It started with purses and sunglasses.
Now Canadians are buying counterfeit makeup, perfume, shampoo and other health and beauty products the RCMP warns could endanger the public. In the last six months, the RCMP in the Toronto area has seized tens of millions of dollars worth of knockoff goods.
"We've estimated that counterfeiters would quadruple their money on a load of counterfeit goods. And that's a conservative estimate," said RCMP Insp. Todd Gilmore. He said almost half of all knockoff goods seized are health and beauty products that people apply to their hair and skin or rub around their eyes, nose and mouth.
"Counterfeiters have no regard for your health and safety. They just want to maximize their profits. Who knows how this was produced."
Standing inside a flatbed trailer piled high with cardboard boxes filled with counterfeit perfume, cologne and cosmetics, Gilmore said it's all from China. He dug out several large packages of what appear to be high-end M.A.C cosmetics but all the mascara lip gloss, eyeliner and eyeshadow are knockoffs.
The RCMP seized it all after a tip from the Canada Border Services Agency.
Gilmore said Mounties picked up even more fake goods at a Toronto area flea market after hearing about a woman who had been hospitalized after having a severe allergic reaction.
"We had the [fake] M.A.C cosmetic tested at an independent laboratory and those tests came back, [and] indicated that there were higher than normal levels of different metals in these counterfeit products and were apt to have caused that allergic reaction," said Gilmore.
In an emailed statement from M.A.C, a spokesperson said the company cares deeply about its consumers and that it is very concerned to hear of the selling of counterfeit products claiming to be M.A.C cosmetics. The company added that it has no control over merchandise sold by unauthorized dealers.
Industry reluctant to talk about problem
Most luxury brand names refuse to speak publicly about the knockoff problem. An executive with one very popular shampoo company, who refused to be named, told CBC News that counterfeit product is an important subject but that the firms don't want to go public in case they create "brand confusion."
He added that sophisticated technologies permit counterfeiters to create convincing bottles and packaging. In some cases he said his company has to conduct chemical tests to determine if it's their product or that of an imposter.
The CEO and co-founder of Paul Mitchell, John Paul DeJoria, is one of the only people in the industry talking publicly about counterfeit goods. Speaking to CBC from his offices in Los Angeles, DeJoria said he has a team working full time on finding and destroying counterfeit goods. He said the public needs to know the risks of buying his products outside authorized salons.
"One that happened at Filene's Basement in Massachusetts, a lady bought one of our products there that you could spray on your skin, a moisturizer. And all of a sudden her eyes started burning, right? … It wasn't our product — 100 per cent counterfeit."
In another case, DeJoria said a store in Florida was stocked with what looked like Paul Mitchell shampoo, but was a knockoff made with contaminated water and full of bacteria.
Not only do counterfeits have the potential to harm people, DeJoria said they hurt his company's good name.
"If you get one [product] you don't like, it's like, 'This is Paul Mitchell?' It's not that special. And we are special. We will probably never have them as a customer again."
Toronto lawyer Lorne Lipkus, who helps more than 75 companies protect their trademarks, said his team regularly busts discount retailers, serves letters to cease and desist and seizes product.
"Just by the number of products that are coming into the country and the fact that we're only looking and seizing a small percentage of them, we know that we're dealing in the billions of dollars of counterfeit in Canada alone," he said.
Laws seen as lax
Lipkus said he and other members of the Canadian Anti-Counterfeiting Network could use some help from Parliament. He explained that staff at the Canada Border Services Agency don't have the authority to stop counterfeit goods from entering the country. If they see something suspicious, Lipkus said, they must call in the RCMP to investigate.
"Very often we have counterfeit product coming through the borders because customs can't seize it and there's no police available to deal with the case at that time."
Ottawa trademark lawyer Monique Couture agreed Parliament should empower border guards. She said there is also a need to strengthen and update Canada's copyright and trademark acts as well as the Criminal Code.
"I think a lot could be done legislatively to make an award of damages hurt more to the counterfeiters. Right now it's a kind of slap on the wrist, the cost of doing business."
Couture said lax laws is why Canada repeatedly shows up on a notorious U.S. government watchlist of countries not doing enough to fight counterfeit and piracy.
"If you look at the company we keep on that list it's not very flattering. You would think that Canada as a First-World nation, a G8 country, it's a bit surprising that we're on that list. And we've been on it for a while."
Then there are the challenges of prosecuting those who import, distribute and sell knockoff goods.
"The key ingredient in any counterfeiting case according to the Copyright Act or the Trade-marks Act or the Criminal Code is you have to prove knowledge. And it's easy to deny that you know," said RCMP Insp. Gilmore.
Canada's Department of Public Safety initially declined to comment on the problem of counterfeit health and beauty products. But a spokesperson for the minister of public safety issued a statement Thursday night saying the government is combating more sophisticated counterfeiting and piracy techniques.
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