Amazon's Crumbling Reputation May Cost Billions Says Amazon Exec

Consumer trust is destroyed by counterfeit, dangerous, and fraudulent products

October 24, 2019, Los Angeles, CA – Amazon's credibility crisis is growing as its reputation crumbles and consumer trust dissolves. Amazon consumer chief Jeff Wilke said at Tuesday's LA Tech Conference that Amazon may need to spend billions of dollars to prevent the sale of counterfeit goods, expired food items, and dangerous products on its platforms.

The first step in solving a problem is recognizing there is one. Amazon's lip-service isn't helping.

Amazon has exhausted its usual illusory public response, "Products offered for sale on Amazon must be authentic. The sale of counterfeit products is strictly prohibited," now segueing into Jeff Wilke's new claim that the company is lobbying for stiffer federal penalties for counterfeiters. While effective legislation is desperately needed, it's Amazon's responsibility to police and clean up its websites.

Dharmesh Mehta, Amazon's vice president of customer trust and partner support, said in a GeekWire interview that 99.9 percent of what customers see on the site is legitimate. Legitimate what?

• Amazon's own reports reveal they receive an infringement notice for 1 of every 100 customer page views, and over 130,000 brands have signed in to fight counterfeits on Amazon -- a shocking revelation of the enormity of Amazon's counterfeit problem.
• The Wall Street Journal detailed the availability of more than 4,000 items that had been declared unsafe by federal agencies.
• The Counterfeit Report, an award-winning consumer advocate and counterfeit watchdog, found over 170,000 fake, fraudulent, and replica items on Amazon and removed 70,300 fakes on behalf of infringed brand-owners. Even under the supervision of two Amazon managers, some counterfeit listings, including dangerous and deadly items, remained for weeks, even months, despite hundreds of repeat infringement notices. Sellers often relist, use multiple usernames, or open new accounts.
• Apple® reported that 90% of Apple products it purchased directly from Amazon were counterfeit. Birkenstock, the global footwear icon, slammed Amazon as "an accomplice" of the fraudsters. The Recording Industry Association of America (RIAA) reported that 25% of new CD's it purchased and were “Fulfilled by Amazon” in the U.S. were counterfeit. Swiss watch company Swatch (Longines, Omega and Blancpain) scrapped selling on Amazon when Amazon refused to "proactively police its site for counterfeits and unauthorized retailers."
• Amazon's shady counterfeit practices didn't escape the attention of federal investigators. The U.S. Government Accountability Office ("GAO") conducted an undercover investigation of e-commerce counterfeit goods sales. The GAO reported that about 50% of the items it purchased from e-commerce websites, including Amazon (AMZN), were counterfeit. The Federal Communications Commission ("FCC") sent a letter to Amazon's CEO, Jeff Bezos, telling him to knock off the counterfeit electronics.
• Peter K. Navarro, White House assistant to the President 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 American Apparel & Footwear Association (AAFA), which represents more than 1,000 brands, has repeatedly recommended that Amazon (AMZN) be added to the U.S. Notorious Markets List - a government list reserved for the worst online markets that enable and facilitate the world's largest criminal enterprise; copyright piracy, trademark infringement, and counterfeit product sales.

While Amazon's continues to flood consumer market with an inexhaustible supply of counterfeit, fraudulent, and replica products, the global giant's problems are further illuminated by continuing customer complaints, reports of scams and fake product reviews, along with allegations of data leaks and employee bribes. Amazon has morphed into an invasive, manipulative superpower controlling 50% of online sales, prompting investigations by EU anti-trust regulators and the U.S. Federal Trade Commission (FTC).

Many consumers would be shocked to learn that they are not buying from Amazon at all. About two thirds of Amazon's sales are from 6 million unvetted global third-party "Marketplace" sellers that are allowed to sell just about anything they want, including an inexhaustible supply of counterfeit, fraudulent and replica merchandise, books, medical devices, and OTC drugs. Many items are shipped from China to Amazon "Fulfillment Centers" giving the illusion they are from Amazon, and providing faster delivery.

