This is the first investigation of its kind by a European regulator. It will not be the last.

What actually happened

The Autorità Garante della Concorrenza e del Mercato, Italy’s competition and market authority, did not send a letter. It sent investigators. Officials from the AGCM, along with officers from Italy’s financial police, the Guardia di Finanza, physically inspected the premises of Sephora Italia, LVMH Profumi e Cosmetici Italia, and LVMH Italia on Thursday, March 26. The Friday announcement followed those raids.

The AGCM said the investigations centre on possible unfair commercial practices linked to the premature use of adult cosmetics by children and adolescents, including those under 10 to 12 years old, encouraged through the compulsive purchase of face masks, serums and anti-ageing creams. It specifically flagged the use of “very young micro-influencers” as part of what it called a “particularly insidious marketing strategy.”

LVMH confirmed in a statement that Sephora, Benefit, and LVMH P&C Italy had been notified of the proceedings. The group said all three companies affirm “strict compliance with applicable Italian regulations” and that they will fully cooperate. Beyond that, it declined to comment.

What “cosmeticorexia” actually means

The AGCM used a specific clinical term in its statement: cosmeticorexia. It describes an unhealthy, compulsive fixation on skincare among minors, a condition now documented in peer-reviewed medical literature and increasingly flagged by dermatologists treating children presenting with skin damage from products they should never have been using.

A 2025 study published in the Journal of Drugs in Dermatology specifically examined the Sephora Kids phenomenon and found that key ingredients common in the products children are purchasing, including retinol, exfoliating acids like AHAs and BHAs, and high-concentration vitamin C formulations, have not been tested on children and can cause real harm. Rashes, allergic reactions, dermatitis, heightened sun sensitivity, and in some cases lasting skin damage are the documented outcomes when children apply adult-grade actives to skin that has no business being treated with anti-ageing chemistry.

Skincare routine videos posted by teenagers on TikTok contain an average of 11 irritating ingredients. Those are not random products the children found. They are products that brands sold to them, or allowed influencers to sell on their behalf, without clear warnings that children should not be using them.

The Sephora Kids machine

To understand the investigation you have to understand the trend it is targeting. Sephora became the physical and symbolic home of Gen Alpha beauty consumption in a way that no brand strategy quite planned for and no brand did very much to slow down.

Sephora has more than 20 million Instagram followers and 2.1 million on TikTok. Its stores became a destination for children, some under ten, filling baskets with Drunk Elephant, Glow Recipe, and Sephora Collection serums while filming “Sephora kids haul” and “Get Ready With Me” videos for social media. Parents complained. Dermatologists warned. Nielsen data shows Gen Alpha households now spend billions annually on skincare and makeup. The industry took note of that spending and did not noticeably slow it down.

In 2024, Sephora North America’s CEO Artemis Patrick said in an interview that “we do not market to this audience.” The Italian investigation essentially challenges that claim directly. The AGCM is not asking whether the brand passively allowed children to shop in its stores. It is asking whether the brand actively marketed to them, used young influencers to reach them, and failed to warn them that products were not intended for minors.

Those are three separate and serious allegations.

What the legal exposure looks like

Italy’s AGCM has the authority to impose substantial fines for unfair commercial practices. Under Italian consumer protection law, aligned with the EU Unfair Commercial Practices Directive, brands can face penalties into the millions of euros if investigations conclude they misled vulnerable consumers, and children are explicitly recognised as a particularly vulnerable category.

The investigation is also notable because it sits at the intersection of two different legal frameworks. One is consumer protection, specifically the obligation to accurately label and communicate product warnings, including who a product is and is not suitable for. The other is advertising law, specifically the rules around marketing to minors through influencer content that is not clearly labelled as commercial or that targets an audience that legally cannot give meaningful commercial consent.

Italy’s AGCM called this a first for European regulators. The European Union has been tightening digital marketing rules for years. The EU Digital Services Act requires additional protections for minors on major platforms. The EU’s Cosmetics Regulation sets out labelling standards. The question Italy is now asking is whether Sephora and Benefit met those standards when their products were being actively marketed to under-12s through covert influencer channels.

