Broken (2019) s01e01 Episode Script

Makeup Mayhem

[suspenseful music plays.]
Hey, Anne? - [woman.]
I can just do my make up there.
- Influencer's coming at 11.
- So we need to get going either way.
- Dallas, do we have two cameras for If I do a tutorial? - [Dallas.]
- Okay.
The business of beauty is having a moment.
[action music plays.]
Take that brush, go in with the blush.
I'm going to use the [woman.]
The beauty industry is absolutely exploding right now.
It's valued at 445 billion dollars, and it's going to reach 800 billion dollars in just the next five years.
All against the backdrop of the social media revolution.
So pretty.
I'm obsessed.
My personal social media have about three million followers.
But behind those high gloss lips and smoky eyes, there's a less glamorous side.
[suspenseful music plays.]
You got Too Faced.
You got some Kylie Jenner.
Counterfeit cosmetics.
- [interviewer.]
Do you think this is real? - Oh, absolutely not.
Absolutely not.
A hundred percent it's not.
This is just a portion of what we have seized.
Most of the fake stuff comes from China.
A majority of counterfeit cosmetics are made actually in clandestine labs, and some of these labs are completely fifthly.
Counterfeit cosmetics have tested positive for known carcinogens.
- [man.]
Levels of animal feces.
- [doctor.]
Rat droppings.
Horse urine was one that really stuck out to me.
Counterfeit cosmetics are big business.
You can see everything here is for export.
Everybody's packing.
Everybody's packing.
[man in Chinese.]
Leave now! You can't shoot here.
Okay, okay, if you say stop.
Ok okay, we have to go.
And most of it is sold online.
Major platforms such as Amazon, they receive a commission from every sale that happens.
- That is their business model.
- It's like the Wild Wild West online.
I mean, the problem's just out of control.
And the consequences can be disastrous.
If you've ever gotten Super Glue on your fingers and they've gotten stuck, that's how it feels.
I was, like, tugging at my lips, trying to pull them apart.
I was freaking out.
I was starting to panic.
[theme song playing.]
[bright music playing.]
People have been using makeup, things to darken their eyes or brighten their cheeks, for as long as recorded history.
It's pretty universal that we've all, through all of time, wanted to look a little bit better.
But now, some people are capitalizing on this desire by selling fake versions of popular cosmetics products.
Everybody just wants the nicest, newest thing for the cheapest price possible.
You can buy whatever counterfeit cosmetics you want.
It's become the latest craze.
It's really hard to blame the counterfeit cosmetic epidemic on just one thing.
There's a lot of things at play that have created this atmosphere for counterfeiting and for this frantic desire for the latest thing in beauty.
To understand why counterfeit cosmetics have become such a major issue, we need to look at how the beauty industry itself has gotten a complete makeover in the last few years.
For a long time, the business was dominated by a handful of big players.
The big makeup conglomerates, like Estee Lauder, L'Oreal, Coty, P&G, tend to have a lot of money.
They tend to have a lot of power.
They can market, they have access to celebrities for endorsements.
But in the last decade, there's been an uproar over certain ingredients, preservatives called parabens, asbestos-contaminated talc, sometimes used in eye shadow, and a pigment called carbon black, to mention just a few.
The consumers are becoming a lot savvier about who owns what, and what's going into products, and what could potentially be dangerous, and who's testing on animals.
And that's given some of these big makeup conglomerates some healthy competition.
[machinery running.]
How we doing, guys? - [man.]
Quality's good? - [employee.]
Yeah, yeah? The name of the color is "Heavenly.
" [narrator.]
It was this distrust in big makeup that opened the door to a transformation: the rise of the indie brands.
We really believed that there was an opportunity to do beauty better, and we wanted to give it a shot.
Siblings Laura and John Nelson founded ColourPop in California in 2014.
- [John.]
How we doing, Jose? - [Jose.]
- [John.]
This is the new machine? - [Jose.]
Yes, sir.
Hopefully with this, we'll be able to fix all those bubbles.
We produce everything here in the US.
And so we have our campus here in Southern California.
It's good.
What shade is this? "Over It," okay.
We come up with the formulas here.
It means that we do all the production here the assembly, and the direct fulfillment.
A lot of indie brands have basically sprung out of nothing and created really amazing campaigns and really amazing products.
They pride themselves for being "different" compared to big brands.
The difference is transparency.
They are cruelty-free, meaning that they don't test on animals.
Some of them are also vegan or organic.
ColourPop and others like them are listening, like never before, to what their young consumers want.
Sometimes the younger, savvier beauty enthusiasts are looking for a different relationship with a brand than perhaps a beauty consumer was years ago.
[television narrator.]
For the lowdown on makeup, the girls are taken by Lucy Clayton to the salon of a famous makeup organization.
Here the company's expert, Mrs.
Riddle, has the task of making sure that the girls go out looking better than when they came in.
Nowadays, the customer is the expert, using social media to send a constant stream of valuable information back to cosmetics companies.
Because we're able to engage with our customers, we're able to ask the questions, we're able to solicit the feedback.
They're truly a part of the formula, the development process at every step of the way.
