The cost of fake reviews and counterfeits
The harsh reality is that the products may well be counterfeit. This means customers have not only wasted hard-earned money on a fake product, they could also be risking their health.
If you need to get a hook on why people should be concerned about fake health and beauty products, a good place to start is the Netflix documentary ‘Broken: Make-Up Mayhem’.
In the show, police investigators and doctors list the heavy metals and carcinogens they have found counterfeiters use to create cheap copies of expensive ingredients. At one level, these cause skin diseases, such as dermatitis, impetigo and pustules. At the other extreme, heavy metals can cause fertility issues and lead to miscarriages. One interviewee revealed how a counterfeit Kylie lipstick got its shiny appearance from superglue which stuck her lips together.
COVID-19 exacerbates the problem
Covid-19 is raising the stakes, considerably. Legitimate businesses and industry experts know that regardless of what is happening to the economy, consumers still want to feel good about themselves. When official outlets they trust run out of stock, as global supply chains come unstuck, even savvy consumers can be tempted to check out online stores they may not totally trust.
Wellness and beauty industry influencer and ITV This Morning guest presenter, Gina Akers, has warned of the dangers of counterfeit products on BBC’s ‘Fake Britain’ television show. She believes many consumers, especially young people, want to look like their favorite celebrity, but cannot afford the high-end prices required. When you add reputable stores running out of stock, you have a counterfeiter’s dream scenario.
“The big issue is the celebrity influencers have their own lines of cosmetics which are high end and are prone to running out of stock, particularly with the supply problems around coronavirus,” she says.
“Young people wanting to look like these celebrities are sorely tempted to get something cheaper from somewhere online that claims to have stock. But they’re often fake and, even worse, they have been made in unsanitary conditions. My advice is that if it’s too good to be true, it probably is. Always buy from a reputable store.”
Market overview: spending is up, so is waste
The coronavirus pandemic has prompted a significant leap in spending in the health and beauty markets. According to our research, 59% of US consumers and 55% of UK consumers say they are spending more on health products due to the coronavirus crisis.
Around a quarter of survey respondents in both markets (26% in the US and 25% in the UK) reveal they are spending more on beauty. As seen in Figure 1, almost half of those consumers spending more on beauty across both markets suggest the extra spending is rooted in wanting to treat themselves (45% in the US and 51% in the UK).
In unprecedented times, both American and British consumers (42% and 40%, respectively) are spending more because they fear that stocks could run out if they do not make a pre-emptive purchase and there is clearly a desire under lockdown to stay healthy and feel good about oneself through a treat purchase.
Consumers are also spending more because salons are closed (45% in the US and 35% in the UK).
In the health category, both markets are clearly showing the impact of the coronavirus pandemic and subsequent lockdowns. The most popular products so far this year have been hand sanitizer and soap, with pain relief, vitamin supplements, and prescription and over-the-counter medicines following closely behind (Figure 2).
A third of consumers in the UK and around two in five in the US had already bought plastic gloves and face masks when our survey was carried out in April. This is a new market for both countries which have no tradition of wearing face coverings in public, unlike some parts of Asia. This category will continue to grow as lockdown measures are relaxed, the use of face masks becomes increasingly recommended or enforced, and anxious members of the public return to busy public areas, particularly on public transport.
In beauty, hair and skin care are the most popular categories for spending so far this year in both the US and the UK, with bathing accessories, foot, hand and nail care, fragrances and makeup not far behind (Figure 3).
The closure of retail outlets has led to an increase in online sales for health and beauty products
According to Meghan Stabler, VP of Global Product Marketing and Communications at ecommerce platform BigCommerce, ecommerce spending has increased significantly in 2020 as consumers are forced to rely on digital channels during lockdown.
She said: “Whether specific to health and beauty, or looking broadly across industries, we’ve seen surges in ecommerce since the start of mass shelter-in-place guidance began in March. Consumer spending online has grown significantly year over year, with some recent days even topping sales numbers from Cyber Week 2019.”
