Press Release

Alibaba Named to U.S. Notorious Markets List for Counterfeit Sales

E-commerce giant likely the largest proliferator of fake goods.

December 23, 2016, Los Angeles, CA – Investors were eager to pump $20 billion into Alibaba, now likely to be the largest proliferator of counterfeit goods -- a $1.7 trillion global criminal enterprise.

America’s top trade official, the Office of the United States Trade Representative, condemned Alibaba, adding them to their list of the world’s most notorious markets for counterfeit goods. Alibaba dismissed the embarrassing disapproval and setback for CEO Jack Ma as influenced by the current political climate.

In October 2016, Alibaba claimed it tightened policies against copyright infringement and made it easier for brands to request fakes be removed. Alibaba touted that it took down 380 million product listings and closed about 180,000 stores on its TaoBao platform in the previous 12 months, more than double of 2015. What Alibaba didn’t reveal in the PR stunt is why so many more items were allowed to be listed, how many duped consumers purchased the products, and how many items were simply relisted – a common practice.

Bruce Foucart, director of U.S. Homeland Security’s National Intellectual Property Rights Coordination Center stated the killers in the vicious Paris Charlie Hebdo massacre that left 12 people including two police officers dead, funded their weapons cache through the sale of counterfeit luxury goods.

All sorts of dirty things are involved in counterfeiting; terrorism, child labor exploitation, kidnapping, money laundering and organized crime.

While e-commerce sites reap billions in revenue and profit from transaction fees, counterfeit detection efforts and consumer protection is severely lacking. Counterfeit listing removal is often described as a whack-a-mole process as the fakes are simply relisted. Alibaba's process for removing counterfeits from its sites is rife with obstacles. The Counterfeit Report®, a consumer advocate and manufacturer's agent, has removed over 8 million counterfeits from Alibaba websites, with some items taking months for Alibaba to comply.

Could you identify these counterfeits purchased from Alibaba websites?

alibaba fake memory

China is the undisputed nexus of worldwide counterfeiting, producing about 90% of fake goods which are easily marketed on e-commerce websites; Alibaba (BABA), eBay (EBAY), Amazon (AMZN), Facebook (FB) and others.

Both eBay and Amazon have followed Alibaba's model, channeling their efforts into online “Marketplace” retail outlets which allow unvetted global sellers to peddle hugely profitable counterfeit goods to unsuspecting consumers. The problem is that anybody can open a marketplace shop and sell anything. Unless you compare a fake with an authentic item, they are almost impossible to immediately detect and may be dangerous or deadly, and not backed by a warranty.

  • The U.S. Postal Service loses millions each year subsidizing e-commerce shipments of China counterfeits through international Terminal Fee agreements that provide China counterfeit sellers heavily discounted delivery rates.
  • U.S. Customs and Border Protection at the Los Angeles and Long Beach seaport seized a total of five shipments of Christian Louboutin pumps and high heels from China containing more than 20,000 pairs, with a potential retail value of $18 million.
  • Ray-Ban says that in 2015, the company “shut down nearly 30,000 web sites and removed over half a million product advertisements that were deceiving consumers by selling fake products.” They also reported the seizure of six million units of counterfeit product this year to date.
  • Wimo Labs, LLC sued eBay in Federal Court for allowing the sale of tens-of-thousands of fake Lunatik® cell phone cases.
  • The owner of the Gucci and Yves Saint Laurent brands sued Alibaba in Federal Court.
  • Alibaba is under investigation from the U.S. Securities and Exchange Commission for its accounting practices.
  • The American Apparel and Footwear Association and others openly called for Alibaba to be added to the government’s notorious markets list, saying its members saw little change despite the company’s efforts to fight fakes.

Perhaps most frustrating is the lack of emotional resonance. Tempted by the flash of wearing a designer logo, consumers ignore the peripheral consequences to manufacturers, jobs, and the human cost.  






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