What You Don't Know Is Killing Your Wallet: Diversion

A "Danny Investigates" Special Report

March 2009

	Redken Fresh Curls products found at CVS on Neil & Green in Champaign. If you notice in the photo (left to right) there is conditioner, Curl Boost and Curl Boost. The Curl Boost on the right is old product in discontinued packaging, yet it is being sold for $1.50 more than the new.  12-19% higher than salon price.  (Reg. $15.00)
	Redken 01 Outshine at CVS on Neil & Green in Champaign, priced 20% higher than in a salon.  (Reg. $16.00)
	Redken 18 Quick Dry found at CVS on Neil & Green in Champaign, priced more than 25% higher than in a salon.  (Reg. $13.00)
	Paul Mitchell at Target with third-party sticker
	Old Meijer Product on right, next to a photo (left) of what it's suppost to look like.  Right Photo:  tigihaircare.com
	You can see the lid of the bottle is not closed, and is not able to be closed, it is so full.
	Photo taken of USED Redken 03 Water Wax at CVS on Neil & Green in Champaign.  This is a personal care item, why would you want to have someone else's germs in your product?

It has come to my attention that guests have concerns about “Salon Only” products that they have found in the discount stores, grocery stores and online.   So I have done my own investigation around town and on the Internet to find out more.  To show that I am not at all biased on this issue, I have researched most professional haircare lines.

Consumers who buy professional hair care products at major retailers -- or at grocery and drug stores -- are not getting the bargains they may think. All professional haircare and skincare products have the label “Guaranteed only if sold in an authorized salon.”  These retailers also fueling a grey-market industry that deals in counterfeit, stolen, or outdated merchandise.  That's the warning issued by hair care giants like Paul Mitchell, Redken, and Matrix, L’Oreal Professional who are trying to crack down on this industry-wide problem known as diversion. This is not just an issue for the companies above, but all professional haircare manufacturers, including these and TiGi, Bumble and Bumble and Pureology.

In this article:

        Getting Robbed:  And You Don’t Even Know It

        How Does It Happen?

        Caution:  Infection(s) May Occur

        Found:  Product Older Than A Preschooler

        Taking Money Away From Your Local Economy

        Remember the 4 C’s

Getting Robbed:  And You Don’t Even Know It

"The average price for a bottle of Matrix shampoo or conditioner is generally 10 percent higher than salon retail prices," the company's Web site states. "Matrix products are available exclusively in salons because only trained and licensed professional stylists can prescribe the best products for use in the salon or at home."  Redken, Pureology, and Paul Mitchell agree.

If mass retailers were authorized to sell these products, then you would see more advertisements from these retailers selling these products.  They can’t advertise these because the product manufacturers don’t endorse them their stores.   In my investivation around town and online, these were only some of the prices that I found:

How Does It Happen?

Vicki Bresnahan, director of product distribution control for Paul Mitchell says that in most cases professional hair care products end up in Target and other retailers when the diverter approaches a struggling salon owner, and the two agree to do business.  The salon orders the products the diverter is looking for.  The products are paid for, often by cash under the table and are taken by the diverter to the warehouse where the diverters often remove batch codes off of the products (so they can not be tracked).  The decoded products are then shipped to discount stores, grocery stores, and drug stores nationwide.

In a Consumer Affairs investigation, part of the batch code on the Paul Mitchell finishing spray was missing. Some of the lettering on the bottle had faded, too.  All the bottles had stickers attached to the containers – ones that looked like someone had taken a razor blade and cut an "X" through them.  In my investigation around town I had seen several instances of these “third-party” stickers attached to salon products.

"At Paul Mitchell, we don't have stickers on our bottles," says Bresnahan.  "Our UPC codes are printed on the plastic. That sticker you see is probably on top of our UPC code and is the code that Target or the wholesaler who bought the product use to scan the merchandise." Missing or damaged batch codes are among the common signs of diversion.  None of the product manufacturers looked at in my investigation, including Redken and Purology, had stickers attached to any of their products, the UPC codes were printed directly on the product.

"We've had cases where the batch codes are totally or partially removed," Bresnahan say. "That can be dangerous if we have a recall. We don't contact Target because they're not an authorized dealer. And if a consumer hears about the recall -- and the batch code is removed -- they can't tell if the product is included in the recall." 

Matrix and Redken echo these concerns.

Caution:  Infection May Occur

Canadian authorities in 2003 issued a statement warning consumers not to use counterfeit professional hair products that may be contaminated.  Canadian authorities isolated certain lot numbers and these counterfeit products were contaminated with Enterobacter gergoviae and Burkholderia cepecia, potentially harmful bacteriathat may pose a health risk to certain users.  If the contaminated product contacts open wounds or get in the eyes, infection could result.  The recall only applied to counterfeit products, and not the full line of professional hair products sold in salons.  The product that was recalled is TiGi Moisture Maniac Shampoo.  I found a bottle of it at Meijer on North Prospect in Champaign.  If you look closely at the photos (above right), you can see that because the product is so old, the contents of the bottle have separated at the bottom..  Who knows what has gotten the chance to grow inside that bottle.  The only reason we can see this is because the bottle is clear.  If you can’t see through the bottle, how will you know?  YOU JUST DON’T.

