Crackdown Overdue For Amazon and eBay Counterfeits

Websites profit by deceiving consumers, and damaging manufacturers and retailers.

August 24, 2017, Los Angeles, CA – Consumers have confidence, and expect honest services and authentic safe products, when they shop at their local grocery, drugstore or retailer. But that confidence is misplaced when they shop online at e-commerce giants eBay (NASDAQ: EBAY) and Amazon (NASDAQ: AMZN). Both websites allow unvetted global sellers to inundate their websites with counterfeit products. The devastation to legitimate manufacturers and the cost for deceived consumers is enormous.

The Counterfeit Report®, a counterfeit awareness and consumer advocate, sent thousands of notifications, authorized by the trademark holders, to Amazon and eBay to remove listings for 1.9 million counterfeit items offered or sold on their websites.

The Counterfeit Report also made test purchases of thousands of name-brand products from Amazon and eBay Marketplace sellers, but never received an authentic item. eBay listings, which reflect actual sales figures, indicate consumers purchased over 686,000 counterfeit or fake items from just a small product sampling selected by The Counterfeit Report.

eBay responded by blocking The Counterfeit Report's test purchase accounts and, by extension, any protections afforded eBay consumers. A letter from eBay outside counsel, O'Melveny and Meyer's partner, David Eberhart, promised "eBay can and will contact the companies that have designated [The Counterfeit Report] as an agent, inform them of [the] conduct, and request that they obtain another reporting agent."

Amazon listings do not report sales for the 30,600 counterfeit items removed by The Counterfeit Report, however;

• Apple reported that 90% of Apple® products it purchased directly from Amazon were counterfeit.
• The Recording Industry Association of America (RIAA) placed orders with Amazon and found that 44 of the 194 top CD's delivered were counterfeit.
• Birkenstock® pulled the plug on Amazon sales of its popular sandals citing counterfeit enforcement problems.
• In the meantime, Amazon argued and won a U.S. Appeal’s Court decision to disavow itself from any responsibility for 'offering to sell' counterfeits products on its website.

Alarmingly, the e-Commerce giants normally don't notify consumers they received a counterfeit, may be in danger, or are entitled to a refund - even when the websites know or have been notified by the manufacturer that items are counterfeit, or fake (items that don't exist in the manufacturer's product line but bear its registered trademark).

Savvy consumers may be aware of fake watches, purses and shoes, but are easily deceived by a vast array of counterfeit electronics, sporting goods, toys, cosmetics, auto parts and Over-the-Counter ("OTC") drugs listed on Amazon and eBay, and featured on TheCounterfeitReport.com website.

Could you identify the counterfeit items below purchased on eBay or Amazon? Most items don’t even exist in the manufacturer's authentic product line, yet remain on eBay and Amazon.

(Clockwise from left – Photo: The Counterfeit Report®)

1. SanDisk® 64GB microSDHC memory card. The microSDHC® standard is limited to a maximum capacity of 32GB, but over 170,000 fake SanDisk®, Kingston®, Samsung® and unbranded Generic microSD® cards were sold to consumers by eBay sellers. Data is lost or overwritten when the actual capacity, often far less than the printed capacity, is reached.
2. These counterfeit Marvel® action figures purchased on eBay are listed as LEGO® products - they are not.
3. The Lunatik® TakTik® Extreme model case is not made for the Apple iPhone 6® or in metal, yet The Counterfeit Report made dozens of purchases of poor quality counterfeit Lunatik® trademarked products representing over 160,000 sales to duped eBay consumers.
4. Drew Tech's MongoosePro interface cable is relied on by vehicle technicians and dealers to program vehicle computers including braking, emission and safety equipment functionality. Counterfeit Mongoose® products may severely damage a vehicle, and install malware on the user's computer. This counterfeit was purchased on Amazon, but the authentic product is not manufactured in purple - an obvious fake.
5. Common sense as well as federal, state and local laws regulate the sale, purchase, possession and display of fake badges. eBay and Amazon policy also specifically prohibit most police badges and items. However, counterfeit FBI, LAPD and other law enforcement badges and identification are common on eBay and Amazon - over 4,400 were found. Repeated reports to eBay CEO Devin Wenig, and Amazon CEO Jeff Bezos were acknowledged, but ignored. The items remain available to terrorists, child predators and other criminals.
6. Fullips® instantly popular lip enhancer has a number of counterfeit counterparts on eBay and Amazon, including sizes not offered by Fullips, and made with potentially hazardous materials. This counterfeit may look indistinguishable from the authentic item, but it is a counterfeit.
7. Vans® does not make iPhone 6 or 7 cases – simply put, they are all fake. The fakes are common on eBay and Amazon, and eBay even sends email solicitations to buy the fake item. Counterfeit product sales support criminals, organized crime and terrorists.
8. The Monster® trademarked Tron T1 Headphone was never produced or sold by Monster Products, yet unsuspecting consumers can be duped out of over $300 for this fake Monster product purchased on eBay, and also sold on Amazon.
9. Dr. Numb® Over-the-Counter 5% Lidocaine topical anesthetic pharmaceutical is not manufactured in a 10gr. size but was purchased on eBay. Unsuspecting consumers receive a fake product with unknown ingredients, and an obvious spelling error.

Counterfeiting is an illegal $1.7 trillion global criminal enterprise that is profitable, difficult to track and widely unpunished. These e-commerce websites wreak devastation on manufacturers and retailers, and deceive consumers by facilitating and enabling an inexhaustible supply of counterfeit goods, mostly from China. By any definition, counterfeiting is stealing.

Consumer awareness is only part of the global solution; trade restrictions, legislation, secondary liability sanctions and severe penalties are needed to arrest the e-commerce counterfeit underground economy destroying U.S. commerce.

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 losses¹ by 2022, while manufacturer's brand integrity is tarnished or destroyed.

The U.S. Legislature, The Office of the United States Trade Representative (USTR), and the current Administration all have the authority and power to take action.

Will they?

Footnote:
¹ THE ECONOMIC COSTS OF COUNTERFEITING AND PIRACY
The report was prepared for The International Chamber of Commerce (ICC BASCAP) and The International Trademark Association (INTA)
January 2017
Frontier Economics, Ltd.