This customer feedback goes straight to the color chemist, who draws from hundreds of pigments and ingredients in the lab to create new formulas.
And we've designed and developed all these production lines ourselves, which allows us to be able to run multiple shades all at one time and then be able to respond as customers are buying this online.
They can take an idea, maybe something that they're getting feedback-wise online, to an actual product that's able to be sold in five days.
Then you have the actual lipstick bullet.
So within this line, you've got the different steps that ultimately result in a finished product that we can ship out.
ColourPop sells a small portion of its products in traditional stores, but most are sold online through colourpop.
From a sustainability point of view, it's not like we have all these pallets in warehouses of inventory.
Instead, we're being able to produce real-time based on real customer demand, which allows us to keep our inventory levels low and keep our costs lower, which allows us to be able to offer it at such affordable pricing.
They're so fast that they're really changing the way that beauty is manufactured.
They're also changing the way beauty is marketed.
Advertising in traditional media, like print or TV, I mean, that would never have been possible for an indie brand.
But now some of these indie brands, they don't even need to jump over those hurdles.
They can just go right to social media, and they can try to get their message about their product out there as well as communicating directly with their consumers.
[uplifting music plays.]
And at the leading edge of this social media beauty boom - are the influencers.
- [Katheleen.]
Hey, guys! So today's video is going to be a two looks using one palette.
What's up, everyone? Welcome back to my channel.
Oh, no! Hello.
What is that? [Lexy.]
A beauty influencer is an individual who creates content for YouTube or Instagram or a blog, even, or a website.
They're a bit of an expert on makeup, makeup application, and the coolest products and how to use them.
Now, I wanna dive in quickly with the Anastasia Moonchild Glow Kit and just give my cheeks an extra little, like, va-va-voom, if you will.
One of the great things that have come out of influencer culture is this idea of inclusivity.
Um, makeup isn't just for girls anymore.
It's for everyone.
It's for expression.
It's for creativity.
All you really need is a camera, some lights.
That's how most of the beauty influencers got started.
It was just casually sitting in your room with a camera, sharing what you love about makeup.
- Bye.
- [music cuts out.]
Makeup for me was a positive distraction.
[melancholic guitar music plays.]
I've been a chubby girl my whole life.
But when I would do this beautiful makeup look, I felt creative and artistic, and I felt confident and positive.
And when I would go outside, people weren't talking about my weight anymore.
They were saying, "I love your beautiful eye shadow look.
How did you do it?" - Hi.
- Hey! [Marlena.]
It's a transforming quality.
It can make you live almost a fantasy where I'm not just Marlena today.
I'm this glamorous rock star, or maybe I'm a retro girl with a nice red lip.
So, Marlena, you wanna shoot this way? [Marlena.]
Yeah, just like it's set up.
The camera's there.
We're in LA, we're in West Hollywood, filming videos today for my followers and some educational tips regarding makeup.
Marlena, can you look at your mirror? - Yeah.
- [Dallas.]
Yeah, it's that light.
Check it out.
Okay, and - The sound recorder's going too? - [Dallas.]
It's going.
All right, makeup geeks, I have a tutorial for all of you today that's very Fall inspired.
This is my favorite time of year to do tutorials because we all seem to love some warm [narrator.]
Marlena Stell was part of the first wave of beauty influencers when she started her YouTube channel back in 2008.
[rock music plays.]
So my first video, I look back at it now and it's so embarrassing.
It was such poor quality, but it was at that time just what you did.
Let me zoom out so you can see what's on the rest of my face.
Whoops! Sorry.
Today, she's a beauty guru with over a million followers on YouTube.
I know it looks crazy right now.
Give me a second.
I'm gonna put it under here.
Take any sort of just buffer brush.
You're gonna buff it up like this.
If someone's watching my channel, they're looking at me like, "Oh, this is someone I'd love to hang out with.
" [Marlena.]
There's kind of a personal connection where you literally think this person is your friend, and you connect with them on a very real and raw level.
Now it's time for the eyes.
Now I know, guys, my brows are a little bit cray-cray right now.
They're dark.
Give me a minute.
Let me put the eye makeup on.
The trick to blending [narrator.]
Brands quickly saw the huge potential of influencers.
The value of an influencer to a brand is simply a new way to market.
Click on the comments below.
Don't forget to subscribe to my channel.
Using an influencer can increase how much product is sold by even up to two times as much.
It's really about engaging with our customers and our fans and our followers, um, so that we're having a dialogue.
And there's really where we have found the power of social media in these relationships.
Those relationships can also be incredibly lucrative for influencers.
You can make money by just the views and the ad revenue on a YouTube channel, for example.
You can strike deals with brands to create sponsored content uh, where you talk about the product, you review the product, you use it in one of your tutorials.
Like, straight on and the side shot could be close in, so you can see the eyes.
- Ready? - [Marlena.]
It's a really really good time to be an entrepreneur in beauty.
The beauty industry has absolutely exploded.
The successful influencers, like Jeffree Starr, Kylie Jenner, Huda Kattan, and Marlena, seized the opportunity that came with their huge online followings and launched their own brands.
