Amazon and eBay Marketplaces Ideal Outlets for Counterfeits

Websites face a credibility crisis for counterfeit sales

October 26, 2016 - Los Angeles, CA – When e-commerce giants eBay and Amazon try to monopolize profits, the collateral damage for manufacturers and consumers can be enormous, and devastating.

Both eBay and Amazon have channeled their efforts into online “Marketplace” retail outlets which allow global sellers to peddle hugely profitable counterfeit goods to unsuspecting consumers.

The problem isn’t just the well-known fakes; watches, shoes and handbags, but a vast counterfeit universe of auto parts, cosmetics, drugs, electronics, sporting goods, toys, and much, much more. Consumers can see the authentic and deceptive counterfeits on The Counterfeit Report® website, a popular consumer advocate and watchdog.

Many manufacturers have spent millions, perhaps billions, researching and building their products, only to have their companies destroyed by Chinese counterfeits sold on e-commerce websites. The e-commerce websites are proving to be an ideal platform to distribute the counterfeit goods.

eBay

eBay is migrating from the auction house of garage sale items and concentrating on Marketplace sales of new items (80%) at a fixed price (86%) from global sellers. That move is drawing an avalanche of counterfeits from both US and global sellers. 

For example, The Counterfeit Report identified over 2-million counterfeit items on eBay and reported over 1.3 million to eBay for listing removal. Over 550,000 were reported already sold to eBay consumers. While the sellers usually remain and may relist, the deceived eBay buyers are never told by eBay they received a fake and may be entitled to a refund.

After reporting the fraud, including one fraudulent seller with over 250 fake item listings, The Counterfeit Report was told by eBay’s intellectual property enforcement unit (”VeRO”); "We are not going to stop them from listing something",  "We will only act on the Notice of Claimed Infringement (“NOCI”) you send to us and in the order received."

The Counterfeit Report also purchased and received over 2,000 counterfeit products from eBay sellers. Many were fake items -- items that never existed in the manufacturer’s product line -- yet display the manufacturer’s trademark. The items remain listed on eBay, and eBay actually sends email solicitations promoting the purchase of the fake items. Weary of test purchases and refund demands, eBay blocked all of The Counterfeit Reports accounts.

Remarkably, buyers can’t even turn to eBay's feedback as an indication of seller credibility – eBay admits it may be altered, and the counterfeit listings that have been removed are not reflected in eBay seller feedback.  

Amazon

Many Amazon consumers do not recognize that Amazon listings present three distinct global product outlet channels, including its 2-million Marketplace account holders who can ship counterfeit products, which are never inspected by Amazon, from all over the world.

1. Amazon Direct (a direct retailer “Sold and Shipped by Amazon”)
2. Amazon Fulfillment (provided to Amazon by a third-party for warehousing and shipping)
3. Amazon Marketplace (sold and shipped directly from third-party sellers)

Apple recently claimed that 90% of Apple Chargers it purchased from Amazon Direct were fake. Birkenstock, a popular sandal maker, pulled the plug on Amazon sales citing an uncontrollable counterfeit problem.

The Counterfeit Report conducted dozens of name-brand test purchases from Amazon Fulfillment and Amazon Marketplace sellers, but never received an authentic item. Infringement notices were submitted to Amazon for 8,429 counterfeit items offered on the website. Despite Amazon’s claim that the listings were removed, some listings still remained, or the sellers were allowed to relist the inarguably fake items. Amazon allows multiple sellers to list against “permanent catalog page” images (stock photos) making identification of counterfeit products difficult.

Amazon policy claims “The sale of counterfeit products, including any products that have been illegally replicated, reproduced, or manufactured, is strictly prohibited” but Amazon is inconsistent in how they treat counterfeit complaints -- a continuous source of frustration in removing counterfeit listings. Complaints are processed through Amazon’s system in an arbitrary manner. One complaint may result in a listing being removed, yet a submission for the exact same thing again may fail -- an experience common with manufacturers and The Counterfeit Report, a manufacturer’s agent.

Could you identify these actual fake items offered on Amazon or eBay? None exist in the manufacturer's authentic product line.

(Clockwise from left – Photo: The Counterfeit Report®)

1. SanDisk® 64GB microSDHC memory card. The microSDHC® standard is limited to a maximum capacity of 32GB, but over 40,000 fake SanDisk®, Kingston®, Samsung® and unbranded Generic microSDHC® cards in capacities above 32GB were sold to consumers by eBay sellers. Data is lost or overwritten when the actual capacity, often far less than the printed capacity, is reached.  (view the alert)
2. Vans® does not make iPhone 6 cases – but they are common on eBay.  (view the alert)
3. The Lunatik® TakTik® Extreme model case is not made for the Apple iPhone 6® or in metal, yet The Counterfeit Report made dozens of purchases of poor quality counterfeit Lunatik® trademarked products representing over 160,000 sales to duped eBay consumers. (view the alert)
4. The authentic Skunk2® performance shift knob is only available in a matte titanium finish. The Counterfeit Report reported 2,443 colored fakes listed on eBay in red, neo, blue, green, gold and chrome. 1,600 had been sold to consumers. And yet, the items remain. (view the alert)
5. The Monster® trademarked Tron T1 Headphone was never produced or sold by Monster Products, yet unsuspecting consumers can be duped out of over $300 for this fake Monster product. (view the alert)
6. Dr. Numb® Over-the-Counter 5% Lidocaine topical pharmaceutical is not manufactured in a 10gr. size. Unsuspecting consumers receive a fake product with unknown ingredients, and an obvious spelling error. (view the alert)

A CNBC report attributes fear of retribution to limiting comments about the websites practices, which may be well founded. In addition to The Counterfeit Report having its own eBay accounts blocked after thousands of counterfeit item test purchases, a letter from eBay counsel, O’Melveny and Meyer’s partner David Eberhart, promises “eBay can and will contact the  companies that have designated [The Counterfeit Report] as an agent, inform them of [the] conduct, and request that they obtain another reporting agent.” 

E-Commerce giants, Amazon and eBay are no strangers to allegations of selling counterfeit goods. The e-commerce giants face a “credibility crisis” fueled by a failure to crack down on counterfeit goods and making it easy for the world’s largest criminal enterprise to peddle $1.7 trillion in counterfeit goods to unsuspecting consumers. Social media sites Facebook®, Twitter® and Instagram® have also become popular counterfeit outlets, while Walmart and Best Buy were also caught selling counterfeits.

Counterfeiting supports organized crime, terrorists and criminals who avoid taxes, destroy an estimated 750,000 US jobs, and cost US businesses over $250 Billion annually. Illegal counterfeiting activity is profitable, difficult to track and widely unpunished.

Buyer beware.