02 Jun 2015

Written by Alice Smithson

Data from payment processing company Worldpay found that beauty businesses were the target of over 5% of all data breaches in the UK during 2014. This means that the sector was one of the top targets for fraudsters – for comparison, the top targeted sector was food and groceries (7% of all breaches). The clean-up process after being targeted by fraudsters is expensive, with a normal investigation process costing £11,250.

Despite countless warnings on counterfeiting in the beauty industry, continuous headlines highlight the scale of the problem and the amount of resources needed to stall the global industry. Like any product on the black market, customers should be wary of the risks involved.

Counterfeit products range from lowered sun protection to merchandise that contain arsenic, cyanide, lead and mercury. The Police Intellectual Property Crime Unit (PIPCU) ‘Wake up _ don’t fake up’ campaign was established to raise awareness of the risks associated with fake beauty products.

During the past 18 months, the unit has suspended more than 5,500 websites that were found to be selling fake luxury brands and seized more than £3.5 million worth of counterfeit goods.

Warning signs to look out for, provided by the The Cosmetic, Toiletry & Perfumery Association (CTPA) include:

  • Poor spelling and grammar on a website – often sellers in the market do not take the time to check the finer details.
  • A lack of contact information – be cautious of a website that does not provide a business address or offer a returns policy.
  • Payment irregularities – only invest in a product if a page begins with ‘https’ at the payment stage. Do not act on pop-ups asking you to confirm your payment details and never enter your PIN online.
  • ‘Too good to be true’ deals – we all stumble across a great deal online from time to time. However, risky websites often features large quantities of stock at a fraction of the retail price. It is right to question why more consumers haven’t snapped up these cut-price products.

Worldpay had some tips for salons to help them minimise the risk of fraud. First: destroy payment card records when no longer needed. Second: don’t store three-digit card security numbers.

Beauty salons and retailers aren’t the only beauty businesses to be under threat from criminal activity. Research from the EU’s Office for Harmonisation in the Internal Market (OHIM) found that the market for counterfeit beauty products is costing manufacturers £3.4 billion each year, including £201 million in the UK.

Counterfeit cosmetics, perfumes and skincare products reduce the demand for genuine products, at the cost of an estimated 80,000 lost jobs across Europe. The total cost to the European economy is approximately £6.8 billion, after the knock-on effects on the supply chain and tax receipts are factored in.

Fraud and counterfeiting are unfortunate aspects of the beauty industry, but salons can take steps to minimise the risk of fraud. If you’re concerned about cyber risks, contact iSalon on +44 (0)1522 887200. We can talk you through cyber security basics to help your salon avoid data breaches and inform you on the latest salon management software for your business.