I decided to start my own brand in about 2011.
I've never had to pay once for traditional marketing.
We've honestly just advertised through me doing videos and then later on through other people using the products online.
But it's all been social media based.
In 2017, we earned about 22 million a year.
It's absolutely surreal.
[uplifting instrumental music plays.]
It's this new ecosystem, the cool indie brands and popular influencers, that turned beauty products into must-haves on social media almost overnight.
Seeing those name brands all over your feed, it gets stuck in your head.
You wanna look that way.
You see that look and you think “That's what I have to use.
” [narrator.]
It fuels a demand that's intense and immediate.
So if you can buy something that says Kylie Lip Kit, it's a status point.
It says something about you.
It says that you can afford it, and you take your look seriously, and you're using what everybody else does.
And some brands will actually play hard to get with their customers, using a technique known as scarcity marketing.
We're living in what we call, like, a sell-out culture.
A lot of brands are using this scarcity tactic where they only produce a small amount, even though the demand is maybe a little bit larger, to try to drum up excitement for the brand in a very crowded marketplace.
And so when these sought-after lip kits and eye shadow palettes sell out, the fear of missing out leads people to counterfeits.
I had that awkward phase in high school where I didn't like how I looked.
Like a lot of teenagers, Khue Nong was inspired by the latest makeup trends online.
I found out about the lip kits on Instagram.
I was looking specifically for the Kylie brand because my friends and all those influencers online said such good things about it.
And I really wanted some.
And I kept waiting maybe for a sale, but they kept selling out.
As soon as she would release some, they would just sell out.
[suspenseful music plays.]
So Khue started looking for the coveted lip kits on other websites.
So I bought a Kylie Lip Kit on eBay.
I think I paid, like, 15, 20 bucks for it.
I really felt that I got a good deal.
I was really excited.
I put it on as soon [chuckling.]
as I got it.
I put it on my lips and after a couple minutes, I couldn't separate my lips.
Khue had unknowingly bought a counterfeit Kylie Lip Kit, and it had sealed her lips shut.
I was, like, tugging at my lips, trying to pull them apart and it hurt.
It really hurt.
My lips were burning.
I was freaking out.
I was starting to panic.
And my first instinct was: Google.
I need to find out what's going on.
[suspenseful music continues.]
First few articles talked about people getting fake Kylie Lip Kits.
About how to get that lip gloss consistency, people were putting Super Glue into their products.
I mean, Super Glue.
I was trying not to have a full-on panic attack.
I had 100% acetone nail polish remover.
I just kept rubbing that into my lips, scrubbing as hard as I could.
I wanted it off.
That kind of worked, but it started to hurt.
So I got butter and also rubbed that into my lips, and that eventually loosened it and got it off.
Khue isn't alone.
More and more people around the world have been reporting all kinds of makeup mishaps.
Looks pretty busy.
So we have, um, the Vbeam set up and ready to go.
- [woman.]
- [doctor.]
Okay, wonderful.
I would say around five years ago, I started to notice sort of an uptick in the incidence of certain skin issues.
- [Dr.
How are you? - [patient.]
- [Dr.
So good to see you again.
- You as well.
I was seeing more of a specific type of skin rash called contact dermatitis, especially around the eyelid area.
I've also seen an increase in skin infections in adults, so bacterial infections.
Things like styes and even pink eye have become more common in my practice.
- I'll examine this one up close.
- We talked about this one before.
Yes, we have.
Okay, great.
We were playing detective, basically.
They would bring in the products they were using, and we were combing through these products to see, you know, what could be causing a reaction.
That's when sometimes the patient would notice it, sometimes I would notice it, there was something off about the product.
Sometimes the consistency or the texture is just slightly off.
Sometimes it doesn't have the smell that you're used to experiencing with the authentic product.
That's what first alerted me that these could be actually counterfeit products.
Initially the shoddy packaging of the knock offs was a giveaway.
But as the years went on, the counterfeit products have become more and more authentic looking.
It's very challenging oftentimes to tell the difference now between a counterfeit and an authentic product.
But ultimately, it doesn't matter how much a fake product looks like the real thing, it's what's actually in the makeup that counts.
If you're baking a pie, and the recipe calls for, say, a pinch of cinnamon or a pinch of salt and then you somehow dump in an entire container, that pie's not gonna taste the same.
So a cosmetic chemist is there to ensure that we're using the proper amounts.
My name is Luisa Fanzani.
I'm a cosmetic chemist.
I work with companies or individuals that want to start a cosmetic line but don't have a chemistry background.
That's why they come to me.
And I make for them, like, a custom formulation.
So the lipstick that I'm gonna make today has a set of basic ingredients.
Most of these formulas are surprisingly simple.
The main ingredient is usually some kind of solvent.
In this case, Isododecane.
We say the solvent is like a carrier for all other ingredients.
Another key ingredient in liquid lipstick is silicone.
Silicone powders grant waterproof properties and also increase the the lasting power of the lipstick.
There are also thickeners, like hectorite and beeswax, and emollients to moisturize.
I'm just gonna add the red.
And finally, the pigments to add color.
