Counterfeit Problems Grow for Amazon, eBay and Alibaba

Websites won't knock off the knockoffs

September 2, 2016 - Los Angeles, CA – e-Commerce giants Amazon^® (AMZN), eBay^® (EBAY) and Alibaba^® (BABA) are no strangers to allegations of selling counterfeit goods. The e-commerce giants face a "credibility crisis" fueled by a failure to crack down on counterfeit goods and making it easy for the world's largest criminal enterprise to peddle $1.7 trillion in counterfeit goods to unsuspecting consumers. Social media sites Facebook^®, Twitter^®, and Instagram^® have also become popular counterfeit outlets. Even Walmart has opened its website to third-party vendors and was caught selling counterfeits.

Counterfeiting is a $1.7 trillion global criminal enterprise; the criminals avoid taxes, destroy an estimated 750,000 US jobs, and cost US businesses over $250 Billion annually. Illegal counterfeiting activity is profitable, difficult to track and widely unpunished. While consumer awareness is only part of the global solution, counterfeited products are now very deceptive, and consumers often unknowingly purchase hazardous or deadly counterfeit products. It's the manufacturers and consumers who ultimately get hurt.

Amazon

Many consumers do not recognize that Amazon listings present three distinct global product outlet channels;

• Amazon Direct (a direct retailer "Sold and Shipped by Amazon") accounts for only about 20% of Amazon sales
• Amazon Fulfillment (provided to Amazon by a third-party for warehousing and shipping)
• Amazon Marketplace (sold and shipped directly from third-party sellers)

Amazon reports over 2-million Marketplace accounts (2014). Marketplace products are never touched by Amazon, but are shipped by sellers all over the world making it attractive for counterfeit sellers. The Counterfeit Report^®, a popular consumer protection and education website, conducted dozens of name-brand test purchases from Amazon Fulfillment and Amazon Marketplace sellers, but never received an authentic item. Amazon allows multiple sellers to list against "permanent catalog page" images making identification of counterfeit products difficult. The Amazon "A-to-Z Guarantee" covered the counterfeit purchases with an overall prompt and consumer confidence building response. A counterfeit item was received from an Amazon Direct purchase, so caution is still advised.

Our Recommendation:

Look closely at the Amazon listing below and you can identify the Amazon Marketplace Seller "meaw love shop" shown here selling counterfeit 128GB microSDHC^® memory cards. There is no such product in the microSDHC^® standard – it is a fake.

eBay

The Counterfeit Report^® received over 2,000 counterfeit products from eBay sellers and identified over 1 million counterfeit items listed or sold to eBay consumers. Many were fake items -- items that never existed in the manufacturer's product line -- but had the manufacturer's trademark. The Counterfeit Report continued with multiple purchases from dozens of the same sellers after notifying eBay of the criminal activity, yet the sellers remained. Hundreds of eBay "Money Back Guarantee" claims initiated by The Counterfeit Report^® proved to be a difficult gauntlet of obstructions, illegal directions and arbitrary decisions. Inexplicably, eBay initiates a refund claim by requiring the buyer to return the counterfeit item to the seller, where it could be easily recycled and resold. Counterfeit purchasers are not told they have purchased a fake and are entitled to an eBay "Money Back Guarantee" refund.

Our Recommendation: AVOID Trademarked Items

Alibaba

China's bad-boy of counterfeits is facing re-inclusion on the Office of the United States Trade Representative (USTR) annual list of the world's most "notorious markets" for sales of pirated and counterfeit goods. Dozens of test purchases from Alibaba subsidiary AliExpress all proved to be counterfeit. It's no surprise, Alibaba's websites are awash in an avalanche of fakes. Subsidiary TaoBao removed 114 million infringing listings in just 10 months in 2013. How many were re-listed is unknown. Alibaba says it relies on brand owners to monitor its websites and report problem listings, a common e-commerce strategy that allows profits while waiting for manufacturers to catch-up. Alibaba's e-commerce websites benefit from higher transaction volume due to very poor intellectual property enforcement and government regulation for profitable counterfeit and infringing product listings on their websites. Interestingly, as a proactive effort, Alibaba requires the sellers to prove disputed items are real, and claims a triple refund for buyers of counterfeits from selected sellers.

Our Recommendation: AVOID Trademarked Items

When e-commerce companies don't pay sufficient attention to these problems, consumer confidence fades and brand integrity is tarnished. Regulation of the e-commerce marketplace is severely lacking, allowing very profitable online marketing, credit card processing, financing, and shipping services that effectuate the sale of the Counterfeit Products.

Buyer beware.