“Though we expect YoY increases to remain strong for the foreseeable future – particularly in categories deemed essential like health and beauty – looking at week-over-week trends shows more consistency in sales numbers, indicating that consumers are finding their ‘new normal’ and pandemic panic-buying may be levelling out. We’ll continue to see slight shifts in consumer behavior alongside public health guidance, though one thing has been made crystal clear: ecommerce has cemented its role as a modern-day shopping staple, and will likely serve as a long-term foundation for the way customers interact with brands across channels.”
The picture that emerges in both the US and the UK is of consumers significantly increasing their online spending on health and beauty products. This is attributable to anxiety surrounding the coronavirus outbreak. Anxious consumers reveal they want to secure favored items as shops are temporarily shut and online suppliers run the risk of running out of stock. As ever in the health and beauty sector, the motivation of a treat purchase is just as important.
The impact of fake reviews and misinformation
When customers are concerned about trusted online sources running out of stock, there's a high probability they will look to new sources — for both new product suppliers and advice from fellow shoppers.
A third (33%) of American and 29% of British consumers reveal they are more cautious about the products they purchase because of online misinformation relating to health and beauty products (Figure 4). This can include fake or inaccurate reviews, spurious or exaggerated claims about a product’s efficacy and lies about its contents.
Just over half of consumers in both the US and UK (59% and 55%, respectively) feel confident they have not suffered from misinformation, but a further 12% in each country say they are ‘not sure’. This reflects the fact that consumers do not always know with certainty if they have received poor advice.
Trust is always a major issue in any health or beauty purchase because, more than any other decision, there is a real risk of not getting the desired result and even accidentally inflicting harm by ingesting a toxic substance or applying it to the skin.
Fake reviews are an everyday occurrence and Ed Saper, Director at Pai Skincare, believes far more should be done to punish brands who engage in what is called ‘astroturfing’. This is where a company’s own staff or third parties are encouraged to post positive reviews for their products and sometimes negative reviews for competitors.
“When a major brand got caught ‘astroturfing’ recently, the view we heard back from the industry was that it was bad but everyone’s at it,” he says.
“Even when someone big is caught, they don’t suffer. We need big fines to ensure the public knows they are reading authentic reviews because it’s the consumer who suffers from being defrauded and honest companies who risk being squeezed out. It’s against our company policy for a member of staff to review our products. If they talk about us online, they have to be clear that they work for us.”
But aren’t fake reviews plainly obvious? According to Thomas Vermeulen, Head of Fraud Investigations at Trustpilot, spotting dishonest reviews that don’t represent a genuine experience and deliberately attempt to manipulate consumer perceptions isn’t as easy as it sounds.
“One isolated review doesn’t tell much — it’s more about finding patterns and anomalies,” he says. “With that in mind, you should look out for more than one red flag within the reviews. When in doubt, compare reviews with other sources of information and don’t discount common sense — if it seems too good to be true, often it is.”
He also suggests the following things to look out for.
Take note of the spread of scores within the ratings and the span of time in which the reviews were left. An honest company is likely to have both positive and negative reviews in the mix, and if all reviews were posted in a short period of time they might not provide a genuine representation of the business.
If a company only has five-star reviews, look at the total number of reviews a company has and their recency to make sure you harness the wisdom of the crowd and not just a select group.
Within those reviews, are you able to identify patterns or recurring structures? If the reviewer mentions the name of the business a number of times, or if it reads more like marketing collateral than a consumer experience, those could be red flags.
Are the reviews invited or left organically? If all positive reviews are invited and the negative reviews left organically, this might suggest a biased invitation process.
These are just a few ways to identify dishonest reviews. Lastly, Vermeulen recommends evaluating the company in question’s website and overall presence as a brand outside of reviews. “Reviews are just one piece of the puzzle when it comes to a company’s trustworthiness,” he says.
Consumers place trust in reviews
With only half of consumers feeling confident they have not been duped by online misinformation around health and beauty products, whom can the market look towards for sage advice? Whom can the public trust?