And so you can mix different pigment colors until you achieve the shade you're looking for.
In the US, there's very little regulation of cosmetics ingredients.
Authentic brands have an incentive to self-regulate by testing for safety and quality because their reputations are at stake.
But for counterfeiters, it's all about quick cash.
They take the ingredients list and they actually try to figure out the percentage of each ingredient.
And then they replace some of the expensive ingredients with some other that are cheaper.
For example, paraffin or mineral oil do much the same job as Isododecane at a fraction of the price.
But there are downsides.
Isododecane doesn't have any smell, while paraffin smells very bad.
Isododecane is very lightweight, while mineral oil, we know that it's heavy and sticky.
But when counterfeiters cut corners on ingredients to save money, the consequences reach far beyond texture and smell.
Counterfeit cosmetics have tested positive for known carcinogens, like arsenic and beryllium.
They've tested positive for heavy metals, things like lead and mercury.
Heavy metals can act as colorants.
Sometimes just adding a heavy metal can easily deliver that vibrant color, and it's much cheaper than trying to coax that beautiful, rich color out of a safer, more natural product.
But in high quantities, some metals, like lead, can be very dangerous.
The brain is exquisitely sensitive to lead.
So it can actually cause, you know, issues with memory.
It can cause headaches.
It can cause fertility issues and miscarriages.
And that's really frightening.
And it's not just heavy metals we should be worried about.
Counterfeit cosmetics can contain a whole array of harmful bacteria that make their way into the product through unsanitary production.
They've actually tested positive for urine and fecal matter.
Specifically, staph has been found again and again in these counterfeit products.
It can cause impetigo.
It can cause cellulitis.
It can cause boils.
It can cause pustules.
It can cause pink eye.
It can cause styes, which are those painful lumps around the eyelash line.
I mean, these are not fun things you wanna be playing with.
[metal creaking.]
You can buy counterfeit cosmetics a lot of places.
At swap meets, you can buy them at mall kiosks.
If you are after a product that is very popular and it's a "culty" product, you can find a counterfeit version of it.
You got Too Faced.
You got some Kylie Jenner.
Do you think this is real? Oh, absolutely not.
A hundred percent it's not.
Detective Rick Ishitani of the LAPD started hearing about counterfeit cosmetics from the public.
We've received several complaints from consumers that they're getting these rashes, and pimples, and pink eye from cosmetics.
So one of the more important questions is, “Where did you buy this stuff from?” Then, of course, they all said Santee Alley.
This is downtown LA's famous Santee Alley, where crowds of people pass through every day on the hunt for a bargain.
Anything and everything you can find in Santee Alley.
It's notorious for the sales of counterfeit goods.
There's handbags, jeans.
Yeah, they're counterfeit, but it doesn't really harm anybody.
Our main focus is health and safety.
Of course, the most dangerous stuff is cosmetics.
I mean, these are the things that our daughters, you know, our mom, our auntie are placing on their face.
- Again Naked.
That's Urban Decay.
- [Rick.]
Urban Decay.
You've got some MAC stuff right here.
Of the 10,000 officers on the LAPD, there are only two dedicated to counterfeit crime.
Detective Ishitani is one of them.
What happened to the person that was working here? - I don't know.
- [Rick.]
Gone? [narrator.]
He partners with private investigators like Kris Buckner who is hired by the brands to go after the sellers of counterfeit goods.
We have a buy set up for Friday in West LA.
They are counterfeit.
- That's a sizable target.
- [man.]
In early 2018, Buckner and his undercovers mounted a surveillance operation in Santee Alley.
Basically what our undercovers do is they go out over several days, they pose as consumers.
They have hidden cameras on themselves.
They go through and they make purchases from these particular vendors.
Brand experts examined suspect cosmetics from 21 vendors.
All were found to be fake.
And some of the items actually contained high levels of bacteria that would pose severe health and safety concerns.
Buckner's undercover work proved that counterfeits were being sold in Santee Alley.
And so, on April 12th, 2018, the LAPD assembled a task force for a full fledged raid.
Right at the apron of the alley, do you see a cosmetic stand - on the north side sidewalk? - [through radio.]
All right, here we go.
And then at 2 p.
, 50 law enforcement officers, LAPD, federal partners from the FBI, Homeland Security, and Custom Border Protection Okay, we're coming out to 12th Street now.
simultaneously, we all went down there and we arrested everybody.
[police car toy siren.]
[camera shutter clicking.]
We recovered about 700,000 dollars worth of evidence.
And these are all seized counterfeit cosmetics.
The fake makeup sold at Santee Alley is just one part of an entire shadow economy that's having its own boom.
In fact, global trade in counterfeit products of all kinds has reached 461 billion dollars a year.
So this is our warehouse.
This is where we keep all of our seized evidence.
This whole section is one case that we did.
And it's all counterfeit handbags.
The black cellophane wrap right here you see down here, all counterfeit cigarettes.
These three pallets are counterfeit pharmaceutical drugs.
This pallet right here is counterfeit airbags.
It's incredible what these people would do to make easy money.
They'll do anything.
And the thing is people have realized that selling counterfeit goods is a much more lucrative opportunity than the sales of narcotics.
