Will Amazon, eBay & Walmart Counterfeits Destroy U.S. Commerce?
E-commerce sites flood the marketplace with fake goods.
February 27, 2018 - Los Angeles, CA – “Counterfeiting and piracy continue to grow at an astounding rate” states a 2017 report "The Economic Costs of Counterfeiting and Piracy"1 commissioned by the International Trademark Association (INTA) and the International Chamber of Commerce (ICC), Business Action to Stop Counterfeiting and Piracy (BASCAP) unit.
The consequence - one-third of online shoppers received an unexpected surprise last year - they unwillingly received a counterfeit product.2
E-commerce websites including Amazon (AMZN), eBay (EBAY), Alibaba (BABA), and now Walmart (WMT) are perfect platforms to enable and facilitate the distribution of counterfeit goods, currently a $1.7 trillion global criminal enterprise. In their quest to dominate online sales, the e-commerce giants have created a haven for U.S. and cross-border scam artists to flood the market with counterfeit products, mostly from China. These e-commerce websites wreak devastation on manufacturers and retailers, and deceive consumers into spending good money for an inexhaustible supply of counterfeit goods.
The problem is that anybody, anywhere can open an online e-commerce "Marketplace" and sell just about anything. The counterfeit products are visually deceptive and may be dangerous or deadly. By any definition, counterfeiting is stealing.
The Counterfeit Report®, a popular counterfeit awareness and consumer advocate, sent formal infringement notices authorized by the right’s holders to e-commerce giants including Amazon, eBay, Alibaba and Walmart to remove listings for over 25 million counterfeit items offered or sold on their websites. The products were destined for, or purchased by, unsuspecting consumers. Actual sales figures on the websites report consumers purchased over 770,000 counterfeit items from just the small product sampling reviewed and enforced by The Counterfeit Report.
Alarmingly, the e-commerce websites did not notify buyers they received a fake after the receiving the counterfeit notifications, and have skirted secondary liability for enabling the sale of counterfeits3.
Amazon
Apple® reported that 90% of Apple products it purchased directly from Amazon were counterfeit, while Birkenstock, the global footwear icon, slammed Amazon as "an accomplice" of the fraudsters. The Recording Industry Association of America (RIAA) placed orders with Amazon and found that 44 of the 194 top CD's delivered were counterfeit. A Tennessee family is suing Amazon for $30 million after a counterfeit hoverboard caught fire and completely destroyed their $1 million Nashville home and personal property in 2016, injuring two of the family’s four children. About 50% of Amazon sales are not from Amazon, but from outside global sellers.
eBay
eBay has migrated from the auction house of garage sale items to concentrating on adding global Marketplace sellers of new items (80%) at a fixed price (86%). The Counterfeit Report purchased and received over 2,300 products from eBay sellers - all were counterfeit. Instead of embracing The Counterfeit Report's research, eBay chose to block The Counterfeit Report's test purchase accounts and, by extension, protections afforded eBay consumers. Consumers are best advised to avoid trademarked items on eBay and buy directly from the manufacturer or authorized retailers.
Walmart
Walmart’s decision to participate in online e-commerce sales comes with a cost - counterfeits are destroying Walmart's credibility. Walmart is allowing and enabling the sale of counterfeit products as both a direct seller, and through global third-party Marketplace sellers. The counterfeits appear right next to authentic items conveying Walmart's endorsement and the illusion they are from Walmart.
Alibaba
The Office of the United States Trade Representative publicly condemned Alibaba, appropriately named after the fable “Ali Baba and the 40 Thieves,” adding the e-commerce giant (again) to the U.S. Notorious Markets List – reserved for the world’s most notorious markets for counterfeit goods. The action is well deserved, but has done little to stem Alibaba's growth of counterfeit sales. Alibaba admitted that 380 million infringing product listings have been removed, and about 180,000 stores closed just on its Taobao.com subsidiary. What Alibaba didn’t reveal is why more than double the counterfeit items of 2015 were allowed to be listed, how many duped consumers already purchased the products, and how many items were simply relisted – a common practice.
Companies that facilitate criminal activity and profit from dishonest sales which impact consumer safety, jobs and public trust create a public perception of deception with impunity. Will the real consequence be the destruction of U.S. retailers and commerce?
Footnotes:
(1) THE ECONOMIC COSTS OF COUNTERFEITING AND PIRACY
The report was prepared for The International Chamber of Commerce Business Action to Stop Counterfeiting and Piracy unit (ICC BASCAP) and The International Trademark Association (INTA)
January 2017
Frontier Economics, Ltd.
(2) Global Online Shopping Survey 2017 – Consumer Goods
Prepared by: Clarivate Analytics for MarkMonitor® Inc. November 2017
(3) In a devastating blow to manufacturers and consumer protection, the U.S. Court of Appeals upheld a U.S. District Court decision by Judge Ricardo S. Martinez excusing Amazon from liability in the sale of counterfeit items on its website. (Milo & Gabby, LLC. v. Amazon.com, Inc.)
(4) Ari Levy, "Amazon's Chinese counterfeit problem is getting worse"
CNBC (July 8, 2016), available at: https://www.cnbc.com/2016/07/08/amazons-chinese-counterfeit-problem-is-getting-worse.html
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