eBay and Amazon Risky for Holiday Shoppers

Websites are ideal for counterfeit sellers.

November 21, 2016 - Los Angeles, CA – When e-commerce giants eBay and Amazon try to maximize profits, the collateral damage to manufacturers and consumers can be enormous, and devastating.

Both eBay and Amazon have channeled their business model into online “Marketplace” retail outlets which allow un-vetted 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 and brand, only to have their companies destroyed by Chinese counterfeits sold on e-commerce websites. The e-commerce websites are proving to be the 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 2.5 million counterfeit items on eBay and reported over 1.8 million to eBay for listing removal. Over 560,000 were already reported sold to eBay consumers. While the sellers usually remain and may relist the fakes, 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 rights 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." Unfortunately, many counterfeit items are listed and sold before eBay acts to remove them.

The Counterfeit Report 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 a registered 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 Report’s 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.com (Amazon as a direct retailer “Sold and Shipped by Amazon.com”)
2. Amazon Fulfillment (provided to Amazon by a third-party for warehousing and shipping)
3. Amazon Marketplace (un-vetted sellers list and ship products from all over the world)

Apple recently claimed that 90% of Apple products it purchased from Amazon Direct were fake. Birkenstock, a popular sandal maker, pulled the plug on Amazon sales citing an uncontrollable counterfeit problem. Smaller manufacturers complain that their business is being destroyed by the e-commerce sites counterfeit sales.

The Counterfeit Report conducted dozens of name-brand test purchases from Amazon Fulfillment and Amazon Marketplace sellers, but never received an authentic item. Counterfeits were also purchased from Amazon Direct. Infringement notices were submitted to Amazon for 11,713 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. Amazon recently announced it will deny all refunds to The Counterfeit Report for Marketplace counterfeit purchases.

Could you identify these actual counterfeits purchased on Amazon or eBay? Most don't 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 67,720 fake SanDisk®, Kingston®, Samsung® and unbranded Generic microSD® cards 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.
2. These counterfeit Marvel® action figures purchased on eBay are listed as LEGO® products -- they are not.
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.
4. The authentic Drew Technologies Mongoose Pro on-board diagnostic interconnect cable has the processor and all of the electronics integrated inside to re-program critical vehicle functions including braking, emissions and performance. This counterfeit purchased on Amazon may damage or destroy expensive vehicle computers and components, and alter safety features or performance specifications.
5. Fullips® instantly popular lip enhancer has a number of counterfeit counterparts on eBay, including sizes not offered by Fullips, and made with potentially hazardous materials. This counterfeit may look indistinguishable from the authentic item, but it is a counterfeit.
6. Vans® does not make iPhone 6 cases – but they are common on eBay and Amazon. Counterfeit product sales support criminals, organized crime and terrorists.
7. 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 purchased on eBay.
8. Dr. Numb® Over-the-Counter 5% Lidocaine topical pharmaceutical is not manufactured in a 10gr. size but was purchased on eBay. Unsuspecting consumers receive a fake product with unknown ingredients, and an obvious spelling error.

A CNBC report attributes fear of retribution to limiting comments about the website's practices, which may be well founded. In addition to having its Amazon refunds blocked, eBay blocked The Counterfeit Report's accounts after thousands of counterfeit item test purchases. A letter from eBay's 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 their 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 offering 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.