I mean, this whole thing is cosmetics.
Look, Kylie Jenner, Anastasia.
The reason why is this: there are people in society.
Maybe 10% might ingest or abuse illegal drugs, but I guarantee you 99.
9% of people out in our society love nice things, name brand things.
So the consumer demand is huge.
It's that demand which has made counterfeiting irresistible to shady entrepreneurs out to make a quick buck and to established organized crime networks.
I've been doing this over 20 years, and I can tell you that 90% of the cases that we work all have a tie to a criminal organization in one way or another.
We have the MS-13 gang, 36th Street, 18th Street who are actually supplying these counterfeit goods to these store fronts.
That's what's important.
You've got to understand what is behind the curtain of counterfeiting.
And you think to yourself, you're like, "Rick, who cares? I mean, what's the big deal?" People need to understand that this is dangerous stuff.
It is so dirty.
Definitely going to wash my hands after I touched this stuff.
Getting almost three quarters of a million dollars' worth of fake cosmetics off the streets was a big win for the LAPD.
But the impact of the raid was short-lived.
We did a huge press conference and, kid you not, the following day, we had a news reporter again being able to purchase the same cosmetics that we just confiscated.
[suspenseful music plays quietly.]
Look at this whole Look at it.
You got MAC.
You got Kylie.
And there's nobody here.
The minute we get down here, everybody knows that, okay, the police is here.
And then Dondee just found some more, just down there, all stacked up, all counterfeit cosmetics underneath there.
Street value, it's about 60-80,000 dollars right here.
There's that old saying, it's like the game of Whack-A-Mole.
Yeah, we can do an action, and multiple people are always popping up.
So at the end of day, it's property crime.
And it's not It doesn't rise to a level of, let's say, murder or robbery or burglary.
You know, the punishment isn't there.
In this case, of the 21 vendors, the LAPD arrested only six and issued cease and desist orders to the others.
So if I get busted selling counterfeit goods and I've gotta spend ten days in jail, but I made 200,000 dollars, is it worth it? Most of the counterfeiters are gonna say yes.
Seizures like this are happening all over the world,.
But these days, most counterfeit cosmetics aren't being sold in street markets, they're being sold online.
- [Kris.]
Where did we find them? - We found them on OfferUp.
- [Kris.]
Does he still - I have him on 5miles and other Ninety active postings.
All right, so When I started doing these investigations in 1995, 98% of our cases were all real world.
You'd go to a brick and mortar store and have to make a purchase.
Now I would tell you 85% of our cases are all online.
Review all the intel in here, and then let's assign it to Cyber and see if we can identify her on any other platforms.
And with the world of influencers driving demand for the hottest brands, buying them online is just one click away.
Counterfeiters are knocking off products that are cult and have a lot of clout on the online communities.
So one theory as to why this is happening so much is because of social media being really hyped up about a few products where you have people who are going online and they're buying up releases of some of these really cult products that everyone's trying to get and then they put them on the marketplace sites.
And then it becomes really difficult to know what's real and what's not.
The online shopping sites provide a legitimate platform to all kinds of sellers.
But they also give counterfeiters the perfect cover.
For people who are selling counterfeit cosmetics, marketplace sites are incredibly appealing because you can just create an account and start selling your products.
So that's like Amazon, eBay, Alibaba.
You can get them on Poshmark, on Wish.
More than half of Amazon sales, for example, happen through third party selling partners, independent vendors that sell anything you can think of.
Most users don't even know that third party sellers happen on Amazon.
They think that they're buying from Amazon themselves.
Saoud Khalifah is the founder of Fakespot, a company that tracks fake reviews online.
You can't trust anything on the internet and along with that come reviews.
In order to land at the top of a consumer search result, the third-party sellers need as many good reviews as possible.
If you're searching for, let's say, lipstick.
Amazon's algorithm will prioritize the products that have a lot of reviews.
Counterfeiters have figured out ways to game this system.
It's become so competitive.
There are companies that offer services to write fake reviews for your products.
So that kind of person, that seller that wants to sell counterfeit products, will buy fake reviews to get to that number one spot.
For its part, Amazon says it's partnering with brands to fight counterfeiting and that it will offer a refund to anyone who does buy a counterfeit on its platforms.
But according to Saoud, the major online shopping sites are still failing to sufficiently police counterfeiters because third party sellers are simply too lucrative.
I think counterfeit problems will always be there.
The marketplaces, they receive a commission from every sale that happens.
That is their business model.
So if they suddenly said, “Only brands can participate on our website,” then there's a huge chunk of revenue that has just been cut.
And their business model is kind of failing.
So it's a really really huge problem.
Everything that is happening in beauty, from indie brands to the way we're shopping online now to influencers, it's all connected.
It's sort of become the perfect storm for counterfeiting to happen.
[suspenseful keyboard music playing.]
The popular new indie brands are among the hardest hit.
Let's just pull up eBay right now.
We actually found out from our customers emailing in, saying, "Is this real? I really want this palette, I see you're sold out, but it's selling on eBay for three times the price.