Other European regulators are watching this case. If AGCM finds in favour of the investigation and issues fines, expect similar proceedings in France, Germany, and Spain before the year is out.

The broader industry problem

Sephora and Benefit are not the only names that should be paying attention to this investigation. The Sephora Kids trend was powered by brands that sold products knowing children were buying them, platforms that served children the content, and influencers, many of them children themselves, who promoted adult skincare routines to audiences of peers and younger kids.

The regulatory response is still catching up. California’s proposed AB 2491, which would have restricted the sale of anti-ageing products to children under 18, was killed in committee partly because of lobbying by the skincare and retail industry, which argued social media, not the products, was the problem. That argument is becoming harder to sustain when Italy’s financial police are walking through a brand’s offices with a list of specific marketing practices they consider unlawful.

For LVMH, the timing is not ideal. The group is already managing significant brand complexity in 2026, from Saks Global’s bankruptcy affecting luxury retail in the US to the broader luxury slowdown compounded by Middle East war uncertainty. An investigation into the ethics of marketing cosmetics to children adds reputational weight to an already difficult year.

For the beauty industry more broadly, this is a question that will not stay in Italy. The “Sephora Kids” phenomenon is global. The regulation is only beginning. 

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Trump’s legal team filed a cancellation petition at the United States Patent and Trademark Office in late February 2026, targeting two registered trademarks belonging to D&J Xin Rong International Trading Company Ltd — “DJT” and “DJT Fashion.” The USPTO has now marked both registrations as “cancellation pending.” The company has a set window to respond. If it doesn’t, the trademarks could be wiped out. If it does, the dispute heads toward formal litigation, with a timeline pointing to fall 2026.

The legal argument being made is not that the Chinese company set out to impersonate the 47th President. It’s something more legally interesting than that. Attorney Michael Santucci, representing Trump’s side, argued in the USPTO filings that “DJT” has become so widely associated with Donald J. Trump that any commercial use of those letters risks creating what trademark law calls a “false suggestion of connection” with a public figure. Three letters. Twelve years of commerce. No apparent controversy — until now.

What the law actually says

The petition leans on Section 2(a) of the Lanham Act, which bars registration of marks that “falsely suggest a connection with persons, living or dead.” This is not the same as alleging that someone is selling knockoff Trump merchandise. The claim is narrower: that consumers might incorrectly assume some association, endorsement, or relationship between the brand and Trump himself.

US trademark law does give public figures meaningful tools here. Once a set of letters, a name, or even a phrase becomes closely identified with a specific public figure, that association can carry legal weight — even in the absence of any intentional copying.

The filings also argued that Trump’s name and image carry “very high recognition in the US and globally” and that commercial use of his brand has long been “systematically protected.” Trump’s organisation has been aggressive about this. In recent months, it has separately moved to rename Palm Beach International Airport and change its code to DJT. The initials are being consolidated as a brand marker across multiple contexts.

Why this case is not straightforward

Here is where it gets complicated. Courts have not always been sympathetic to public figures trying to clear the field of mark-holders who never intended to trade on their identity.

The Trademark Trial and Appeal Board and federal courts apply a multi-factor test for false association claims. The key question is whether the public would reasonably assume a connection. For that, courts look at how famous the person is, how unique the name or mark is, and whether there is any evidence consumers were actually confused.

“DJT” is not “Donald Trump.” It is not even “Donald J. Trump.” It is three letters that happen to be initials. The Chinese brand has been operating for twelve years, primarily through e-commerce platforms, primarily outside the US market. There is no evidence, at least publicly, that any customer ever bought a high-waist miniskirt thinking they were purchasing from Trump’s fashion line.

Compare this to the “Trump Too Small” case, where the Supreme Court unanimously upheld the government’s right to deny trademark registration for a phrase that directly included Trump’s name. The Court in that case was dealing with Section 2(c) of the Lanham Act, which requires a living person’s consent before their name can be registered as a trademark. Three initials sit in a different legal category. The false association analysis under Section 2(a) requires demonstrating actual associative confusion — and that bar is harder to clear when you are dealing with an abbreviation that the average consumer may never connect to a specific person at all.

