Authenticity of Cosmetics in the Era of Global Trade: How To Verify the Origin of Products and Prevent Fraudulent Practices

The cosmetics industry has an estimated worldwide worth of nearly $278 billion and is expected to continue growing at a CAGR of 5% through 2028. But despite how quickly the industry is expanding, the market has never been more prone to the risk of counterfeits. Indeed, in the era of global trade and eCommerce, the volume of fake goods in circulation on the market has grown exponentially. But counterfeit, adulterated, and fake goods aren’t just a major cause of financial losses! Indeed, they can cause public health risks, reputation damage, and loss of customer loyalty. Luckily, thanks to new and emerging technologies such as blockchain, NFT, and NFC, brands can protect themselves and consumers from fake goods.

In this guide by Authena, you’ll learn how to secure fragrances and cosmetics and prove their authenticity. Let’s get started!

Major Cosmetics Companies: How Much They Lose Annually From Counterfeits

As we have seen above, the international beauty, cosmetics, fragrances, and personal care industries are thriving. However, beauty products have never been more subjected to crime such as illegal refilling, diversion, cloning, and counterfeiting.

Although the damage caused by the rising volume of fake goods on the market isn’t easily quantifiable, estimation shows that the industry might be losing upwards of $5.4 billion in sales every year.

But the damages that are caused by certain fake goods in circulation under a certain brand name cause a lot more than just financial damages!

Indeed, these products are usually lower in quality or refilled with below-standard ingredients. Even worse, fake goods don’t go through the strict set of clinical tests authentic items must pass to be fit for user consumption, and can pose a severe risk to consumer health and well-being.

Because of this, fake goods can cause manufacturers to lose the loyalty of their consumers, miss out on repeated sales, and even face severe lawsuits in the case of recalls and public health scandals.

Do You Need FDA Approval for Cosmetics?

According to the FDA, cosmetic products and the ingredients used in cosmetics and personal care items aren’t required to seek FDA approval. Nonetheless, before they are released onto the market, manufacturers carry out several clinical tests to ensure that these items are suitable for human use.

Although the only exception to this rule is color additives (which have to be approved by the FDA), manufacturers in the beauty industry often provide consumers with seals of clinical approval to gain loyalty and safeguard their reputation.

Using NFC Technology To Confirm the Authenticity of Cosmetic Products

With the volume of fragrances and beauty products on the market rising at an unprecedented rate, verifying the origin of cosmetics has never been more challenging – especially as the global trade continues to expand, and most consumers opt to shop online.

Luckily, new technologies can help both manufacturers and consumers verify where a certain item comes from and make better business or buying decisions.

In particular, NFC (Near-Field Communication) tags can be used across the supply chain to track products and determine their authenticity, origin, and safety.

These tags work similarly to QR codes, and they can be scanned by enabling devices such as smartphones to obtain all the relevant information about the product, including where it comes from and how it has been produced. However, unlike QR codes, NFC labels are far more secure and resistant to cloning and tampering.

The Role of the Supply Chain in Ensuring the Integrity of Cosmetics

Although counterfeit makeup and beauty products are a growing concern, the problem of fake goods plagues several industries beyond the cosmetic market. According to estimates, today, the trade of counterfeit and pirated goods accounts for 2.5% of the world’s trade and 6% of all imported products in the EU.

And, these numbers are only bound to increase as the global supply chain continues to be stretched even thinner by the growing global demand. In such a fast-changing environment, it has never been more important for manufacturers and supply chain managers to adopt the right technologies to improve the visibility, traceability, and transparency of the supply chain.

The Potential of Blockchain To Combat Fraudulent Practices in the Cosmetic companies

Blockchain, when used as part of end-to-end solutions such as Authena Shield, can effectively be used to prevent counterfeiting and boost the visibility and traceability of products at each stage of the supply chain. Indeed, blockchain infrastructures allow manufacturers to record data about each item and the transactions it is subjected to in a way that is both safe and immutable. These transactions can then be delivered to consumers through user-friendly interfaces, thus boosting brand trust and reputation.

Verifying the Origin of Cosmetics Through Traceability and Transparency

As consumer demand continues to increase, products and items move through the supply chain at an unprecedented speed, which makes it more likely for products to fall victim to bad actors. Because of this, it has never been more important for manufacturers to adopt solutions that allow them to track and trace products through the supply chain in real life, such as Authan L1VE^TM.

These solutions utilize a combination of technologies such as AI, blockchain, and miniaturized rechargeable geolocators to track products in real life and immediately identify diversion, illegal opening, and refilling attempts.

Preventing Counterfeit Cosmetics Through Advanced Technology and Collaboration

Another way to boost supply chain security and support the protection of cosmetics on their journey to the consumer is to implement a digital-twinning system, such as the one employed by Authena M3TA^TM.

These advanced technologies, through an IoT device like an NFC chip applied to the product, associate an NFT or digital twin to each physical product. This string of code exists in the metaverse, making it far easier to track and trace than the underlying physical item they are attached to. In sprawling supply chain infrastructures, these solutions allow manufacturers to boost product visibility and supply chain transparency.

How To Identify Fake Cosmetics

Undeniably, manufacturers and supply chain managers are responsible for introducing product authentication technologies to protect themselves and consumers. Nonetheless, it has never been more important for buyers to make more conscious decisions and understand how to spot counterfeit makeup and cosmetics.

Some telltale signs that you are buying fake cosmetics include:

• Uneven fill levels
• Discolored packaging
• Logo differences
• Misspelling
• Missing information
• Different prints or forms
• Broken seals
• Suspicious damages, holes, and tears

Work With an Authentication Expert To Protect the Authenticity of Cosmetics and Fragrances

Protecting the authenticity of cosmetics and fragrances has been made a lot easier by new technologies. Work with a product authentication expert to safeguard the health of your consumers and prevent financial losses within your business. Get in touch today or request a demo to get started.