Taking Money Away From Your Local Economy

When these products are purchased from unauthorized outlets, the consumers aren’t the only ones scammed.  Salons count on retail as a huge part of their income, and it also helps to keep costs low.  When you purchase products from a mass retailer, such as Walgreens, Walmart, CVS, or a random online store, you are not only paying more (often more than 20%) for product that has no guarantee, but you are also taking money away from your local economy.  Because of the high costs of labor, payroll expenses in salon take up to 75% of the income.  This includes stylists, technicians and support staff, such as receptionists and associates.   If these products are not purchased in the salon, the owners of the salon need to make up the money from somewhere, which is usually done by raising service prices.

Found:  Product Older Than A Preschooler

In many instances ingredients that have not been approved by the food and drug administration have been added to products in unauthorized outlets.  "Diverted products can be counterfeit, diluted formulas, or old, expired formulas that may not be safe to use," the company's Web site states.   "Contaminated or counterfeit products could cause irritation or even infection,” says Vicki Bresnahan, director of product distribution control for Paul Mitchell.  Contaminated, counterfeit Paul Mitchell hair products were found in 2003.

When I was in Meijer on North Prospect in Champaign I found a bottle of Redken Blonde Glam Conditioner that so so full that the cap on the top of the bottle would not close completely.  Redken, as a manufacturer, does not fill the bottles up so much to where you can’t close them, so obviously, it was not Blonde Glam Conditioner in that bottle.  That bottle of Redken was either counterfeit or diluted with another substance, and I say substance because nobody knows what it really is.

Jessi Hempel with Business Week was apart of a “Combat Diversion” investigation and she explained, "We see products coming in from China, we see products being, out-dated,sold in bottles that should have been sold two-years-ago." That's what got John Paul Dejoria up in arms. He only sells his Paul Mitchell products to salons. His company launched a multi-million-dollar campaign to educate consumers, "If you find any of our products in any drug store or supermarket, it is either counterfeit, black/gray market, stolen or extremely old."  Some of these products that were found were purchased by Paul Mitchell and tested which they concluded "products that were found were purchased by Paul Mitchell and tested which they concluded "the bacteria count was too numerous to even count. That's how bad it was."

While doing research for this online, I found several products that had been discontinued several years ago that were selling for more than what they were 5 years ago.  On one site, I found Redken Active Express Quick Treat.  The online outlet claims the product was added to their catalog in November, 2007.  This product was discontinued close to 5 years ago. I use to sell it when I ran a chain salon for Regis Corporation, and I remember putting it on clearance because it was discontinued.  It is selling for $29.95, which is 60% higher than what I use to sell it for.  Another website selling Redken Extreme Anti-Snap showed packaging that was also several years old, and advertising it at 26% off.  The reality is that they were selling that old, outdated product for 12% more than what the current product, in current packaging is selling for in an authorized salon.

David Craggs, President of Professional Products Division for L'Oreal USA, says “I was browsing at Staples, and noticed their price matching guarantee sign for all new computers EXCEPT for those purchased on eBay. I did a little online research and found that HP is experiencing some of the same issues as our salon professional brands, as many of their products are being counterfeited or sold at unauthorized online dealers and in some cases, customers are being scammed and not shipped products at all from eBay sellers.”  Craggs also states in his blog:  “If you buy a computer from eBay and it blows up or doesn’t work, chances are HP won’t guarantee your product. We also do this for our salon products purchased at our authorized salons. While you may think that you are finding a great deal on eBay, you may be purchasing a fake, defective or in some cases unsafe product. We simply do not offer our professional product brands such Redken, Matrix, Kérastase, Mizani and PureOlogy to be sold on eBay.”  David Craggs composed a letter discussing the dangers of purchased diverted, unauthorized products to consumers and it is available here.  You can also check out his website at DavidCraggs.com.

Remember the 4 C’s

“Other than www.kerastase-usa.com, no other [L’Oreal Professional] websites are authorized to sell professional products. There are sites that mask themselves as salon websites, have fake anti-diversion statements or claim they obtained products from a manufacturer.”  Explains Craggs, adding “beware of these websites. Clients might be tempted to risk the purchase from eBay.com, for example, because they believe that they are getting a better price. In instances like this , it is especially important to remember the 4 Cs (cost, counterfeit, contaminated & crime) which are the dangers of buying diverted products both online and offline.”

Finally, Craggs adds “If you buy any of our brands from a salon or stylist, if you keep the receipt, and you are not happy, then we will give you your money back.”

Danny Pierce Redken Artist Master Colorist Kane & Company Salon & Spa 41 E. University Avenue Champaign, IL 61820 www.danny-pierce.com

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