Amazon, eBay, Alibaba and Walmart Pump Counterfeits Into U.S. Commerce
Fake products deceive consumers, destroy manufacturers and retailers.
October 5, 2017 - Los Angeles, CA – “Counterfeiting and piracy continue to grow at an astounding rate” states a 2017 report "The Economic Costs of Counterfeiting and Piracy"1 commissioned by the International Trademark Association (INTA) and the Business Action to Stop Counterfeiting and Piracy (BASCAP) unit of the International Chamber of Commerce (ICC), .
E-commerce websites including Amazon (AMZN), eBay (EBAY), Alibaba (BABA), and now Walmart (WMT) have become perfect platforms to enable and facilitate distribution of counterfeit goods, currently a $1.7 trillion global criminal enterprise. In their quest to dominate online sales, the sites have opened the floodgates for counterfeit products, mostly from China. These e-commerce websites wreak devastation on manufacturers and retailers, while deceiving consumers with an inexhaustible supply of counterfeit goods.
The problem is that anybody, anywhere can open a website "Marketplace" account and sell just about anything on the websites. By any definition, counterfeiting is stealing.
Alarmingly, the e-commerce websites do not notify buyers they received a fake after notifications by the right’s holder, and have skirted secondary liability for enabling the sale of counterfeits. Sellers find counterfeiting profitable, difficult to track and widely unpunished, while the websites receive a transaction fee for each fake item sold.
The Counterfeit Report® sent formal infringement notices, authorized by the right’s holders, to e-commerce giants Amazon, eBay, Alibaba and Walmart to remove listings for over 15.5 million counterfeit items offered or sold on their websites in just the past year. The products were destined for, or purchased by, unsuspecting consumers. