Who Will Cleanup eBay's Sleazy Counterfeit Marketplace?

eBay is ideal for dangerous, fraudulent and counterfeit products.

April 2, 2018 - Los Angeles, CA – eBay is under fire for some shady practices - enabling and facilitating the sale of an inexhaustible supply of counterfeit goods, while hiding behind illusory counterfeit policies¹ and ineffective website policing.

• A U.S. Government Accountability Office ("GAO") investigation of counterfeit consumer goods on eBay (EBAY), Amazon (AMZN), Sears (SHLD), Walmart (WMT) and Newegg found that about 50% of the items purchased by the GAO were counterfeit.²
• Forbes recently deemed the e-commerce giant a "cesspool of counterfeits and other illegal and potentially dangerous goods."³

eBay has migrated from the auction house of garage sale items to a global "Marketplace" seller model. These unvetted global sellers are about 80% of eBay business. The same model landed China's Alibaba on The Office of the United States Trade Representative's Notorious Markets List - a condemnation and designation reserved for the world's most notorious markets for counterfeit goods.

eBay is a haven for U.S. and cross-border scam artists to freely unload counterfeit merchandise, mostly from China, on unsuspecting consumers. Consumers just don't have a chance of identifying dangerous, deadly and often visually indistinguishable counterfeit goods. The Counterfeit Report®, a popular consumer advocate and industry watchdog, found over 3.3 million counterfeits on eBay and removed over 1.9 million authorized by the trademark holders. eBay listings reveal that over 760,000 counterfeit items were sold to consumers. Consumers can see the authentic items and their counterfeit counterparts on TheCounterfeitReport.com website.

eBay receives a transaction fee for each fake sold and profits soar. The downstream consequences are destroyed U.S companies and retailers, lost U.S. jobs and deceived consumers spending good money for bad products. The problem isn’t just the well-known fakes; watches, shoes and handbags, but a vast counterfeit universe of auto parts, cosmetics, drugs, electronics, sporting goods, toys, and much, much more. Even inarguably fake products - items that bear a trademark, but do not even exist in the authentic product line, are repeatedly offered on eBay.

eBay consumers wouldn't suspect the items below are fake, or dangerous -- even drug pill presses are offered on eBay to make replica Oxycodone, Alprazolam and Xanax

(Photo: ©The Counterfeit Report)

Row 1 - Monster® never made a Tron model headphone. Supra® never produced a "Justin Bieber" model skateboard shoe, and the Drew Technologies® Mongoose® Pro vehicle diagnostic interface cable was never made in purple. Vans® does not make or license the use of the VANS® trademark on iPhone 6,7 or 8 phone cases. Your life could literally be riding on this counterfeit vehicle suspension part. Group-A Autosports® never made the Skunk2® lower suspension control arm in the color shown. An automobile suspension part failure can cause a catastrophic accident with fatal consequences to those in, and around, the counterfeit equipped vehicle.

Row 2 - Authentic Dr. Numb is not made in the 10g size shown here. Counterfeit Dr. Numb® 5% Lidocaine Cream submitted for ingredient testing did not contain any Lidocaine as indicated, but Tetracaine, a potentially fatal drug. Composite Resources, Combat Application Tourniquet® (C-A-T®), has been supplied to the U.S. Military, police, first responders and the public worldwide for the past decade but was never produced in tan. Counterfeit versions of the C-A-T tourniquet have catastrophically failed during actual life-saving applications. eBay listings offer drug pill press to make replica drugs including Oxycodone, Alprazolam, and Xanax. The Drug Enforcement Administration ("DEA") and FBI do not sell their badges on eBay, but counterfeits are available to terrorists, child predators and other criminals.

Row 3 - The various micro SD® memory cards shown were never produced in the authentic product line in the capacities shown, or licensed by SD-3C, LLC, the right holder of the microSD® trademark. Pharmaceutical giant Novartis does not make its OTC anti-fungicide medication, Lamisil® in the liquid form shown.

Everyone knows selling counterfeits is illegal, yet through huge legal loopholes, and virtually immune to prosecution, IP laws and safety standards, eBay continues to allow counterfeits and avoid prosecution. Foreign sellers are difficult to identify and also escape liability.

Counterfeit notices can be sent dozens of times for weeks, yet the fake products still remain. Complaints to senior management and corporate counsel fall on deaf ears. Sellers of removed counterfeit items can easily relist, or return under new accounts. eBay does not notify sellers they have received a reported counterfeit, even if it's dangerous or deadly.

Companies that facilitate criminal activity and profit from dishonest sales which impact consumer safety, jobs and public trust create a public perception of deception and impunity. However, their reputation damage is only a small part of the problem: the value of counterfeit and pirated goods is forecast to grow to $2.8 trillion, and cost 5.4 million net job losses by 2022⁴ while manufacturer's brand integrity is tarnished or destroyed.

Consumers seeking authentic items would be safer and better served buying directly from the manufacturer or authorized retailer.

Footnotes:
⁽¹⁾ eBay Counterfeit Policy; "You can't list replicas, fakes, counterfeits or other illegal copies on eBay"

⁽²⁾ Report to the Chairman, Committee on Finance, U.S. Senate
Full Report: Agencies Can Improve Efforts to Address Risks Posed by Changing Counterfeits Market
GAO-18-216: Published: Jan 30, 2018. Publicly Released: Feb. 27, 2018.
Summary: https://www.gao.gov/products/GAO-18-216

⁽³⁾ Wade Shepard, "As Amazon And eBay Flood With Illegal Goods From China, Beijing Cracks Down On Foreign E-Commerce"
Forbes (Nov. 22, 2017), available at https://www.forbes.com/sites/wadeshepard/2017/11/22/as-amazon-and-ebay-flood-with-illegal-goods-from-china-beijing-cracks-down-on-foreign-e-commerce/#7223f1604dfd

⁽⁴⁾ 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.