Trump Counterfeit Warning Targets Amazon, eBay, and Alibaba

E-commerce giants warned: clean it up or the government will.

April 4, 2019 - Los Angeles, CA – Peter K. Navarro, White House assistant to President Trump for trade and manufacturing policy, wrote a harsh condemnation in Wednesday's WSJ; "when you purchase brand-name goods through online third-party marketplaces like Alibaba, Amazon, and eBay, there’s a good chance you’ll end up with a counterfeit." The criticism accompanied President Trump's signing a presidential memorandum to help protect American consumers, manufacturers and factory workers from a flood of counterfeits and the widespread direct-to-consumer shipments of infringing and replica goods.

The e-commerce giants enable and facilitate an enormous amount of counterfeit, fraudulent and replica goods to be sold and shipped to unsuspecting consumers while taking a transaction fee for each item sold. The 2018 Global Brand Counterfeiting Report found that two-thirds of consumers who had unintentionally bought counterfeit goods lost trust and then often avoided the legitimate brand. Brands are tarnished, while companies and jobs are destroyed.

The Counterfeit Report, an award-winning consumer advocate and counterfeit watchdog, has removed over 187 million counterfeits from Amazon, eBay, and Alibaba on behalf of brand owners. Despite repeated infringement complaints, the counterfeits continue to flood the e-commerce marketplace. Fraudulent sellers simply change their names, relaunch and relist as quickly as they are removed.

In Operation Mail Flex, a 2017 investigation, Customs and Border Protection officers randomly examined more than half of the express-mail packages arriving daily from Hong Kong and mainland China over five days -- and seized 43% of them. These seizures included 1,297 noncompliant imports, such as counterfeit pharmaceuticals (along with controlled substances, including fentanyl).

The U.S. Government publishes its yearly "Notorious Markets List" of the worst online-markets that enable and facilitate the world's largest criminal enterprise -- copyright piracy, trademark infringement and counterfeit product sales. China's billion-dollar bad boy of counterfeits, Alibaba, has the distinction of being on this list of public censure.

The American Apparel & Footwear Association (AAFA), which represents more than 1,000 brands, has recommended that Amazon (AMZN) be added to the Notorious Markets List. Amazon is awash in counterfeit product sales, scams, fake reviews and allegations of data leaks and employee bribes. While Amazon continues to claim it has "zero tolerance" for counterfeits and bad actors, the statement is patently false. Amazon's own reports state that over 100,000 brands are fighting counterfeit products on Amazon, and Amazon receives an infringement notice for 1 of every 100 customer page views. Hardly a testimonial to a safe consumer buying environment.

Shockingly little protection is afforded e-commerce consumers;

• The e-commerce giants won't notify consumers they received a counterfeit even after the brand owner's notification and listing removal.
• Amazon, with 50% of online sales, argued and won a U.S. Appeal's Court decision to disavow itself from any responsibility for 'offering to sell' counterfeit products. "Alibaba, Amazon, and eBay face virtually no liability when they act as middlemen for counterfeiters" states Mr. Navarro.
• eBay blocked The Counterfeit Report's accounts and threatened legal action for any test purchases, including dangerous or deadly products. Amazon refuses counterfeit listing removals and its A-z Guarantee claims for counterfeit products, while Alibaba is often simply unresponsive to infringement complaints.

The value of counterfeit and pirated goods is forecast to grow to $2.8 trillion, and cost 5.4 million net job losses by 2022 states a 2017 International Chamber of Commerce Report.

Consumers have the choice to avoid businesses that enable and facilitate global criminal enterprises, and Congress can enact legislation that holds e-commerce websites accountable for their sleazy practices. Will they?