The broader context: short marks, rising scrutiny

There is a wider pattern worth noting. As cross-border e-commerce has grown, short letter-combination brands have proliferated globally — and they are increasingly running into legal scrutiny when they happen to overlap with the names, initials, or abbreviations of well-known individuals or entities.

The DJT situation is not isolated. In early 2025, the USPTO issued a show cause order that could potentially cancel over 40,000 trademark registrations tied to Chinese filers, citing fraudulent filings and tainted examination processes. The Trump administration has also separately pushed staffing changes at the USPTO that, according to some analysts, are already causing examination delays — creating a processing environment where trade disputes involving politically connected parties can move through the system with particular visibility.

What happens next

D&J Xin Rong has to decide whether to fight this. Responding means engaging with US trademark proceedings, hiring US counsel, and mounting a defence that essentially argues three letters are generic enough to be used by anyone. That is not an impossible argument — but it is an expensive one, especially for a small fashion company that sells through Amazon and was not built around the US domestic market.

The practical calculus for a small foreign brand facing a cancellation petition backed by a sitting US president is not entirely a legal one. Settlement — surrendering the marks and rebranding — may be the path of least resistance, regardless of what the law might actually support on the merits.

If the case does reach formal proceedings, it will forc a direct answer to something US trademark law has never had to address cleanly: when does an initial combination become so synonymous with a public figure that a decade-old clothing brand in Hong Kong has to give up its name?

That question has no obvious answer. But it is going to get one.

Sources:

Vision Times

Perfil (Spanish)

Morrison Foerster — Vidal v. Elster analysis

National Law Review — USPTO China filings

Carlton Fields — Section 2(a) analysis

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The 48-year-old founder and former CEO of CaaStle Inc. pleaded guilty to securities fraud before U.S. District Judge J. Paul Oetken, agreeing to forfeit nearly $300 million and facing up to 20 years in prison. Sentencing is scheduled for August 5, 2026.

“Christine Hunsicker fashioned a massive fraud scheme, built on forged documents, fabricated audits, and material misrepresentations to hundreds of venture capital investors,” said U.S. Attorney Jay Clayton. “Today’s guilty plea sends a clear message: individuals who exploit investor trust for personal gain will be held accountable. Fraud in the venture capital ecosystem not only harms investors financially, but also undermines innovation and confidence in emerging businesses.”

The $200 Million Screenshot That Showed $200,000

The details in the federal indictment read like a masterclass in financial fabrication.

In one instance, Hunsicker provided an investor with fake bank account screenshots showing nearly $200 million in available cash. The actual balance? Less than $200,000.

That wasn’t a one-off. According to prosecutors, Hunsicker provided investors with falsified income statements, fake audited financial statements, fictitious bank records, and sham corporate documents that grossly overstated CaaStle’s operating profit, revenue, and available cash.

She also told investors their funds would be used to purchase discounted shares from existing shareholders who needed liquidity. Those shareholders didn’t exist. She fabricated them entirely, using the money as new capital for CaaStle while concealing the company’s desperate cash needs.

At its peak, CaaStle was valued at over $1.4 billion. Behind the “Clothing-as-a-Service” buzzwords and sustainability narratives, the company was in financial distress with limited cash and significant expenses.

The Brands That Bought In

CaaStle wasn’t some obscure startup operating in the shadows. It powered rental services for recognizable names across the fashion industry.

The company’s client roster included Vince, Rebecca Taylor, Express, Banana Republic, Scotch & Soda, Walmart’s Eloquii brand, Lauren Ralph Lauren, L.K. Bennett, Derek Lam 10 Crosby, and Destination Maternity. In the UK, it partnered with Moss Bros to launch “Moss Box,” a men’s subscription rental service.