It turns out consumers are digitally savvy enough to know that advertising and information shared through social media and messaging apps aren’t always to be taken at face value. Depending on each channel and the market involved, these information sources are only highly trusted by between 10% to 14% of the public (Figure 5).
Conversely, customer and expert ratings and reviews are the preferred sources for a significant proportion of consumers despite the issue of fake reviews in the marketplace. In the US, these are assigned the same level of ‘high’ trust (41%), whether they come from consumers or from experts. The same sources of information are the most trusted in the UK. Britons are slightly more likely to trust experts over fellow consumers (35% versus 29%).
Interestingly, Figure 5 also shows that nearly twice as many consumers in both markets assign a ‘high’ level of trust to consumer and expert reviews as to news articles.
Perhaps even more telling for brands that are built around famous people or rely heavily on them for promotional activities, celebrity influencers are the least trusted channel for information. Digitally savvy consumers probably realize that the rich and famous have endorsement contracts in place and there is a risk their advice isn’t impartial and is limited to the brands they have a financial arrangement with. Such posts will typically feature the #ad (or similar) hashtag.
Both US and UK consumers are significantly more likely (four and three times, respectively), to assign a high level of trust to a rating from a fellow shopper than they are to a celebrity’s words of wisdom.
The clear trust-related takeaways are:
The public places a significantly higher level of trust in ratings and reviews than in news articles and retailer websites.
Retailer websites are trusted only slightly more than advertising. Consumers clearly draw a comparison between advertising and skilled copywriting on a slick website.
Advertising is only trusted ‘highly’ by around the same proportion of those who trust information shared on social media and messaging apps.
Celebrity influencers have the lowest level of trust among consumers – two-thirds (67% in the US and 65% in the UK) describe their level of trust in this source of information as ‘low’.
How can retailers build trust?
As seen in the previous section, the promotional copy retailers have spent a great deal of effort perfecting is only trusted a little more than advertising. Customers are around twice as likely to believe the word of a fellow shopper or expert reviewer than they are the slick words and beautiful photographs on a retailer’s site.
This means reputable retailers need to find a way to show their credentials and prove to the public they are trustworthy and that their products are authentic and work in the way described. Showcasing customer approval stands out as the most effective way to achieve ‘social proof’ authentically. According to Daniel Durose, Brand Marketing Manager at male grooming business ManCave, the key is to talk about the authenticity of the brand as well as be seen to actively embrace customer reviews.
On the company’s site, the pictures show models and the products in outdoor settings to underline the cruelty-free, sustainably resourced message, backed up with certification from the appropriate bodies, such as Cruelty Free International. However, as Durose points out, people expect a website to convey what a brand wants to show about itself. Where companies can go much further is encouraging reviews and, even more importantly, engaging with them.
“Reviews are essential for a retailer to show new customers they’re trustworthy,” he says. “Trustpilot is the Holy Grail of trust for us but we can’t just rely on good ratings and hide away from occasional unfavorable comments. We want to resolve any issues so we always respond to people and do what we can to help. We find people react really well when they see you take the time to engage with people and resolve issues rather than hide away. It’s a great way of showing you listen and care.”
Tim Peckover, Content Marketing Manager at brand loyalty business Smile.io, agrees. In his experience, the power of customer testimonials lies not just in what they say about a company’s products, but also the brand itself.
“Reviews are powerful for health and beauty brands because of the social proof they attach not just to the brand, but to the quality of the products as well,” he says. “In today’s ecommerce world, health and beauty shoppers don’t just look for a fun and engaging brand, they also want products that are going to give them the results they want. Shoppers are looking for health and beauty brands that will become their go-to, and customer reviews show them how loyal other customers already are, and help turn potential shoppers into long-term brand advocates.”
Counting the cost of fake reviews
Reviews can represent a two-edged sword. On the one hand, as our research shows, they are the most trusted way for consumers to find out which goods experts and fellow shoppers rate highly.
