Not long ago, the well-known professional counterfeiter hunter Wang Hai successively targeted multiple beauty brands, sparking industry discussions.
Recently, a cosmetics store owner named Chen Haonan in the southwest region revealed to CHAILEEDO, “This year, my stores have been targeted by professional counterfeiter hunters several times. Most recently, a professional counterfeiter reported to the industrial and commercial department that there were registration issues with the imported toothpaste sold in the store and was asked to pay a ‘coordination fee’ of 1000 yuan to resolve it.”
In fact, it’s not just one cosmetics store that has caught the attention of professional counterfeiter hunters. Further investigation by CHAILEEDO revealed that these professional hunters not only know well the ways to detect counterfeits in physical cosmetics stores but have even established an educational industry chain.
A certain cosmetics merchant has been “visited” four times by professional counterfeit hunters.
Professional counterfeiting is not uncommon. What was once seen as a pursuit filled with justice has gradually evolved into a controversial means of profiteering through exposing counterfeits. Currently, professional counterfeiting has developed a fixed pattern. In many judicial cases, professional counterfeit hunters often use methods such as reporting, reconsideration, litigation, etc., to pressure merchants seeking punitive compensation for profit.
In the cosmetics industry, many merchants are also plagued by professional counterfeit hunters. This year, Chen Haonan has experienced four “visits” from professional counterfeit hunters, with the most recent occurring on September 3rd. On that day, Chen Haonan received a text message from a staff member of the industrial and commercial department, “Being informed that the goods being sold have been reported by professional counterfeit hunters again. This time, they are targeting an imported Korean toothpaste.”
“The complaint was that the imported toothpaste we are selling does not have a customs registration number and therefore demanded negotiations for a compensation of 1000 yuan to resolve the issue.” However, Chen Haonan refused to negotiate. He told CHAILEEDO, “According to the regulations of the National Medical Products Administration, imported toothpaste produced before November 2023 does not require registration, so our product complies with the regulations.” Therefore, following the request of the staff from the industrial and commercial department, he provided the supplier’s business license, purchase invoices, customs clearance documents, and product qualification certificates.
Regarding the multiple “visits” from professional counterfeit hunters, Chen Haonan expressed his distress, stating, “We can cooperate with the industrial and commercial department to prove the compliance of all products we sell. However, being repeatedly burdened with this kind of unfounded increase in workload undoubtedly hinders our business. Moreover, demanding a coordination fee of 1000 yuan at every turn is abhorrent behavior.”
Chen Haonan is not the only one selected by professional counterfeit hunters. Another well-known owner of an offline cosmetics chain store, Zhang Yi, has also had experiences of being asked for “coordination fees” by professional counterfeit hunters. He told CHAILEEDO that professional counterfeit hunters typically focus on specific targets, such as checking if stores sell unpackaged individual sheet masks or if imported cosmetics have Chinese labeling.
Furthermore, after purchasing products they believe to be problematic within the store, professional counterfeit hunters usually employ two methods: “Firstly, they directly approach the store making demands, every sentence is about money; secondly, they lodge complaints with the local market supervision and administration bureau seeking negotiated solutions.”
“Many professional counterfeit hunters, after complaining to the supervisory authorities, do not visit the site but directly call for results, forcing you to comply. Physical stores are already struggling, and if the supervisory authorities mishandle the situation, it could be enough to shut down a store,” Zhang Yi stated. However, in response to the complaints of professional counterfeit hunters, Zhang Yi’s stance is the same as Chen Haonan’s: “Cosmetics stores must not compromise and should actively provide relevant evidence to the supervisory authorities. Giving in to a coordination fee once will only encourage more professional counterfeit hunters to make similar claims.”
A seller claims “to achieve moderate prosperity through combating counterfeits for a year”.
In recent years, with the further prosperity of social media, an increasing number of professional counterfeit hunters have entered this track. In May of this year, the Changning District Market Supervision Bureau in Shanghai disclosed that Shanghai had compiled a list of nearly 6,000 abnormal professional counterfeit hunters and explored excluding professional complaints from the category of “daily consumer needs.” Media reports have also stated, “There is a standard extortion model for a certain type of professional counterfeit hunter. Complaints are made against small and micro-businesses for tricky issues such as false advertising, labels, lack of qualifications, with each claim amounting to between 300 to 1000 yuan. If the businesses do not pay up, they are threatened with lawsuits.”
A CHAILEEDO investigation found that professional counterfeit hunters not only have specific focuses on cosmetics but have even formed an entire education and training industry chain. On the well-known second-hand trading platform Xianyu, searching for “counterfeiting” as a keyword brings up many “counterfeiting skills training courses,” with some sellers even claiming “working in vain year after year, achieve moderate prosperity through combating counterfeits for a year.”
In response, CHAILEEDO randomly messaged a “counterfeit teacher” under the guise of seeking advice, and the individual immediately shared a set of tutorials on the “full process of counterfeiting in 2024,” covering various aspects such as offline product categorization, rights protection processes, risk control, negotiations, and more through video explanations. In the realm of cosmetics, the “counterfeit teacher” first requires students to download a cosmetics regulation app and lists four common issues: no Chinese, using approval documents, expired approvals, and revoked approvals.
