Counterfeit Spotlight Falls on Alibaba, eBay and Amazon

Rife with counterfeits, e-Commerce sites remain unregulated.

February 2, 2015, Los Angeles, CA – e-Commerce giants, Alibaba, eBay, and Amazon are no strangers to allegations of selling counterfeit goods. The e-Commerce giants make it easy for the world’s largest criminal enterprise to peddle an estimated $1.7 in counterfeit goods expected to be produced in 2015. Over 90% of counterfeit goods are produced in China and often end up sold on ecommerce and social media sites to unsuspecting consumers.   

The Counterfeit Report^®, a watchdog and consumer education website, purchased hundreds of name brand counterfeit products including OTC drugs, sporting goods, children’s toys and electronics from eBay, Amazon and Alibaba sellers. The test purchases have yet to produce an authentic brand name product.

Alibaba^®
Illustrative of the enormous problem is last week’s scathing report by China’s commerce watchdog, the State Administration for Industry and Commerce, or SAIC. SAIC accused Alibaba of failing to crack down on the sale of counterfeit goods, bribery and other illegal activities. Ironically, the China Government intentionally withheld the report until after global investors dumped $25 billion into the Alibaba IPO.

While subsidiary TaoBao.com boasted of removing 114 million infringing listings, the SAIC study said only about a third of the products it sampled on the subsidiary were genuine. Even so,  Alibaba was removed from, the US Government’s “Notorious Markets List” in 2013, but was recently named in a racketeering lawsuit by Gucci, Yves St. Laurent, and parent company Kering S.A., et el.

Consumers should question just exactly what is authentic on the website, and how many products are simply relisted. Alibaba claims it spends over $16 million a year fighting counterfeits – but quick math reduces that to only pennies to remove each infringing listing.

Appropriately put by one AliExpress seller when The Counterfeit Report disputed a counterfeit product purchase, “If you want the original, don't buy here.”

eBay^®
The Counterfeit Report purchased hundreds of name brand counterfeit products on eBay, yet eBay claims “You can't list replicas, fakes, counterfeits, or other illegal copies on eBay.” After a counterfeit purchase, eBay instructs purchasers to return counterfeit products to the seller, although a conflict with eBay policy and a violation of US law and Postal Regulations. Returned counterfeits can easily be recycled and resold to the next unsuspecting consumer.

eBay presents a gauntlet of obstacles, contradictory instructions, arbitrary decisions and obstructions to consumers in its counterfeit dispute resolution process. The Counterfeit Report observed that after reporting counterfeits, the sellers and listings often remained, and counterfeits could be purchased again. Negative “Counterfeit” feedback for the sellers to protect other consumers would sometimes just “disappear.” With almost $3 billion in profits, eBay’s efforts are woefully inadequate.

Amazon^®
Many consumers do not recognize that Amazon product listings present three distinct global product outlet channels; Amazon (a direct retailer), Amazon Fulfillment (provided by a third party, but warehoused and shipped by Amazon) and Amazon Marketplace (seller direct new and used products). Amazon Marketplace accounts for 40% of Amazon’s business, but Marketplace products are never touched by Amazon, being shipped by sellers all over the world. The Counterfeit Report purchased dozens of counterfeit name brand products from Amazon sellers. The Amazon “A-to-Z Guarantee” covered the counterfeit purchases with an overall prompt response.

Conclusion

• The Counterfeit Report has yet to receive an authentic brand name product in any of its hundreds of test purchases from Amazon, eBay or Alibaba.
• While the counterfeit purchases were immediately reported, previous buyers are not notified by the websites they may have a counterfeit, including dangerous and potentially deadly products. Duped consumers may never be aware they are eligible for a refund.  
• The counterfeit sellers and listings often remain, and the counterfeits could be purchased again.

When companies don’t pay sufficient attention to these problems, consumer confidence fades and their brand integrity is tarnished. Regulation of the e-commerce marketplace is severely lacking, ultimately requiring regulators and law enforcement to step in and protect the marketplace.