Amazon is both a direct seller and enables "bad actors" to list and sell counterfeit and fraudulent merchandise. Simply, consumers are spending good money for bad products while Amazon turns a blind eye to the problem. Forbes deemed the e-commerce giant a "cesspool of counterfeits and other illegal and potentially dangerous goods."

Amazon collects half of every U.S. retail dollar spent online and takes a transaction fee for each item sold, raking in $11.2 billion in profit in 2018 and $5.6 billion in 2017 but paid no federal income tax.

Amazon's deceptive and dishonest practices define its business operation;

• Amazon is a direct retailer of counterfeit goods, e.g., "ships from and sold by Amazon.com." Amazon Prime, Amazon Warehouse Deals, and the Fulfilled by Amazon ("FBA") offerings are plagued with counterfeit, fraudulent and replica items. Counterfeit, fraudulent, and products prohibited by Amazon policy are easy to find on Amazon's websites, even endorsed with Amazon's coveted "Amazon's Choice" designation. Complaints are ignored.
• A first-ever Amazon SEC 10K investor warning offers;
  

  "Under our seller programs, we may be unable to prevent sellers from collecting payments, fraudulently or otherwise, when buyers never receive the products they ordered or when the products received are materially different from the sellers' descriptions. We also may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies."

• Consumers might place their confidence in Amazon's guarantee; "We stand behind the products sold on our site with our A-to-z Guarantee." That could be true, but only if consumers were informed by Amazon (or knew) they received a counterfeit product. However, Amazon does not notify consumers they received a fake, even after being notified by the brand-owner. Of course, consumers would then be entitled to a refund.
• Search results and product reviews are no indication of authenticity or quality, and may not even be related to the product sought. Worldwide scammers easily outsmart and trick Amazon's systems, submit fake reviews and ratings, and pay off workers inside Amazon to gain competitive information reports the Wall Street Journal.
• Amazon's seller evaluations (feedback) and product reviews are virtually worthless. Negative reviews are removed by Amazon, while sellers hire businesses to create dummy accounts, purchase products, and write fictitious reviews and complaints.
• While Amazon was publicly denouncing counterfeits on its website, sharply contrasting activity was occurring in the background. Amazon argued and won a U.S. Appeal's Court decision to disavow itself from any responsibility for 'offering to sell' counterfeit products. Counterfeits, trademarks, and copyrights became the right holder's problem, and when there is an outcry over the infringements, Amazon claims it is simply a venue and immune from prosecution and liability. (Milo & Gabby, LLC. v. Amazon.com, Inc.)
• Amazon's Corporate Counsel, Annasara Purcell, confirmed Amazon will not remove counterfeits listed on Amazon's global websites unless the trademark is registered in each country listing the item. The position was echoed and endorsed by Amazon CEO Jeff Bezos. The practice effectively provides counterfeit sellers a safe-haven to list and sell counterfeits worldwide regardless of the seller's location (often China) or the delivery destination. Over 800 complaints for inarguably counterfeit items, including corroborating test-purchases by The Counterfeit Report have fallen on deaf ears -- the fakes remain.

Amazon is not making a better marketplace that serves consumers. Amazon is no more than an arena of creative destruction, leaving consumers on their own to sort the legitimate, honest sellers from all the bad actors under an umbrella of legal immunity. They are voracious churners of counterfeit and fraudulent items, indifferent to the damage they cause to consumers, legitimate sellers, and manufacturers while fulfilling their desire to be the sole source of items for purchase. There is no incentive to clean up their websites -- they make too much money.

America has a complexion blemished with corporate fraud, corruption, and scams; Enron, Tyco, Madoff, Lehman Bros., Cendant, HealthSouth, WorldCom...and more. Will Amazon be added to the list as America's biggest consumer fraud?

Can you trust Amazon with insight into your personal life and data, product purchases, groceries, medical history and drugs, entertainment choices, and advertising interests?