Hunsicker positioned CaaStle as the infrastructure layer for fashion’s circular economy. Brands used their own inventory while CaaStle handled the technology, logistics, cleaning, and fulfillment. It was meant to be the unsexy but essential backbone of sustainable fashion.

The Princeton Lie

The DOJ press release reveals a particularly brazen moment in October 2023, when an audit firm confronted Hunsicker about transmitting a fake audit to an investor.

Her response? She claimed she had created the fake audit in connection with a lecture she gave at Princeton University, and that sending it to the investor had been “a one-time error.”

In reality, Hunsicker had provided two fake audits to that investor while soliciting an investment. She later repaid that investor to prevent the public disclosure of her fraud.

But she didn’t stop. One month later, in October 2024, she provided a different investor with yet another fake draft audit.

Forging Board Signatures

The fraud extended beyond fake financials.

In 2024, Hunsicker falsified the signatures of two Board directors to make it appear that the Board had authorized the grant of stock options to another investor. This forgery helped her raise more than $20 million for CaaStle.

When the CaaStle Board finally caught on in December 2024, they removed Hunsicker as Chair and explicitly prohibited her from soliciting investments.

She continued anyway.

P180: The Scam Within the Scam

In 2024, as CaaStle’s finances crumbled, Hunsicker launched a new venture called P180. The plan was elegant in its circularity: P180 would acquire clothing brands, those brands would then pay for CaaStle’s services, and that money would flow back into the failing company.

She raised millions from the same investors she had already defrauded with CaaStle. In soliciting these investments, she repeated the same misrepresentations about CaaStle’s financial performance and failed to disclose that her prior representations had been false.

P180 did complete one acquisition: Vince Holding Co. in January 2025. That company has not been implicated in the fraud.

The FBI Seizure She Ignored

In February 2025, Hunsicker attempted to sell an additional $19 million of her CaaStle shares to another investor—despite the Board’s explicit prohibition.

Then, in March 2025, law enforcement agents seized her electronic devices.

Even that didn’t stop her.

According to prosecutors, after the FBI seizure, Hunsicker continued to meet with the investor about a fake audit without revealing its fraudulent nature, her removal from the Board, or the prohibition against her selling shares.

CaaStle filed for Chapter 7 bankruptcy on June 20, 2025.

The Rise and Fall

Hunsicker’s credentials once seemed impeccable. She was named one of Inc. magazine’s “Most Impressive Women Entrepreneurs” and featured on Crain’s “40 Under 40” list.

She first entered the rental space with Gwynnie Bee in 2012, a plus-size subscription service that later evolved into CaaStle’s B2B platform. Her pitch was compelling: in a world of fast fashion and overproduction, rental offered brands a way to monetize inventory more efficiently while giving consumers access to variety without the waste.

“Instead of disposing of it, someone else is wearing it,” Hunsicker told WWD in 2018. “You can still have the same ‘I’m only going to wear it once or twice attitude,’ but the next person is wearing it once or twice and the next person is wearing it once or twice.”

The sustainability angle was particularly appealing in an industry under pressure to address its environmental impact.

What This Means for Fashion Tech

The CaaStle collapse raises uncomfortable questions for an industry that has embraced the language of disruption and sustainability.

Fashion rental as a concept isn’t dead. Urban Outfitters’ Nuuly continues to grow, and Rent the Runway remains operational. But the CaaStle case demonstrates the dangers of venture capital’s growth-at-all-costs mentality when applied to fashion’s traditionally thin-margin economics.

“We will continue to pursue those who deceive investors and distort our private markets,” Clayton said.

For brands that partnered with CaaStle, the fallout has been minimal—most had already wound down their rental programs or transitioned to other providers. But for the hundreds of investors who believed in Hunsicker’s vision, the loss is real.

The Lesson

The fashion industry has been slow to adopt technology and slower still to embrace circular business models. CaaStle positioned itself as the solution to both problems—a bridge between legacy retail and sustainable innovation.

What Hunsicker sold was a story: that fashion could be profitable, sustainable, and technologically sophisticated all at once. It was exactly what investors wanted to hear.

