As a beauty industry executive, Joshua Morgan spent 17 years working at some of the industry’s top companies – including Aveda, Giorgio Armani Beauty and Laura Mercier – all the while suffering from severe plaque psoriasis, a chronic skin condition whose symptoms were exacerbated by the very products he promoted. He says fragrances, sulfates and colorants often triggered breakouts of itchy, red skin lesions, and even high-end personal care products purporting to be “organic” or “natural” irritated his skin.

Ten years ago, Morgan went to an herbalist in search of alternatives. Experimenting with essential oils that he derived from plants in his garden and other local sources, he created his own line of products and, in 2015, he and his business partner founded Little Barn Apothecary, a natural hair and skin care business. Today, the company’s products are sold in Urban Outfitters and dozens of other retail outlets across the US, Canada, Japan and Australia. The company expects to more than double its sales volume this year.

Little Barn’s success reflects a growing trend away from mainstream cosmetics and personal care products. According to natural market research firm Spins, sales of organic cosmetics and beauty aids increased by nearly 31% in natural and specialty store and supermarket outlets between 2014 and 2015.

Chemical safety is a growing consumer concern. A 2015 report by the nonprofit Environmental Working Group (EWG) says the average American uses nine personal care products – containing 126 chemicals – every day. Yet the federal agency responsible for overseeing the industry, the Food and Drug Administration (FDA), lacks the legal authority to approve most of these products before they go on the market. Some ingredients have never been tested. Even when they have, little may be known about how they interact with one another.

Among the chemicals causing concerns are suspected endocrine disruptors: diethyl phthalate (DEP), frequently used in fragrances, parabens and used as preservatives; and triclosan, an ingredient often found in antibacterial products like hand sanitizer as well as some toothpastes and soaps. Formaldehyde, a preservative found some hair straighteners and other beauty items, and coal tar, used in anti-dandruff shampoos, are among the known carcinogens present in many products.

Is smaller safer?

But the question remains: how healthy – or safe – are small-batch products? It’s difficult to answer, partially due to regulation that opponents like EWG and the Campaign for Safe Cosmetics say is weak and outdated. In general, the FDA regulates personal care products under the 1938 Federal Food, Drug and Cosmetics Act, which requires that a cosmetic product must not be “adulterated”. In other words, it must be safe for its intended use and free, for example, from harmful bacteria and chemicals.

In practice, cosmetics oversight is limited. Except for color additives, the FDA does not require the government to review or test ingredients before personal care products go on the market. Instead, it relies on manufacturers to accurately list ingredients on product labels and vouch for their safety. Companies are not required to disclose customer complaints to the FDA, nor are they obligated to publish the results of their own health and safety studies.

Labeling on alternative personal care products can also been misleading. The FDA has not legally defined the term “natural”, so there’s no guarantee that a product advertised as such is free from harsh chemicals and other synthetic ingredients, or even that the majority of ingredients come from nature. A product labeled as “organic” does not necessarily contain 100% USDA-certified organic ingredients either.

Dr Alan Dattner, a New York-based holistic dermatologist, advises consumers of handmade goods to carefully research the source of the “organic” ingredients in their products. “What kind of evidence do they have that [a plant] was grown organically?” he says. “My concern would be that, compared to more experienced herbalists, people may or may not know.”

Nneka Leiba, EWG’s deputy director of research says that, to her knowledge, there is no organization specifically monitoring the safety of independent, ‘green’ products. EWG recently launched its own voluntary certification program, EWG Verified, to meet consumer demand for safe, natural personal care products, and smaller producers have been among the first to sign up.

But verifying product safety shouldn’t fall exclusively to watchdog groups, says Leiba. “Why isn’t the federal government watchdogging that entire industry and making sure those products are safe? EWG shouldn’t have to do that in an ideal world – every product on the shelf should be safe.”

Self-policing

While regulation is lax across the board, purveyors of handmade natural goods maintain that these small producers on sites like Etsy are more accountable to their customers. Etsy merchandising manager Emily Bidwell says that sellers on the site are asked to follow the company’s safety, labor and environmental policies and guidelines, and an internal team monitors compliance.

“While many people begin by experimenting with ingredients from their home, by the time they launch their product on Etsy, they have researched responsible sourcing methods,” she says. “I think there’s always that self-policing and quality control among the sellers, and we get flags from sellers and buyers.”

Bidwell adds that sellers tend to police one another. Reputation counts for a lot on the site: each Etsy shop links to reviews of its products, and allows customers to send questions and feedback directly to the shop owners. There are also Etsy online forums where people can pose questions to others with registered Etsy accounts.

Kristeen Griffin-Grimes, who has sold her popular French Girl Organics skin care products on Etsy for six years, says people who make similar products have a vested interest in ensuring that their competitors are adhering to high standards. “People who make things on Etsy and get bad reviews don’t last long,” she says. “It’s very review-driven, and in a way that’s the quality control, the marketplace itself.”

Changing the regulation structure

A bipartisan bill introduced last year would create greater quality control and standardization of cosmetics and other personal care products. The Personal Care Products Safety Act, co-sponsored by Senator Dianne Feinstein (D-CA) and Senator Susan Collins (R-ME), would require more stringent labeling and safety verification measures for both conventional and handcrafted products. Manufacturers would be required to register each year with the FDA and furnish documentation of ingredient safety through testing and expert analysis. They would also be obligated to post complete ingredient information and product warnings online.

The bill would give the FDA the authority to issue product recalls, instead of relying on voluntary industry recalls as it currently does. Each year, the FDA would also be required to review five ingredients commonly found in personal care products to determine safe levels. Among the first chemicals proposed for review are lead acetate, a suspected neurotoxin found in hair dyes, and propylparaben, a preservative in shampoos and lotions linked to hormone disruption.

Small producers of handmade natural and organic goods worry the law would hurt them: the costs associated with product registration and ingredient reporting are, they argue, disproportionate.

“The burden on small companies is just extraordinary,” says Mary Anne Walsh, legislative director of the Handmade Cosmetic Alliance, which argues that existing law already mandates that ingredients appear on product labels.

The vast majority of small, handmade goods producers already have ample incentive to be honest and forthright about their ingredients, she says, because their business depends heavily on cultivating relationships with customers.

“This bill will do nothing to stop bad actors: if you’re going to conceal ingredients, a new law isn’t going to change that.”

• This article was amended on 10 February 2016. An earlier version incorrectly stated that Etsy sellers were required to sign a contract upon joining the site.