So we’re going to meet the undercover operative
Make the buy.
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?
$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?
A lot of people cannot afford $30 lipstick.
So $5, $3, they prefer to pay that.
I heard people have reactions and things,
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.
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.
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
indie brands at a record rate.
The result is a palpable demand for expensive
luxury beauty products, an atmosphere perfect
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
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
And reported reactions include acne,
psoriasis, serious skin rashes, and eye infections.
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.
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
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.
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.
I don’t know who the undercover is.
You’re the undercover?
The girls are just going to play—just act
like you’re dating their brothers like you’re
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.
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.
Take a look at how “sheertone” is spelled.
You guys, they spelled “tone”
wrong on the packaging.
T-I-O-N-E is how they spelled it.
So what is the final verdict?
All of it?
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?
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 subscribe click here.