The guilty plea reveals the reality was far more mundane: a company that couldn’t generate meaningful revenue, run by a founder willing to fabricate whatever numbers were needed to keep the money flowing—even forging Board signatures, inventing shareholders, and lying to the FBI.

Sentencing is scheduled for August 5, 2026. Hunsicker faces up to 20 years in prison.

For now, the case stands as a warning: in fashion tech, as in fashion itself, not everything that glitters is gold.

Sources:

1. U.S. Attorney’s Office, Southern District of New York – CaaStle Founder Pleads Guilty to $300 Million Fraud Scheme
2. WWD – CaaStle Rental Tech Platform Expands to the U.K. with L.K. Bennett and Moss Bros
3. WWD – Christine Hunsicker’s Fraud Scheme a Lesson for Fashion Investors
4. WWD – The Savvy Rental Strategy behind CaaStle (2018)
5. Business of Fashion – Rental Retail: Is There Enough Demand?

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The glasses sold over 7 million units in 2025. Meta marketed them as “designed for privacy, controlled by you.” Turns out, that’s not quite how things work.

What Workers in Kenya Are Actually Seeing

The investigation focused on Sama, a Nairobi-based company that Meta hired to train its AI systems. Journalists talked to more than thirty employees. All of them spoke anonymously because they were worried about losing their jobs.

What they described was not subtle.

“In some videos, you can see someone going to the toilet, or getting undressed,” one worker said. “I don’t think they know, because if they knew, they wouldn’t be recording.”

Another put it more bluntly: “We see everything—from living rooms to naked bodies. Meta has that type of content in its databases.”

The list of things contractors have watched includes bathroom footage, people changing clothes, sexual activity, credit card numbers visible in recordings, and private conversations about relationships and alleged wrongdoing. One worker described watching a man leave his glasses on a bedside table, then seeing his wife walk in and undress—completely unaware she was being recorded.

The workers draw bounding boxes around objects, assign labels, check transcriptions. Standard AI training work. Except the material isn’t stock photos. It’s other people’s lives.

The Privacy Features That Don’t Work

Meta says faces get blurred before contractors see anything. According to the workers, that’s hit or miss at best.

A former Meta employee confirmed it to the Swedish reporters: “The algorithms sometimes miss. Especially in difficult lighting conditions, certain faces and bodies become visible.”

The glasses have a small LED that’s supposed to light up when recording. In theory, people around you can see it and know what’s happening. In practice? Bright sunlight washes it out. Crowded rooms make it easy to miss. Some people just cover it up.

There’s no real opt-out either. If you want the AI features—the translations, the object identification, the hands-free assistant—you have to agree to let Meta process your footage. The AI doesn’t work offline at all. Journalists tested it.

Meta’s terms do mention that “in some cases, Meta will review your interactions with AIs, including the content of your conversations with or messages to AIs, and this review may be automated or manual (human).”

Manual. Human. Workers in Kenya watching you in your bathroom.

The Lawsuits and Investigations Piling Up

Things moved fast after the story broke.

On March 5, Clarkson Law Firm filed a class action in the Northern District of California. Plaintiffs Gina Bartone from New Jersey and Mateo Canu from California bought the glasses believing Meta’s marketing. The lawsuit also names EssilorLuxottica, Ray-Ban’s parent company.

Ryan Clarkson, the firm’s managing partner, wasn’t gentle: “Meta made a promise to millions of consumers while knowing full well it could not keep it. Workers thousands of miles away have been watching footage from inside people’s bedrooms all along. That is not a technicality or an oversight—that is a system working exactly as designed.”

The UK’s Information Commissioner’s Office announced it would contact Meta for information about data protection compliance. They called the allegations “concerning.”

In the EU, 17 Members of Parliament from four different political groups formally asked the European Commission whether Meta is following GDPR rules. The problem? Kenya doesn’t have EU “adequacy” status. That means its data protection standards haven’t been recognized as equivalent to European law. The EU and Kenya only started talking about this in May 2024.

