A new class action claims the beauty retailer repackages and resells returned products

Super Fan?

Paula Ogurkiewicz is an Ulta Beauty power-user, purchasing, by her own account, hundreds of dollars’ worth of Ulta products each year, including hair dye, mascara, lip cream, moisturizer and other products from the full-price and discount sections of Ulta stores. She is also a member of the company’s “Ultamate Rewards” loyalty program, accumulating points toward future purchases, which kept her coming back for more.

And now, she’s the lead plaintiff in a class action lawsuit against the company

Kerfuffle

The action was inspired by a social media storm brought on by customers and former employees accusing Ulta, the largest beauty retailer in the United States, of refurbishing, repackaging and reselling products that had been returned by customers. According to the complaint, the practice originated in the Ulta corporate office and trickled all the way down to individual stores.

Employees were allegedly told by store managers to try to keep the number of returned or damaged products below certain quotas to save money that would otherwise be lost. In order to meet the quotas, employees were encouraged to touch up the used products so that they appeared new – and then repackage the used products and put them on the shelf for sale

The Takeaway

There’s nothing wrong with many used or refurbished products. Used cars? Sure. Secondhand appliances? Fine. But there are some products that we simply cannot imagine taking a second pass at. Food, for instance. Or medicine. Underwear. You get the idea; it’s a health issue.

This is why this class action is a serious threat to Ulta – not just financially, but in terms of its reputation. A report cited by Ogurkiewicz’s complaint tested used makeup products from a number of retailers, including Ulta, and found that they had been contaminated with a variety of nasty substances, including E. coli and Klebsiella pneumoniae bacteria, the herpes simplex virus, and golden staph.

How will the company respond to Ogurkiewicz’s claims? How will it respond to the more general allegations in the news and in social media? Will the company broadly deny the accusations, or isolate “bad apple” managers who tried to cut corners?

The litigation is in its earliest days, and we’ll be watching to see how it develops.