What is this?" And we would investigate and see that it wasn't our product.
It was counterfeited.
The first product that was knocked off was our signature Super Shock Shadow, which is the first product that we launched the brand with.
At that point, we were notified by the Customs and Border Protection that product had actually been seized at the border.
[dramatic music plays.]
It's here at the Port of Long Beach in Southern California where many counterfeit cosmetics enter the US.
Five-point-one million containers pass through the port of Long Beach, Los Angeles, a year.
Officer Herbert Day leads a team of Customs and Border Protection officers whose job is to catch counterfeits before they hit American markets.
The container ships are offloading a container every five to six seconds.
With over 180 billion dollars' worth of goods coming through here yearly, it's impossible for the Customs officers to check everything.
- [Herbert.]
Morning, Jeffo.
- Morning.
Several things will set off red flags.
It's where it's from.
Prior information that indicates that the importer has had issues in the past.
Sometimes it's the physical appearance of the packagingwill set off red flags.
This is an arriving shipment.
Looks like it's cosmetics.
And it's been selected for exam.
[dramatic music continues.]
We'll examine, make sure that it complies with all trade regulations.
And after that, we'll make a call.
It will either be released or we'll take an adverse action, so we keep it out of commerce.
Uh, Mr.
Yie, are you available? I need some assistance, uh, conduct an inspection for us.
- Is it cosmetic? - Yes, sir.
Cargo that arrives here for importation without exam could pose a significant safety risk.
- That's a generic box.
No label on there.
- [Herbert.]
With cosmetics, it's not enough to simply identify suspect goods.
Officers need to see what they're made of to find out if they're real or fake.
Good morning.
We have some samples we pulled out of some cargo that was delivered.
Could you guys check this out for us? Sodium hydroxide.
These officers will test the cosmetics for any harmful substances.
[suspenseful music plays.]
So this is where chemistry comes into play.
And they find something that doesn't belong in a lip gloss.
We are having a 98% probability that the compound that we're seeing here, it is a plumber's product for using in construction.
We need to do further investigation in order not only to corroborate, but try to see the implication of somebody using construction clay to put on their faces.
If this lip gloss is found to be fake, it won't make its way onto the US marketplace, but many others will.
Counterfeiters improve at all times.
Once they figure out that we're stopping something that they've made, they'll change it.
They'll make it better.
So it's gotten harder over time because the tools available to the regular counterfeiter are more sophisticated.
But we're steadily improving too.
It's like a race.
It's a race between us and them.
Only one percent of those sea containers are actually physically checked.
Then look at the tens of thousands of packages that are coming through mail shipments on a daily basis.
How can Customs and Border Protection properly screen and actually examine all those things? They can't.
So even though seizures are up 25%, that's just a drop in the bucket.
To investigators like Kris Buckner, the only way to stop the flow of counterfeit cosmetics into the US is by tracing it back to the source.
China is our number one source country.
So out of the actions that we did in April, we did identify some major importers of those counterfeit goods.
But tracking those people back becomes very difficult because the information that we get, it's passed on to authorities to take further action in China.
Whether that happens or not? Sometimes does, sometimes doesn't.
That's packaged to smuggle.
My name's Ted Kavowras, and I work for a company named Panoramic Consulting.
And we do undercover intellectual property investigations out of Hong Kong.
I used to be a policeman in New York, and I retired from that work after being injured.
And I traveled around the world and I found myself in China.
And I found that there was this opportunity to to do this undercover work.
And I've been doing it about 23 years.
Over the last 40 years, China has spent billions modernizing its economy.
Today, it's the world's manufacturing powerhouse.
Its efficient factories, large work force, and low costs have also attracted cosmetics companies.
In 2017, China exported a staggering three billion dollars' worth of legitimate beauty products, including well-known brands like Anastasia Beverly Hills, Avon, and Elf.
[men chattering.]
But there's a flip side to all that success.
[dramatic music plays.]
China's the number one source country for the manufacturing of counterfeit cosmetics.
There's not even a country that's even close second.
And recently, more and more of them are funneled for export through Hong Kong.
Hong Kong's a special administrative region of China, and it's used as a conduit for some counterfeiters to ship their goods via Hong Kong because they feel products arriving from Hong Kong rather than China get less scrutiny from Customs or other authorities, or it may have more credibility as a real product.
With governments unable to handle the enormous task of tracking down the counterfeiters, the brands often end up taking matters into their own hands by hiring investigators like Ted.
There'll be a brand and they'll come to us with a problem.
Somebody is either making fake product or using their brand inappropriately or they've tried to register a brand that looks similar, and we'll go and try to get evidence that will help alleviate the problem.
[action music plays.]
And that requires some old-fashioned undercover work.
I pretend to be a big buyer and, you know, I go fishing, and who wants to play.
I don't want the small guy.
I want the factory that's supplying the market.
Well, I change my look quite often.
We flew a guy, a makeup guy, in from California, and he did some wonderful work for us.
These hair devices are actually molded to the face.
They have to be custom fitted.
That's pretty much me.
Now I just have a very different look.
To build a solid case against counterfeiters, Ted collects evidence by purchasing fake goods.
