Amazon and eBay -- China's Counterfeit Pipeline To The U.S. Market

Websites flood consumers with fake goods.

June 12, 2018 - Los Angeles, CA – Consumers would be shocked to learn they are throwing away good money for an inexhaustible supply of fake goods sold on Amazon and eBay.

A recent ABC news reports and a 2018 Government Accountability Office ("GAO") Report each illuminate the enormous problem of online counterfeit goods, which is growing exponentially. Forbes deemed the e-commerce giants a "cesspool of counterfeits and other illegal and potentially dangerous goods."

The Problem; Unknown to most consumers, e-commerce websites allow unvetted worldwide third-party sellers to inundate their websites with counterfeit goods, including dangerous and deadly items. About 50% of Amazon's business, and 80% of eBay's business comes from these online global "Marketplace" sellers.

The Consequence; one-third of online shoppers received an unexpected surprise last year - they unwillingly received a counterfeit product from U.S. and cross-border scam artists.

The websites take a transaction fee for each item sold.

An ABC special featured The Counterfeit Report®, a popular counterfeit awareness and consumer advocate, who has removed listings for over 26 million counterfeit items offered on e-commerce websites. Only eBay reports actual sales figures, which reflect consumer purchases of over 750,000 counterfeit items from just a tiny sample of listings targeted by The Counterfeit Report.

• Alarmingly, the e-commerce giants did not notify buyers they received a fake after the receiving counterfeit notifications, and have skirted secondary liability for enabling the sale of counterfeits.¹
• Inexplicably, while Amazon may remove a counterfeit product from its U.S. website (Amazon.com), Amazon allows the same products and sellers to remain and continue selling on Amazon's other global websites (e.g. Amazon.co.uk. Amazon.fr, Amazon.it, etc.). The counterfeits may still be shipped to the U.S.

Amazon and eBay each responded with statements they do not allow counterfeits, fakes or replicas, yet the GAO reported that about 50% of the items it purchased in an undercover investigation were counterfeit.

Would consumers suspect the items below, offered on Amazon and eBay, are all counterfeit? Even fake police badges and eBay prescription pill presses to make replica Oxycodone, Alprazolam and Xanax are offered without consequence.

(Photo: ©The Counterfeit Report)

Row 1 - Monster® never made a Tron model headphone. Supra® never produced a "Justin Bieber" model skateboard shoe, and the Drew Technologies® Mongoose® Pro vehicle diagnostic and programming interface cable was never made in purple. Vans® does not make or license the use of the VANS® trademark on iPhone 6, 7 or 8 phone cases. Your life could literally be riding on this counterfeit vehicle suspension part. Group-A Autosports® never made the Skunk2® lower suspension control arm in the color shown. An automobile suspension part failure can cause a catastrophic accident with fatal consequences to those in, and around, the counterfeit equipped vehicle.

Row 2 - Authentic Dr. Numb is not made in the 10g size shown here. Counterfeit Dr. Numb® 5% Lidocaine Cream submitted for ingredient testing did not contain any Lidocaine as indicated, but Tetracaine, a potentially fatal drug. Composite Resources, Combat Application Tourniquet® (C-A-T®), has been supplied to the U.S. Military, police, first responders and the public worldwide for the past decade but was never produced in tan. Counterfeit versions of the C-A-T tourniquet have catastrophically failed during actual life-saving applications. eBay listings offer drug pill presses to make replica prescription drugs including Oxycodone, Alprazolam, and Xanax. The Drug Enforcement Administration ("DEA") and FBI (obviously) do not sell their badges on eBay or Amazon, but counterfeits are available to terrorists, child predators and other criminals. CREE®, a global manufacturer of lighting products, does not make flashlights, yet they are sold on Amazon and eBay.

Row 3 - The various micro SD® memory cards shown were never licensed by SD-3C, LLC, the right holder of the microSD® trademark, and never produced in any authentic product line in the format and capacities shown. Pharmaceutical giant Novartis does not make its OTC anti-fungicide medication, Lamisil®, in the liquid form shown, but it is sold on Amazon and eBay.

Everyone knows selling counterfeits is illegal, yet through huge legal loopholes, and virtually immune to prosecution, IP laws and safety standards, Amazon and eBay continue to enable and facilitate criminal activity, and profit from counterfeit sales which destroy manufacturers and directly impact consumer safety, jobs and public trust.

"Counterfeiting and piracy continue to grow at an astounding rate” states the 2017 report THE ECONOMIC COSTS OF COUNTERFEITING AND PIRACY commissioned by the International Trademark Association (INTA) and the International Chamber of Commerce (ICC), Business Action to Stop Counterfeiting and Piracy (BASCAP) Unit. The report forecasts the total economic value of counterfeit and pirated goods will grow to $2.8 trillion by 2022. The report also identifies the significant global impact on employment and net job losses, reported at 2 to 2.6 million jobs for 2013, and projected to rise to 4.5 to 5.4 million job losses by 2022.

Congress can act to punish offenders and protect consumers, and consumers can shop elsewhere - will they?

Footnotes:

⁽¹⁾ In a devastating blow to manufacturers and consumer protection, the U.S. Court of Appeals upheld a U.S. District Court decision by Judge Ricardo S. Martinez excusing Amazon from liability in the sale of counterfeit items on its website. (Milo & Gabby, LLC. v. Amazon.com, Inc.)