However, if review systems are not properly overseen, they can provide a means through which an online business can try to appear more popular than it really is. Fake reviews are such a problem that nearly half (47%) of US consumers reveal they have been duped into wasting money on a health or beauty purchase by an inaccurate or fraudulent review (Figure 6).
Our research shows that the average American health and beauty shopper has wasted $39.6 in the past year – 9% have lost more than $100 over the same period.
This equates to 3.7% of their total spending on health and beauty, an industry worth $90bn in the US. That means a staggering $3.3bn is wasted every year due to fake reviews. That breaks down to $275m a month, or $63.5m a week or $9m every day.
In the UK, more than a third of consumers (37%) have been duped into buying a product on the basis of inaccurate or fake reviews. The average shopper has wasted £19.7 in the past year alone (Figure 7).
This accounts for 3.3% of their spending on health and beauty products, which is a £9.9bn market in the UK. This means fake reviews lead to £327m of wasted expenditure each year, equivalent to £27m per month, £6.3m per week or just under a million pounds (£895,890) every day.
For Rebecca Hopkins, Founder of skincare brand Balance Me, fake reviews are a common way for unscrupulous online retailers to try to hoodwink the public.
“We find the occasional bad review on our site and third-party sites from purported customers that are difficult to verify and trace and we’re almost certain we didn’t actually sell them anything,” she says.
“When we investigate further we often find they can’t prove they’re a customer, even though we always offer to put things right. On third-party sites, such as Amazon, we can often see that they have left similar poor reviews on several other brands and then left a glowing review for a rival, often for a lesser known, non-high street brand. I suspect that there are individuals or businesses out there that provide this kind of service to less scrupulous brands but they are very hard to pin down, yet their comments can be quite harmful in the customer's eyes.”
Hopkins also highlights the issue of non-authorized ecommerce businesses claiming to sell the company’s stock: “We also have people using our brand name as a storefront in other markets, usually on third-party platforms. They seem to be able to get hold of some of our stock through the grey market and they then lift photos from our website. It’s very hard to police but we do what we reasonably can to stop it. It seems to be particularly prevalent where we are not actively operating in a specific market, such as America. We can’t be sure it’s definitely our products or not, we don’t know how old they are and, either way, consumers may not be buying from whom they think they are, and they won’t be getting our level of customer service or quality guarantee.”
This issue is also of particular concern to Sarah Brown, Founder of Pai Skincare. She reveals the company spends hundreds of thousands of pounds protecting its formulas and the look and feel of its products. However, only a global giant, she believes, can afford to protect themselves in every market, regardless of how many sales they make in it.
She believes some businesses are ‘passing off’ counterfeit goods as original. The look and feel of their products and the packaging are copied, but the natural ingredients are not.
“We have spent a dozen years building up a reputation for certified, natural products which are kind on skin,” she says.
“We run our own manufacturing and control our own supply chain to make sure every ingredient is stored and handled properly. Someone passing off our products will not do this and so the end result could well include skin irritants which are usually added to make the product last longer. It’s annoying. It’s damaging to our brand, but it also means people buying the product won’t get what they think they’re paying for and there’s a good chance it will cause skin irritation.”
Counting the cost of counterfeits
Wasting money is bad enough but the even more alarming impact of fake reviews for consumers is the purchase of counterfeit or poor-quality goods which damage their health. This risk is heightened when salons and stores are closed and people cannot talk to a professional for advice.
Nearly two in three (64%) American consumers have lost money in the past year by buying fake or poor-quality health and beauty goods (Figure 8). The average loss in the past year has been $43.9.
In the UK, there is a similar picture, with nearly half of consumers (48%) revealing they have bought poor-quality or fake beauty and health products (Figure 9). The average loss was £25.2 in the past year.
It is here that campaigners are particularly worried. Losing money to a counterfeit or adulterated product is one thing, but consumers are risking far more than cash. As Janet Nudelman, Director of the Campaign for Safe Cosmetics, reveals, there are very real risks of people inadvertently jeopardizing their health with these bad purchases.