Bad guys always love cash.
So, I mean, the more we show up with, the more the better.
See, counterfeiters are greedy.
So when we show up, they're happy to sell to us.
You know, normal businessmen might be more cautious.
But these guys are bad guys, so they rush into it.
The bigger the lie, the more they believe.
I mean And it works.
It just works.
[dramatic music plays.]
Ted's work tracking down counterfeiters takes him all over mainland China.
In a successful case, Chinese authorities take Ted's evidence and prosecute the counterfeiters.
The national bird of China, the crane.
[dramatic rhythmic violin plays.]
Today, Ted is in Shenzhen, one of the largest manufacturing hubs in the world.
In Shenzhen, you feel a level of energy you don't have in other places.
I mean there's energy and commerce and product moving.
You don't see product moving like this anywhere else in the world.
So it's exciting, you feel it.
It's almost electrical.
[violin music continues.]
Along with all that commerce comes a thriving counterfeit economy.
Illegal factories, labs, and markets can pop up right next to the legit ones and then vanish at the first sign of trouble.
We're going to go look at a notorious market that's on the border between Hong Kong and China that uh gets a lot of tourist trade with businessmen coming and going.
And our client reported to us that there was some very suspicious cosmetic product they were selling.
You get nervous when you're undercover.
It's part of the game.
You learn to deal with it.
You project.
You have to be careful when you're undercover not to project.
Like, "He knows, I can tell in his eyes.
He knows.
" But they don't know.
[suspenseful music plays.]
Ted is trying to gather evidence from a particular vendor at the five-story Luo Hu Mall.
Let's say, 95% of the products are fake.
It's just known for that.
Sometimes these vendors are the best link back to the illegal factories.
And you'll see foreigners here buying as well.
[man 1.]
Okay, don't worry about it.
- [man 2.]
I have your number.
- [Ted.]
See? Foreign customer.
These are basically outlets, not selling retail but trying to meet customers like me, big customers.
So, you know, a factory will pay to have an item on the shelf.
If somebody's interested, they'll sell you one or two, but they want your details and they want to meet with you.
It's not complicated.
Supply and demand.
Counterfeiters wanna export, and they wanna meet a guy like me.
You know, a big, fat, wealthy guy.
- Have any clothing that would fit me? - [man.]
Oh, for your size? - [Ted.]
Yeah, 1XL.
- [man.]
- [Ted.]
For me.
- [man.]
For you? For you too small.
4X large.
You size.
I'm not 4XL.
Hi, ladies.
It's a very expensive market for these counterfeiters to rent.
So a lot of counterfeiters will, you know, hit and run.
So they'll rent space inside another shop, and they'll just show their goods.
And then they'll be there three months, and the authorities will shut them down.
Ted has located the store where the vendor of the counterfeit cosmetics was rumored to be.
- [Ted.]
Hey, how are you? - Good.
What did you need? I have glasses, sunglasses.
But there is no sign of any counterfeit cosmetics here.
Because here, I have many foreign people come here to buy.
Ted suspects the sellers got spooked and have moved operations to another mall nearby.
We're gonna race over there now and try to see if I can make an approach.
Okay, we should go.
What gets me nervous is waiting and going, traveling.
That time, that's when your mind starts to wander.
You should have the car ready in case we need to leave quickly.
The location's on the third floor.
So let's go see what's happening.
[suspenseful music continues.]
U-unfortunately, uh things move faster than us.
The shop location that we had targeted is now under construction.
So it's all gone.
[indistinct chatter.]
- [in Chinese.]
You can't shoot here.
- Okay, if you say stop.
[in Chinese.]
Okay, let's go.
All right.
Is this the way out? [Ted in English.]
You can see how export orientated it is.
You can see everything here is for export.
Everybody's packing.
- [man shouts.]
Leave now! - It's all export.
[in Chinese.]
This way? Okay.
[in English.]
We have to go.
Sorry, careful.
That guy was uh wasn't like a regular security guard.
So I didn't want to push him.
All of these outlets are distributors for factories.
So they all have at least one or two, maybe three or four factories behind them.
Or they, you know, it's one owner who owns them all.
I find that, one owner keeps growing and growing and growing.
But this would be mid-level.
This would be the middle of the sandwich, not the top or the bottom.
I mean, the big fish are a three-hour flight away in some province, and this is how they distribute.
And we walked in with the camera and it just They weren't very happy.
Uh [narrator.]
Ted did not get the tip-off he was hoping for today.
But all around him, the business of counterfeit cosmetics appears as healthy as ever.
Look at these guys.
So see this? This is all stuff packed to export.
And I just saw this guy unload a thousand packages.
So the volume is just mind-boggling.
[car alarm buzzing.]
There have been some successful attempts at tracking down illegal factories.
Recently, a local Chinese journalist went undercover to try to capture one on camera.
[indistinct Chinese chatter.]
He brings an authentic Chanel lipstick to a mall in Yiwu, China, and asks the cosmetics vendor if she can arrange to manufacture a counterfeit version.
[journalist, in Chinese.]
If I order this one, how much is it? [woman, in Chinese.]
