EOS Lip Balm -- Customers Say, 'We'll Give You Lip, In Court!!!' (UPDATE)

WEDNESDAY 1:29 PM PT -- EOS tells TMZ, "We firmly believe this lawsuit is without merit. Our products ... exceed all safety and quality standards set out by our industry ... . The health and well-being of our customers is our top priority."

EOS -- which makes a wildly popular lip balm touted by the likes of Kim Kardashian and Britney Spears -- is being sued by a bunch of customers who say they used the product and ended up a bloody mess.

A woman named Rachael Cronin has filed a class action lawsuit against the company, which sells its product in colorful, egg-shaped pods. Kim, Britney, Hilary Duff and others are brand ambassadors.

The suit claims the product has produced a panoply of bad reactions, including severe rashes, bleeding, blistering, cracking and loss of pigmentation.

Cronin claims her experience was awful ... she says within hours of applying the balm, her lips felt like sandpaper, so she applied it again. She claims her lips started cracking, flaking and bleeding, creating blisters and rashes which lasted 10 days.

The suit -- filed by Mark Geragos -- asks for damages and demands corrective advertising.