Aught Six, Sawbill:

the cruelty-free make up as it is sold was never tested on animals. However, the government would not allow something on the market like makeup that was never tested. the way it works is that each component was tested on animals for another product, usually a different brand of lipstick, rouge, or whatever. Then the "cruelty-free" company takes those studies and says, well it was ok from their testing so we will use it in our "cruelty-free" product.

they simply aren't the ones testing. they use others to test.
beej