That one? It's It's 8 yuan.
If I order 20,000 items, is the price of the mold included? [woman.]
Yes, if you order enough items.
I came here to find people who can do it for me.
Can you introduce me? [woman.]
Yes, on the fourth floor.
[suspenseful music playing.]
A short time later, he's on his way to visit the factory where the fake lipsticks would be manufactured.
A majority of counterfeit cosmetics are made in clandestine labs in China.
The ingredients and the environment in which these things are being produced are actually appalling.
These are the conditions in which bacteria and other contaminants can make their way into counterfeit makeup.
Contrast this to a legitimate cosmetics lab.
It is just so clean and sanitized.
You'll see individuals wearing hair nets, a mask covering their face.
There’s lab coats.
It's like going into surgery or something.
That's how clean these places are.
Now, on the other hand, in China, where they actually manufacture counterfeit cosmetics, who knows? There is no standard.
At the end of the day, it's all about how fast can you produce it and how fast you can ship it out.
Cosmetics, lipsticks and powders, are especially good products for counterfeiters because there's a great margin.
They can make something for pennies and sell it for dollars.
What do you really think it takes them to manufacture that counterfeit eye shadow? A legitimate company, their costs could be maybe $20 because they're complying with labor laws, they're paying their taxes.
That counterfeiter isn't complying with labor laws.
They're not paying their taxes.
They're making it in a clandestine lab.
Maybe it costs them a dollar to make.
So then they turn around and sell that for 20 or 30 dollars.
I mean, look at the profit margins that these guys can make.
Counterfeiting is a crime that just makes perfect sense if you're a criminal.
Back in Los Angeles, Detective Rick Ishitani pays a visit to Santee Alley, a few months after the LAPD raid.
Well, right now we're basically just going down Santee Alley, making sure everybody knows that we're still out here.
We're still monitoring everything and, you know, we didn't disappear.
So don't be so blatant in selling the stuff.
But as you can see, you know, they're still out there doing it.
Hi, how are you? [narrator.]
Despite the efforts of Customs officers, law enforcement, and private investigators in both China and the US, illegal cosmetics are still pouring into consumer markets around the world.
There's some right there too.
But today, Detective Ishitani sees a glimmer of hope that maybe the raids have had a positive effect.
So all your Kylie stuff is legit? No.
This is the last things I have.
But you know you can't sell that, right? - I know that.
- Okay, you know it's illegal.
- But I don't have no more - Okay.
No brand.
It's only Beauty Creation and that's it.
This vendor says she's decided to stop selling counterfeit cosmetics.
- [Rick.]
Can I ask you a question? - [woman.]
How much does this cost, like, when you bought it wholesale? Wholesale Well, basically I get this from China, like, for two bucks.
- From China, you got it for two dollars.
- Yes.
It's Kylie powder.
So And how much do you sell it for? - Well, before, when it was good.
- Before, when it was good, $10 a piece.
So eight-dollar profit.
That is pretty good.
But now, like I buy for two even, and I'm selling it for two bucks.
Oh, got it.
You're just wanting to get your money back? - Yeah.
Basically I don't order no more.
- Okay.
- [Rick.]
Yeah I know, I know.
- Like being honest - [Rick.]
- the second raid you guys did messed up our business really bad.
Being honest, like, people will see it and won't buy it.
- [Rick.]
Oh, really? Good.
- They basically pass and say, - "Oh, don't buy makeup from here.
" - That's good.
So, honestly, like, our makeup business went down.
Even though you see people with a lot of stuff, they're not selling it no more.
People don't want it.
[melancholic guitar music plays.]
The counterfeit cosmetics phenomenon can't be traced back to any single cause.
Influencers, social media marketing, online shopping sites, and the counterfeiters themselves all play a role.
But as consumers, we're not totally powerless.
There are ways to avoid counterfeits.
So I call it the three Ps: price, place, and packaging.
If something is half the price of what a legitimate item would be, that should be what we call an indication.
A lot of these major cosmetics companies are only going to be sold through their online outlets or through major famous retail locations.
So any other place, it's gonna be counterfeit or stolen.
Another way of identifying something if it's counterfeit or not is looking at the packaging carefully.
I mean, look at the print.
Is it clear? Is it crisp? Looking at the back, believe it or not, these guys are not the best spellers.
You'll see something, and you're like, “Ah, okay.
Well, this can't be right.
” Even the color of Facebook, the color of YouTube is different.
You know, it's not the right shade.
To the investigators who spend their lives chasing down counterfeiters, the only real solution to the problem is an educated and responsible consumer.
It's been going on, in my experience, for so long and will continue as long as there's a demand for it.
So I think the buck stops at the customer.
If there was no demand for it, there wouldn't be the product to supply them.
People really have to understand that the power of all this is your dollar.
That counterfeit cosmetic has no value unless you pay your money for that cosmetic.
So, in turn, the consumer has all the power to stop this problem.
Law enforcement doesn't have the power.
Companies don't have the power.
I don't have the power.
The consumer can stop the problem if they don't buy the product.
[music fades out.]
[suspenseful music playing.]
[music fades out.]

Next Episode