Amazon CEO Jeff Bezos Snubs White House On Counterfeit Sales

U.S. Trade Advisor to the President slams Amazon's counterfeit marketplace.

February 6, 2020, Los Angeles, CA – “Online counterfeit trafficking is defrauding consumers at the very least and harming or even killing Americans with the fakes coming into our homes and businesses,” says Peter K. Navarro, Ph.D., top economic and trade advisor to the President. “This is a time for Jeff Bezos to stand up and do the right thing. If he needs to be educated on the problem, I am more than happy to go over this with him chapter and verse.” The well-deserved and long overdue admonishment targets Amazon's CEO for enabling and facilitating an endless supply of counterfeits, fraudulent, and replica products on Amazon's world-wide e-commerce platform.

“The reason I want to see Jeff Bezos is because Jeff Bezos could, in the blink of an eye, put a complete halt to the counterfeiting that Amazon is facilitating” Dr. Navarro said. “It’s a rare occurrence where a single individual can have an enormous impact on the issue — but so far, it’s ‘see no evil.”

The White House initiated strong sanctions Friday via Executive Order, along with "best practices" recommendations that will be the active role e-commerce platforms, online third-party marketplaces, and other third-party intermediaries such as customs brokers, fulfillment shippers, and express consignment carriers must take for monitoring, detecting, and preventing trafficking in counterfeit and pirated goods.

The Trump administration said it would begin imposing fines and other penalties on merchants, warehouses, and third-party websites such as Amazon that facilitate the import and sale of counterfeit and pirated goods.

The Department of Homeland Security will make the determination of whether such conduct affects that entity's opportunity to participate in transactions with the Federal Government. The consequences can be severe. Recently, the U.S. Department of Defense awarded its $10 billion cloud computing contract to Microsoft over Amazon. Did Amazon's nefarious activities influence the decision?

“For all practical purposes, these e-commerce hubs are basically laundries for counterfeits,” Dr. Navarro said at a news conference announcing the measures. “The thrust of the recommendation is to get e-commerce hubs to accept their fair share of the responsibility.”

As the marketplace grows, analysts say, it’s opened up new opportunities for overseas merchants and counterfeiters to sell counterfeits and replicas without much oversight. Amazon says its third-party merchants sold more than 1-billion items on Amazon during the holidays. Amazon's unvetted merchants are allowed to list and sell any number of products, including counterfeits, fraudulent, and replica products, some part of its Prime subscription program, and some bearing the "Amazon's Choice" endorsement.

Dr. Navarro also said Trump is angry over the trade of counterfeit goods on Amazon and “thinks it’s outrageous what the e-commerce platforms are getting away with” at the expense of brick-and-mortar retail stores in the United States.

"We’ll get it done” Bezos said, according to The Washington Post, which Bezo's owns, but Amazon is offering only to have senior executives meet with Dr. Navarro, not its chief executive.

This has escalated a long-simmering tension between the Trump administration and the United States’ largest e-commerce company. Amazon claims it already spends millions of dollars on the issue, including $400 million in 2018 on things like fraud and abuse. In contrast, Amazon is criticized for not paying any federal income tax on $11 billion in profit in 2018, taking advantage of the U.S. Postal Service, and investing $6 billion in Amazon's India operations.

"The Internet is not solely responsible for the worldwide availability of counterfeited and pirated goods, it has been key in facilitating their trade and distribution,” says Anish Melwani, CEO of LVMH, the parent company of dozens of high-end brands including Louis Vuitton, Fendi, and Guerlain North American operations. David Kahan, chief executive of footwear giant Birkenstock, likened Amazon’s practices to “modern-day piracy on the high seas,” and Nike pulled its products from Amazon “disappointed the deal with Amazon didn’t eliminate counterfeits and give the brand more control over gray-market goods.”

Amazon is not making a better marketplace that serves consumers. Amazon is no more than an arena of creative destruction, leaving consumers on their own to sort the legitimate, honest sellers from all the bad actors under an umbrella of legal immunity. Amazon is a voracious churner of counterfeit, replica, and fraudulent items, indifferent to the damage they cause to consumers, legitimate sellers, and manufacturers while fulfilling their desire to be the sole source of items for purchase. There is no incentive for Amazon to clean up its websites -- they make too much money.

Legislative and judicial intervention is warranted and long overdue for Amazon's indifference to the damage they cause to consumers, legitimate sellers, and manufacturers.