Counterfeit Sales Destroying Amazon's Credibility

Consumer protections disappearing, but counterfeits remain.

June 27, 2017, Los Angeles, CA – Amazon has a credibility problem. While Amazon would like consumers to believe that Amazon (NASDAQ: AMZN) provides an honest and safe place to buy name-brand goods – and only authentic name brand goods - it is not true. Amazon is enabling and facilitating the sale of counterfeit products.

So challenging are counterfeits for Nike that the sportswear giant is in talks to commence selling Nike shoes directly on Amazon. Did Nike get bullied into direct sales on Amazon to combat over 70,000 Nike listings from outside Marketplace sellers identified by one Bloomberg source? The news is punishing the shares of retailers, while Nike announced plans to eliminate more than 1,000 jobs, or about 2% of its workforce. Seeking Alpha® reports "Investors should avoid investing in Nike right now."

About 50% of Amazon sales are not from Amazon, but from outside global sellers, many from China, who can list just about anything they want, including counterfeits. Amazon receives a transaction fee on each sale through its 13 worldwide websites (e.g. amazon.com, amazon.fr, amazon.co.uk, etc.). Amazon makes about $2.6 billion in net income.

Counterfeit products appear right next to authentic items conveying Amazon’s endorsement, and the illusion the products are from Amazon. Consumers don't know they have a very real possibility of receiving visually indistinguishable counterfeit goods from unknown and unvetted global sellers. Some can be dangerous or deadly.

Despite trademark, copyright and patent infringement, Amazon posts this illusory policy claim; "The sale of counterfeit products, including any products that have been illegally replicated, reproduced, or manufactured, is strictly prohibited."   The truth is that counterfeits and replicas can be, and are, easily listed and sold on Amazon.

In addition to Amazon's ongoing PR stunts including touting Amazon's anti-counterfeiting efforts and initiating lawsuits against two Amazon counterfeit sellers, sharply contrasting activity is occurring in the background;

• Amazon argued and won a U.S. Appeal’s Court decision to disavow itself from any responsibility for 'offering to sell' counterfeits products.
• Amazon does not inform buyers they have received counterfeit products - even dangerous or potentially deadly items. Of course, buyers would then be entitled to a refund under “Amazon’s A-Z Guarantee.”
• Apple reported that 90% of Apple® products it purchased directly from Amazon were counterfeit.
• The Recording Industry Association of America® (RIAA) placed orders with Amazon and found that 44 of the 194 top CD's delivered were counterfeit.
• Birkenstock® pulled the plug on Amazon sales of its popular sandals citing counterfeit enforcement problems.
• Smaller manufacturers, regularly featured in the news, highlight the jobs being destroyed by Amazon’s counterfeit practices.
  
• After counterfeit listings are removed, consumers can still purchase the exact same counterfeit item, with the same listing ID on other Amazon global websites. Amazon requires that; “Your trademark, patent, or design must be in "registered" status in the country or territory were the infringement is happening; counterfeit or not.”

How does Amazon respond to counterfeit complaints, and by extension protect Amazon consumers?

The Counterfeit Report^®, a consumer advocate and watchdog, sent formal infringement notices authorized by the trademark holders and on Amazon's own form, to Amazon for over 28,121 counterfeit items offered on Amazon. Amazon responded with inexplicably absurd rejections, requiring an average of 3 infringement notices to remove the listings. Jeff Bezos' Executive Relations Team telephonically responded with "I do understand it can be frustrating to deal with the seller infringement team. It appears clear to me you are providing the appropriate information and contacting the appropriate team, continue to contact them."

Manufacturers simply do not have the time and resources to repeatedly deal with the obstructions presented by Amazon, nor can they suffer the consequences and financial devastation from lost sales incurred from Amazon’s counterfeit practices.

After notifying Amazon of the problems and inarguable counterfeit listings for months, Amazon's Head of Product Integrity, Melissa Kriz, acknowledged and claimed the issues would be resolved, but that promise was simply lip service.

A recent CNBC report says it best; “In Amazon's quest to be the low-cost provider of everything on the planet, the website has morphed into the world's largest flea market — a chaotic, somewhat lawless, bazaar with unlimited inventory.”

If Amazon wants to maintain any consumer trust, they need to cleanse dishonest and fraudulent sellers and close counterfeit loopholes. Web platforms that facilitate criminal activity and benefit from the proceeds of dishonest actions which impact jobs, consumer safety and public trust create a public perception of deception with impunity. However, reputation damage is only a small part of the problem: counterfeiting costs U.S. manufacturers over $250 billion, and U.S. workers over 750,000 jobs.

How will consumers react?