauty supplies. The multimillion-dollar enterprise sold these products along the East Coast, including Pennsylvania, Florida, and New York. Counterfeit items included everyday health and beauty items such as Chapstick, baby oil, and sanitary pads. The selling of fake goods not only puts consumers at risk with counterfeit products, but also brands’ reputations. According to CNN, a manufacturer at the time described the operation as the biggest known counterfeit enterprise in the United States, while another company called it the only known such manufacturing operation in the country for its products, prosecutors said.
- Beauty Breach: Social media platformsare making it easier than ever for users to shop directly from posts (Kylie Cosmetics on Snapchat anyone?) Beauty influencers are playing a major role in that, so it’s no wonder that fraudsters infiltrated the database of a marketing firmthat pairs online stars with top brands seeking product reviews and endorsements earlier this year. Fraudsters not only gained access to the information of over 12,000 prominent social media influencers from YouTube, Instagram, Twitter, and Twitch, but also the innerworkings of their brand partnerships.
So how can beauty brands and stores – new and old – protect themselves? Check out our eBook, “Nourish Sales and Exfoliate Fraud” for online health and beauty retailer market trends; unique fraud challenges for merchants in this space; and eight strategies to maximize revenue and minimize fraud.