In Kenya, The Oversight Lab filed a petition with the Office of the Data Protection Commissioner. Sama is already dealing with human trafficking and labor exploitation claims from former Facebook content moderators. A Kenyan court ruled Meta can be sued there. That case is moving forward.

What This Means for Fashion Tech

Smart wearables are becoming normal. That’s the whole point—the glasses look like regular Ray-Bans. You can’t tell someone is wearing a camera on their face anymore.

This is the trade-off nobody talked about clearly enough.

There’s the bystander problem. People around someone wearing these glasses have no idea they’re being filmed. That little LED isn’t doing much. There’s the cross-border data problem. Your footage can end up on a computer in Nairobi whether you’re in Stockholm or San Francisco. There’s the human review problem that Meta buried in its terms of service.

Kleanthi Sardeli, a data protection lawyer with the privacy group NOYB, called it “a clear transparency problem.” Once footage gets fed into AI models, she said, “the user in practice loses control over how it is used.”

Petter Flink, a security specialist at the Swedish data protection authority, put it simply: users have “really no idea what is happening behind the scenes.”

Meta’s Position

The company has responded with carefully drafted statements.

“Ray-Ban Meta glasses help you use AI, hands-free, to answer questions about the world around you. Unless users choose to share media they’ve captured with Meta or others, that media stays on the user’s device. When people share content with Meta AI, we sometimes use contractors to review this data for the purpose of improving people’s experience, as many other companies do. We take steps to filter this data to protect people’s privacy and to help prevent identifying information from being reviewed.”

When the Swedish journalists visited ten eyewear stores, employees often didn’t know what data the glasses transmit, where it goes, or how recordings get processed. The people selling the product couldn’t explain what it actually does with your information.

If You Own These Glasses

Check your settings. Go to Privacy, then Data Sharing. Understand what you’ve agreed to.

Know that any time you ask the AI to “look” at something, that image could end up in front of a human reviewer.

Don’t leave them in private spaces. The bedside table is the worst possible spot.

Treat them like a live camera that someone else might be watching. Because sometimes, they are.

The Uncomfortable Question

One early adopter posted on social media after the investigation came out: “The day I found out my glasses were sending video to Kenya, I stopped wearing them.”

The post got two million views.

Fashion tech is supposed to make life easier. These glasses can translate languages, identify landmarks, take hands-free photos. The features are genuinely useful.

But someone in Nairobi is watching footage of strangers in their bedrooms to make those features work. The face-blurring doesn’t always blur. The privacy promises have asterisks. The terms of service are unreadable on purpose.

Is smart fashion worth it? That depends on how much you trust the system. And whether you think your bathroom should be part of someone’s workday.

Sources:

1. Svenska Dagbladet and Göteborgs-Posten Joint Investigation (February 27, 2026) — Primary source for contractor testimony
2. TechCrunch: “Meta sued over AI smart glasses’ privacy concerns” (March 5, 2026)
3. Clarkson Law Firm Press Release: “Meta AI Glasses Class Action Lawsuit Filed” (March 5, 2026)
4. Euronews: “Meta faces privacy lawsuit over AI smart glasses” (March 6, 2026)
5. Digital Watch Observatory: “EU pressures Meta over alleged smart glasses privacy breaches” (March 2026)
6. The Register: “Meta smart glasses face UK privacy probe” (March 5, 2026)
7. Help Net Security: “Workers reviewing Meta Ray-Ban footage encounter users’ intimate moments” (March 5, 2026)
8. HapaKenya: “Oversight Lab petitions ODPC to probe Ray-Ban Meta glasses” (March 9, 2026)
9. TechCabal: “Kenyan workers say Meta Ray-Ban AI glasses expose intimate moments” (March 4, 2026)
10. Decrypt: “Inside the Ray-Ban Smart Glasses Controversy Plaguing Meta” (March 2026) — Cited for 7 million units sold
11. Engadget: “Meta hit with a class action lawsuit over smart glasses’ privacy claims” (March 5, 2026)

Disclaimer: This article is for informational purposes and does not constitute legal advice.

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