1.7 Million Fraudulent Products Expose eBay’s Counterfeit Ecosystem
eBay profits while consumers and manufacturers bear the cost.
August 23, 2016, Los Angeles, CA – Counterfeit trafficking on e-commerce websites is a clear example that just because something is “lawful” does not make it right. In the case of e-commerce giants, proving their intent in hosting of counterfeit sales can be difficult.
The Honorable Michael Mukasey, US Attorney General (2007-2009) and US District Judge (1988-2006) has stated, conscious avoidance of knowledge can be sufficient for liability. Yet, eBay claims it's "just a venue" and has immunity for counterfeit sales under eBay's often cited 2008 Tiffany (NJ) Inc. v. eBay Inc.1 lawsuit.
The Counterfeit Report investigated and identified over 1.7 million counterfeit and fake items listed or sold on eBay, after selecting just a handful of trademarked items.
Weary of The Counterfeit Report’s persistence in identifying and reporting its counterfeit and fake item sales activities, eBay utilized its high priced law firm, O’Melveny and Myers, who wrote:
“There is nothing illegal, improper, or misleading about selling iPhone chargers, or replacement printer ink cartridges, or a host of other unbranded competing products, replacement parts, or accessories unless those items bear counterfeit trademarks.” wrote O’Melveny & Meyers Partner, David Eberhart, and … [The Counterfeit Report ] “at least should know the difference.
Except, the products weren’t unbranded. The eBay counterfeit products are replicas of real products, designed to take advantage of the superior value and reputation of the real product. The eBay fake products are products that do not even exist in the manufacturer's product line, but are represented as the authentic branded product and bear the manufacturer's registered trademark. Both are sold on eBay.
The Counterfeit Report made test purchases and received over 2,000 counterfeit and fake products2 from eBay sellers, retaining all the items as evidence and reporting the items to eBay. The test purchases identified over 400,000 counterfeit items listed, or sold to eBay consumers. How did eBay respond to the fraudulent test purchase sales and reports? eBay blocked all The Counterfeit Report’s test purchase accounts to eliminate the ongoing exposure of the fraudulent sales, yet the sellers usually remained.
Additionally, The Counterfeit Report, a manufacturer’s authorized agent, reported 1,008,266 counterfeit and fake items to eBay’s self-acclaimed Verified Rights Owner (“VeRO”) Program that were listed, or sold to eBay consumers. While the listings were removed, the sellers usually remained, the fake items often relisted, and the buyers never notified they received a fake.
The Counterfeit Report was told after reporting the frauds, including one fraudulent seller with over 250 fake item listings, "We are not going to stop them from listing something" said Joe at eBay VeRO, "We will only act on the Notice of Claimed Infringement (“NOCI”) you send to us" and "in the order received."Not only does eBay and its law firm not stop the sale of counterfeits, they have aggressively challenged The Counterfeit Report efforts to report and stop the fraud. O’Melveny & Meyers again stepped in to attempt to discourage reports of counterfeits. It wrote “eBay can and will contact the companies that have designated [The Counterfeit Report] as an agent and inform them on … the conduct and request that they obtain another reporting agent.”
eBay’s practices highlight its broad knowledge and enormity of eBay’s counterfeit marketplace. The counterfeit products received from eBay sellers were featured in television newscasts, magazines and media articles, The Counterfeit Report’s Press Releases, and are displayed on The Counterfeit Report website.
It is unclear just what eBay believes is its legal defense to hosting the sale of counterfeit and fake merchandise is, however manufacturers of legitimate goods would likely strongly disagree. For example, cell phone case manufacturer Wimo Labs3 is suing eBay after making 5,557 notifications to eBay that it was hosting the sale of counterfeit and fake metal versions of its popular LUNATIK® cell phone cases in materials, models and various colors not even available from the manufacturer. The Counterfeit Report purchased and reported some of these counterfeit phone cases, yet thousands of innocent and duped eBay buyers were never notified they received a fake. The fake items continue to be listed.
The Counterfeit Report purchased 193 fake microSD® memory cards carrying an infringing registered trademark, and identified 979,448 listed or sold items. Purchasing a counterfeit microSD® card, which are used to store data, images and contacts in your phone, camera, iPad, tablet, laptop and GPS, is dangerous. If you buy a fake, you are likely to lose your data and you may damage your equipment.
What did eBay do when notified of the fraudulent fake items depicted in pictures below? Nothing, as the items, which don’t even exit in the manufacturer’s product line, remain for sale on the website.
The Counterfeit Report’s Press Release identifying the particularly alarming practice of selling fake FBI and Police badges and identification on eBay was emailed to eBay CEO Devin Wenig in May, 2016. The email was viewed 328 times. Despite eBay’s policy “You can't list replicas, fakes, counterfeits, or other illegal copies on eBay” and the obvious hazards, the items remain on eBay available to child predators, terrorists and other criminals.
The Counterfeit Report received the fake FBI and LAPD identification below from eBay sellers, made to order for presentation to U.S. Attorney General Loretta Lynch and California Attorney General Kamala Harris to illustrate the ease the fake government ID was obtained from eBay. Both badges are offered on eBay.
e-Commerce giant eBay is no stranger to allegations of selling counterfeit goods and faces a “credibility crisis” for failing to adhere to its own policies, crack down on counterfeit goods listed on its website, altering feedback, and making it easy for counterfeiters, the world’s largest criminal enterprise, to peddle $1.7 trillion in counterfeit and fake goods to unsuspecting consumers.
Companies 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 and impunity. However, reputation damage is only a small part of the problem: counterfeiting costs US manufacturers over $250 billion, and US workers over 750,000 jobs.
eBay can adopt real and effective solutions to end the counterfeiting problem that it is aware of, and enables. Will it?
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