Okay, you need to be really careful about this if you’re the sort of person who cares. I regularly check labels, and I subscribe to a newsletter that publishes which products made by which companies test on animals in any regard, including ingredient testing. I have even called up companies to get information.* PETA can actually be a good source of information in this area. (Although don’t trust too much else they might say- they’ve been known to fiddle with the facts for their own ends, too.)
Yes, those labels are there to increase sales. Yes, there are people who care and check regularly. Yes, some companies lie, or at least bend the truth a bit. For the past 30 or so years, consumers have become more concerned about what is actually going on with the products they buy, but they are not on average any more educated about this than they ever were. So sticking a label on your product that says “not tested on animals” can actually increase sales in some markets, but may not be strictly true. And this is plenty good enough for most people; companies have become more conscious of their public image with the green crowd and don’t want to bend the truth too far lest someone look too closely. (I suppose they could be slammed for false advertising otherwise, even though they’re not technically lying.)
Many consumer beauty products are still tested on animals, it’s true. Skin and eye irritation tests are still going on, and I know some products are even tested for carcinogenic effects. Some companies, however, have moved away from animal testing for several reasons, such as a change in company policy, a move to target the “green” market, or simple economic reasons, as building and maintaining adequate animal labs is an expensive proposition.
The best way to get accurate information is still to check around with various watchdog groups and update your info every few months. But it’s best to pick a group you can trust and has a good track record. Checking PETA is a good starting point, but do more research, as those people are 1) crazy; and 2) not above outright lying, especially if they’ve got another one of their interminable lawsuits going on. Various environmental groups also provide this information, and if you really want to get into it, trying searching the internet for trade journals.
*Never do this unless you have a few hours to spare and don’t mind being put repeatedly on hold, transferred through about 6 public relations offices, and making people very uncomfortable by asking lots of questions. On the upside, if you do call up a company and ask for info, they may send you free samples or coupons to get you to stop calling. Calling up a “green-friendly” company will get you plenty of free samples and coupons, but also a long speech about animal rights and environmental concerns, and probably a request for donations to their favorite charity group. You’ve been warned.