Cosmetics ‘counterfeiters will keep exploiting’ social media ‘loopholes’ unless industry adjusts: Red Points report

- June 11, 2018

Barcelona SaaS platform Red Points releases a new report detailing the social media activity of counterfeiters in the cosmetics industry, who will keep exploiting loopholes unless the industry smartens-up.

Red Points, the online brand protection technology solution, has launched a new report that analyzes the rise of counterfeit cosmetics in the major social networks. The results show that more than 50% of the infractions detected on the Internet take place in these networks.

Unless companies implement smarter ways to address the problem, counterfeiters will continue to exploit loopholes in the system to distribute fake products on the Internet.

In recent years, the cosmetic sector has suffered a great shock, due to the popularity of digital marketing through social networks, which has led to an increase in fake products in the online sphere.

The research by Red Points reveals that almost half of the respondents in the United States (45%) had bought cosmetics through social networks, and that 19.5% of them had received fake cosmetics by mistake.

counterfeit social media

Laura Urquizu

Commenting on the findings of the report, Laura Urquizu, CEO of Red Points, explained in a statement to the press, “The falsification of products represents a challenge that has always plagued the cosmetic industry and has increased in recent years, especially with the advent of social networks.

“Despite the work of e-commerce platforms such as Amazon and eBay, unless companies implement smarter ways to address the problem, counterfeiters will continue to exploit loopholes in the system to distribute fake products on the Internet,” she added.

Compared to other sectors, the report shows that the cosmetic industry has been the most affected in terms of online brand infringement, and that counterfeiters prefer social networks to sell fake items.

Additionally, the resale of authentic cosmetic products in the so-called “gray market” has also played an important role in further damaging the legitimate cosmetic industry throughout the world.

The majority of participants (69%) expressed their great concern about counterfeiting in the cosmetics industry, which poses a great challenge for brand owners, who not only face a greater loss of profits, but also also be responsible for removing all fake items on online platforms, according to 50% of respondents.

“Our experience working with brands in the cosmetics sector around the world shows us that the sooner a company implements a real action plan to protect the distribution channels of its brand against the gray market, and curb the resulting loss of income of the falsification of its products, more possibilities will have to prosper and stand out in the current competitive market,” said Urquizu.

“That’s why at Red Points we continually invest in new technologies to develop intelligent solutions that detect and report online infractions effectively and, ultimately, help brands protect their intellectual property from counterfeiters,” she added.

The report is issued shortly after the launch of Red Points Academy, the first online intellectual property protection certification designed to help companies improve in critical areas of intellectual property application.

Last month Red Points closed a financing agreement with British venture capital firm Eight Roads for €10.13 million.

Read More: Barcelona SaaS startup Red Points closes €10M financing deal with Eight Roads VC

The Barcelona SaaS startup protects brands and content in the digital environment. It does so through its proprietary technology which employs machine learning algorithms to scan the internet and identify all violations and infringements.

Red Points will now look to increase its international activity with the support of Eight Roads Ventures, a fund with more than 50 years of experience, which recently launched a European startup fund of €300 million.

Red Points is the preferred brand protection partner in the sporting, entertainment, fashion & accessories, editorial, design and luxury industries, providing unique products across the entire digital spectrum.

Eight Roads has been busy on the European continent and particularly on the Iberian peninsula.

The international success of Portuguese startups drew the attention of a €300 million startup scaleup investment fund led by Eight Roads last March, according to Portugal Startups.

Tim Hinchliffe

Tim Hinchliffe the editor in chief at Novobrief. Previously, he was a reporter for The Ghanaian Chronicle in West Africa, and Colombia Reports in South America. Principal at Espacio.