Amazon Gets White House Ultimatum -- Clean Up The Counterfeits or Else

E-commerce giant facilitates fakes, fraud, and scams

April 24, 2019 - Los Angeles, CA – Amazon's deceptive marketplace and business practices received a long overdue warning from Washington -- clean up the counterfeits or the government will.

Amazon has opened counterfeiting to the whole world and is awash in counterfeit product sales, scams, fake reviews and allegations of data leaks and employee bribes. While Amazon continues to tell the media and policymakers that it has "zero tolerance" for counterfeits and bad actors, the statement is patently false.

Peter K. Navarro, White House assistant to President Trump for trade and manufacturing policy, wrote a harsh condemnation in the 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 the Presidents 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.

Is it too little, too late? The invasive, manipulative superpower already controls 50% of online sales, snubs brand-owners, and has repeatedly received Washington warnings and ignored them or created programs that lack teeth.  

Here are the facts;

• Amazon's shady counterfeit practices captured the attention of federal investigators. The U.S. Government Accountability Office ("GAO") conducted an undercover investigation of e-commerce counterfeit goods sales. The GAO reported that about 50% of the items it purchased from e-commerce websites, including Amazon, were counterfeit.
• Federal Communications Commission ("FCC") Director Michael O'Rielly sent a letter to Amazon's CEO, Jeff Bezos, telling him to knock off the counterfeits.
• Amazon exploits last mile delivery USPS fees and low rates unavailable to its competitors, receiving a $1.46 postal subsidy per package reports the WSJ. The President also ordered the ending of deeply discounted U.S. Postal fees (as little as $2.50 for first class) known as "Terminal Dues" for delivery of international mail. The action should severely disable Chinese counterfeiters and dishonest sellers using e-commerce websites, including Amazon sellers, from mailing an enormous amount of counterfeit, fake and replica goods to unsuspecting buyers in the USA.
• The American Apparel & Footwear Association ("AAFA"), which represents more than 1,000 brands, has recommended that Amazon be added to the U.S. Notorious Markets List - a government list reserved for the worst online markets that enable and facilitate the world's largest criminal enterprise; copyright piracy, trademark infringement and counterfeit product sales.

The Counterfeit Report, an award-winning industry watchdog and consumer advocate, found and removed over 58,000 infringing items from Amazon's websites on behalf the brand owners -- a stark rebuttal to Amazon's illusory brand protection claim; "The sale of counterfeit products is strictly prohibited." Counterfeit complaints are often ignored, sellers remain, and the counterfeits are relisted.

Amazon Corporate Counsel Annasara Purcell responded stating Amazon counterfeit removals are jurisdiction specific -- Amazon may remove counterfeits in one country but leave them in others where they can be sold and shipped worldwide to deceived consumers. The Counterfeit Report did just that, purchasing counterfeits from U.S. sellers listing overseas and shipping to the U.S. That's OK with Amazon -- they still take a transaction fee for each fake item sold.

Amazon’s own reports reveal they receive an infringement notice for 1 of every 100 customer page views, and over 100,000 brands have signed in to Amazon’s Brand Registry program fight counterfeits on Amazon -- a shocking revelation of the enormity of Amazon's counterfeit problem.

Federal and State Investigators should consider various legal options including; Wire Fraud, Racketeering, Mail Fraud, Money Laundering, a variety of state consumer protection laws and unfair competition laws, Breach of Express Warranty, Breach of Implied Warranty of Merchantability, Negligent Misrepresentation, Fraudulent Misrepresentation, Fraudulent Concealment, Breach of Covenant of Good Faith and Fair Dealing and Unjust Enrichment. Closer IRS scrutiny of Amazon's tax practices may also be in order; Amazon paid no Federal Income Tax on $16 billion profit in 2017 and 2018.

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. Congress can enact legislation that holds e-commerce websites accountable for their sleazy practices. Will they?

Until then, consumers only choice is to avoid businesses that enable, facilitate, or participate directly as global criminal enterprises.