Subsequently, using a well-known international brand face cream as an example, the “counterfeit teacher” detailed the operational methods to CHAILEEDO: first, open the webpage, search for the product name, and click on the recommended product link on the webpage. On the product details page, capture the product image and registration information image. Then, check the public approval document through the cosmetics regulation app. The “counterfeit teacher” further explained, “If the registration number for the cosmetic is revoked, it means it can no longer be produced or sold.”
Furthermore, the “counterfeit teacher” also shared the “technique” of checking for expired approval documents on cosmetics with CHAILEEDO. “Many counterfeit manufacturers sell cosmetics using old approval documents (registration numbers), but the products are different from the originals. You can compare the product packaging graphic on the cosmetics regulation app with what is being sold in the market; often they are different.”
For physical offline stores, the “counterfeit teacher” also detailed a process. Before entering the store, prepare a marker pen, remember the store’s location; inside the store, record the entire purchasing process of products, mark problematic products, ask the merchant for a receipt; after leaving the store, complain to the local market supervision bureau by phone, explaining the time, location, events, and demands. Finally, the “counterfeit teacher” repeatedly emphasized, “To avoid the risk of extortion, all rights protection should be carried out through the relevant departments for negotiation and complaints, and do not privately approach the merchant.”
It is evident that from preparation, to operation, to negotiation, and then to rights protection, professional counterfeit hunters have established a complete business model. In response, Zhang Yi believes that businesses should not have a mentality of taking chances on a daily basis, must procure goods through legitimate channels, ensure the integrity of the product authorization chain and qualifications, confirm labels before shelving, and actively inspect after shelving. Additionally, in terms of efficacy claims, businesses should regularly monitor changes in relevant regulations, communicate regularly with brands to stay updated, in order to avoid violations.
“Professional Malicious Complaints” Enforced with a Tightening Regulation
Similar to Zhang Yi, the head of a brand management company in Hangzhou also offered advice, “Cosmetics stores should carefully select upstream suppliers, preferring products with transparent pricing systems in the market. If chasing immediate profits leads to the purchase of goods with unknown origins, it is actually taking a huge risk.”
To some extent, profit-driven professional counterfeiting not only seriously disrupts the normal production and operation order of enterprises but also consumes a large amount of limited administrative and judicial resources, making the complained-about businesses miserable. The head of a well-known cosmetics chain store in North China expressed, “Currently, genuine professional counterfeit hunters who truly uphold consumer rights and help stores improve are rare. Instead, profit-seeking and extortion are prevalent.”
Where exactly are the boundaries of professional counterfeit hunters’ behavior?
“In the long run, professional counterfeit hunters will promote stores to manage products more rigorously and standardized.” The founder of a cosmetics chain store in Jiangsu bluntly stated, “As long as the store operates legitimately, there is no need to fear any crooked shadows.” Xing Shaoshan, the general manager of Hefei Zhenzhi Enterprise Management Company, believes that as long as professional counterfeit hunters’ actions do not involve extortion or violate the law, they can actually promote fair industry development, legitimate operation, and urge operators to raise their own standards. Similarly, store operators also need a fair and just business environment.
In fact, policies have also provided a strong response to the malicious compensation behavior of professional counterfeit hunters that has been troubling cosmetics merchants. The “Regulations on the Implementation of the Law of the People’s Republic of China on the Protection of Consumer Rights and Interests,” which came into effect on July 1 of this year, will restrict and deter malicious complainants who abuse their right to complain and report, unreasonably occupy government administrative resources.
Article 27, Paragraph 2 of the Regulations clearly stipulates that complainants “shall not use complaints or reports to seek undue benefits, infringe on the legitimate rights and interests of operators, or disrupt the market economic order.” Paragraph 2 of Article 49 further stipulates that “those who cheat operators out of compensation through methods such as tampering, swapping, forgery, altering the production date of goods, fabricating facts, or extorting operators will be dealt with in accordance with relevant laws and regulations such as the Law of the People’s Republic of China on Administrative Penalties for Public Security; if a crime is constituted, criminal responsibility shall be pursued in accordance with the law.”
At the same time, the State Administration for Market Regulation has for the first time explicitly regulated professional compensation behaviors in accordance with the law. On September 3, the General Administration of Market Supervision issued the “Key Measures for Optimizing the Business Environment by Market Supervision Departments (2024 Edition).” The “Key Measures” explicitly state that those who deceive operators out of compensation or extort them through methods such as tampering, swapping, forgery, altering the production date of goods, fabricating facts, will not be subject to punitive compensation. Instead, in accordance with laws and regulations such as the Law on Administrative Penalties for Public Security, they will be transferred to public security organs for legal processing; if a crime is constituted, criminal responsibility shall be pursued in accordance with the law. Those who seek undue benefits, infringe on the legitimate rights and interests of operators, and disrupt the market economic order through complaints and reports will undergo strict scrutiny.
“The promulgation of relevant regulations is sufficient to prove that the state market regulatory authorities are paying more attention to regulating the behaviors of professional counterfeit hunters. Through the unified management of relevant big data and the coordination of different regional competent authorities, further measures will be taken to crack down on behaviors seeking undue benefits through counterfeiting.” said Deng Gang, a lawyer at Guangdong Fazhi Shengbang Law Firm.