“We regularly hear horror stories about what happens when health and beauty products are counterfeited or tampered with using dangerous chemicals,” she says. “There was a recent case of a woman in California ending up in a coma because the skin lightening cream she had bought contained mercury."
“This is only going to be made worse as the lockdown and recession lead to more stores closing and more people shopping online and buying products they’re not familiar with that could be counterfeit, especially because they can’t see or feel the packaging to get an idea of whether the product is real or not.”
Conclusion: social distancing and recession raise the stakes
Covid-19 did not create fake reviews and misinformation that are employed by unscrupulous ecommerce operators to sell counterfeit health and beauty products. Nor is it the sole reason why people waste money and risk their health by using goods of unknown origin.
However, industry experts agree that the lockdown and inevitable global recession have, and will, exacerbate the problem. The unprecedented global pandemic brings with it lower wages and the real risk of reputable retailers regularly running out of stock. This is happening because international supply chains are already strained and some manufacturers are heeding the call to switch production to hygiene products to support communities emerging from lockdown.
The risk goes beyond supply chains being stretched, of course. Consumers are having to make important purchasing decisions without any access to trusted professionals running boutiques. Even when salons reopen, capacity is reduced by social distancing requirements, meaning access to advice is not as available as before.
As Robert Myers, General Manager for Memberships at the Professional Beauty Association, explains, the public has to be vigilant when buying products without the advice of a trusted professional.
“Consumers must be careful about where they purchase their professional salon products,” he cautions.
“Counterfeit products, phishing campaigns, defective inventory and other deceptive business practices are ever-present and a risk when going outside authorized channels. False claims have been an ever-present issue and we recommend seeking the advice of a licensed professional to select the best products and solutions.”
So, who can the public turn to for advice if stores and boutiques are moving from closure to social distancing measures which restrict the number of people a professional can assist? As international supply chain challenges lead to legitimate online and physical retailers running out of stock, customers run the risk of being conned. Misinformation about a product’s authenticity and efficacy are rife, so too are fake reviews.
The result? Nearly one in two US consumers and just over one in three UK consumers feel they have lost money on the basis of fake reviews and misinformation.
The solution? As our research shows it looks like the public already knows where it can go for advice – reviews from experts and fellow consumers. The digital savvy public understands how ecommerce and online marketing works and it has placed its trust firmly in expert advice and social proof. This means reviews are not only clearly the most trusted source of information, they’re nearly twice as highly trusted as the news. Retailer websites only have trust levels comparable to advertising. The same applies to social media.
In fact, the public is passing on some social media insight here that an industry so heavily reliant on celebrity endorsement really needs to listen to. Two in three consumers do not trust celebrity influencers highly. They are nearly four times more likely to trust one another, than a superstar. Clearly, the public has spoken. Pop stars and actors are not the go-to source to differentiate between trustworthy brands and those relying on fake reviews and misinformation to sell counterfeit goods.
The public is looking beyond the hype and glamour of slick advertising, beautiful copywriting and well-known faces. It’s even looking beyond the words of praise laid out by journalists in news organisations.
Our research is clear. Consumers are placing their trust in one another.
London Research was commissioned by Trustpilot to carry out surveys of 1,000 nationally representative consumers in the US and UK in April 2020, while both countries were under lockdown during the coronavirus crisis. The research was conducted using a Toluna research panel. London Research also carried out a series of interviews for this report.
London Research and Trustpilot would like to thank the following people for their help in compiling this report:
- Gina Akers, TV and radio presenter, and wellness and beauty expert
- Sarah Brown, Founder, Pai Skincare
- Daniel Durose, Brand Marketing Manager, ManCave
- Rebecca Hopkins, Founder, Balance Me
- Robert Myers, General Manager for Memberships, Professional Beauty Association
- Janet Nudelman, Director, Campaign for Safe Cosmetics
- Tim Peckover, Content Marketing Manager, Smile.io
- Ed Saper, Director at Pai Skincare
- Meghan Stabler, VP of Global Product Marketing and Communications, BigCommerce
- Thomas Vermeulen, Head of Fraud Investigations, Trustpilot