White House Warns Alibaba -- Clean Up The Counterfeits

E-commerce giant gets ultimatum: clean it up or the government will.

April 22, 2019 - Los Angeles, CA – Peter K. Navarro, White House assistant to President Trump for trade and manufacturing policy, wrote a harsh condemnation in the WSJ; "when you purchase brand-name goods through online third-party marketplaces like Alibaba, Amazon, and eBay, there’s a good chance you’ll end up with a counterfeit." The criticism accompanied President Trump's signing a presidential memorandum to help protect American consumers, manufacturers and factory workers from a flood of counterfeits and the widespread direct-to-consumer shipments of infringing and replica goods.

Appropriately named after the fable "Ali Baba and the 40 Thieves," Alibaba and its subsidiary websites (AliExpress.com, Taobao.com, 11main.com, etc.) offer counterfeit products directly to consumers and fraudulent resellers on Amazon, eBay, Walmart, and other e-commerce websites. About 85% of counterfeits come from China, with many enabled and facilitated by Alibaba who takes a transaction fee for each item sold.

In response, Alibaba was publicly condemned by The Office of the United States Trade Representative, and landed on the U.S. Notorious Markets List - a designation reserved for the world's most notorious markets for counterfeit goods. Yet, Alibaba continues to be the go-to source for counterfeit, fake and replica products.

The Counterfeit Report, an award-winning industry watchdog and consumer advocate, found and removed over 150 million infringing items on Alibaba websites on behalf the brand owners -- a stark rebuttal to Alibaba's illusory brand protection claim; "Listings of counterfeits, replicas, or other unauthorized items are prohibited on the Site strictly." In fact, counterfeit complaints are often ignored, unrealistic new reporting terms and conditions are required, and communications often go unanswered. Recently, The Counterfeit Report sent 576 infringement complaints to Alibaba for removal of just 21 listings.

Alibaba Group President Michael Evans claims that the company has worked above and beyond to protect brands. The fact is, the company ignores its own policies and counterfeit notifications from brand owners. Counterfeits remain, consumers are deceived, and manufacturers and retailers are being harmed in a big way with little recourse. Alibaba and its subsidiaries are best avoided.

In Operation Mail Flex, a 2017 Customs and Border Protection investigation, officers randomly examined more than half of the express-mail packages arriving daily from Hong Kong and mainland China over five days -- and seized 43% of them. These seizures included 1,297 noncompliant imports, such as counterfeit pharmaceuticals (along with controlled substances, including fentanyl).

The 2018 Global Brand Counterfeiting Report found that two-thirds of consumers who had unintentionally bought counterfeit goods lost trust and then often avoided the legitimate brand. Brands are tarnished, while companies and jobs are destroyed.

The value of counterfeit and pirated goods is forecast to grow to $2.8 trillion and cost 5.4 million net job losses by 2022 states a 2017 International Chamber of Commerce Report.

Consumers have the choice to avoid businesses that enable and facilitate global criminal enterprises, and Congress can enact legislation that holds e-commerce websites accountable for their sleazy practices. Will they?