House Judiciary Committee Hearing Shines Light on Dangers of Counterfeit Products

FOR IMMEDIATE RELEASE

Contacts:  

Lisa Powers, (202) 466-0489, powersl@personalcarecouncil.org
Stefanie Harrington, (202) 615-6558, harringtons@personalcarecouncil.org
Jamie Kurke, (202) 454-0316, kurkej@personalcarecouncil.org

House Judiciary Committee Hearing Shines Light on Dangers of Counterfeit Products
Expert Witnesses Testify About Need for SHOP SAFE Act

Washington, D.C. — The U.S. House Committee on the Judiciary’s Subcommittee on Courts, Intellectual Property and the Internet held a hearing today highlighting efforts to address the critical and growing risk posed by online sales of counterfeit products, including cosmetics and personal care products. The hearing also focused on the SHOP SAFE Act, introduced last week, designed to protect consumers by stopping the online sale of harmful counterfeit products. Expert witnesses included the Personal Care Products Council’s (PCPC) Meredith Simpson, Michigan State University’s Kari Kammel, the Internet Association’s Jonathan Berroya and Foley Hoag LLP’s Natasha N. Reed.

“The Personal Care Products Council’s member companies invest substantial resources to ensure the safety and quality of their products and that those products meet federal and state safety and quality requirements,” PCPC’s Vice President, Federal Government Affairs Meredith Simpson stated in her testimony. “Counterfeit personal care products are fraud—they damage businesses, drain the economy, and most importantly, threaten consumer health and safety.”

Counterfeiting and Online Platforms Impact on Consumers and the Industry

According to a report from the Organization for Economic Cooperation and Development (OECD), the cosmetics industry loses more money to counterfeit products than any other industry, with losses reaching $5.4 billion each year to fraudulent sellers. These products sold to consumers likely do not meet the U.S. Food and Drug Administration’s (FDA) safety, efficacy and labeling requirements. Consumers often cannot distinguish between authentic and counterfeit products when shopping online because fraudulent sellers will use a brand’s product images and trademarks, creating confusion.

Illegally produced products do not adhere to federal or state safety and quality requirements and inherently pose health risks to consumers. Counterfeit cosmetics may be adulterated, tampered with, expired, and contain impurities or materials not of cosmetic grade. Consumers may be applying dangerous ingredients not intended for topical use directly to the skin, lips, eyes and other sensitive areas, including products indicated for children. In a January 2020 report to the President, the Department of Homeland Security noted that counterfeit cosmetics often contain arsenic, mercury, and aluminum and other contaminants, including harmful bacteria to human waste.

Industry Efforts to Mitigate Counterfeit Products on E-Commerce Platforms

At present, the burden of monitoring and enforcing against counterfeit goods on online platforms falls on the makers of the authentic products rather than on the platforms themselves. Brand owners engage directly and regularly with online platforms to address counterfeits. A single personal care product company may spend as much as $15 million annually to combat counterfeits, including monitoring the platforms and social media sites; enforcing against counterfeits through resource- and time-consuming notice and takedown processes; test buys and lab testing of purchases; and working and sharing information with competitors and federal, state, and local law enforcement. Smaller companies, however, often lack the resources needed to combat online counterfeits in the same way.

“However, despite aggressive efforts on the part of the personal care products industry to mitigate the harms of counterfeit good, too often our member companies are hindered by a lack of cooperation from the platforms and difficulty identifying sellers who can too easily hide and change their information, putting consumers at risk from these potentially dangerous products,” added Simpson.

PCPC supports establishing a framework to advance best practices for online platforms and sales to help ensure products sold on online platforms comply with U.S. laws and regulations.

Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce Act (SHOP SAFE)

House Judiciary Committee Chairman Jerrold Nadler (D-NY), Subcommittee on Courts, Intellectual Property and the Internet Chairman Henry C. “Hank” Johnson, Jr. (D-GA), Subcommittee on Courts, Intellectual Property and the Internet Ranking Member Darrell Issa (R-CA), and Representative Ben Cline (R-VA) introduced the SHOP SAFE Act in the House last week.  U.S. Senators Chris Coons (D-DE) and Thom Tillis (R-NC) introduced companion legislation in the Senate. The legislation includes many elements that PCPC members support, including:

  • Broad scope of platform definition to capture counterfeits where they are offered online, including social media;
  • Practices to prevent the occurrence of counterfeit goods before they are made available online, including:
    • Verification of seller information;
    • Displaying seller identity, location, and contact information (with exceptions for personal data); and
    • Screening for counterfeits before listing;
  • Repeat infringer policies;
  • Screening sellers to prevent terminated sellers from rejoining;
  • Provide verified information on infringing sellers to brand owners, when requested;
  • Prohibition of certain selling practices, such as the use of generic images rather than photographs of the actual item sold; and
  • Potential for liability for platforms that do not adopt the best

Simpson also suggested the Committee consider:

  • Consumer notification after a platform removes an illegal product that has been reported – consumers have a right to know they have purchased what could be a dangerous product;
  • Clarity in the legislation to ensure the processes and steps outlined in the bill work in practice for the platforms and brand owners to achieve what is intended, preventing and mitigating counterfeits getting in the hands of consumers, and;
  • Recognition that all counterfeits cause harm or have the potential to be dangerous – efforts to distinguish between those that could cause health and safety risks and those that may not could be confusing for consumers and cause impediments to effective

“We strongly support provisions in the SHOP SAFE Act that advance best practices for online platforms to help ensure that products sold on these platforms are authentic and safe,” Simpson concluded in her testimony. “We look forward to continuing our engagement with this Committee and with other stakeholders, including online platforms, government regulators and law enforcement, to advance solutions to combat counterfeit.”

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For more information about cosmetics and personal care products and their ingredients, please visit www.cosmeticsinfo.org.

Based in Washington, D.C., the Personal Care Products Council is the leading national trade association representing the global cosmetic and personal care products industry. Founded in 1894, PCPC’s 600 member companies manufacture, distribute, and supply the vast majority of finished personal care products marketed in the U.S. As the makers of a diverse range of products millions of consumers rely on every day, from sunscreens, toothpaste and shampoo to moisturizer, makeup and fragrance, personal care products companies are global leaders committed to product safety, quality and innovation.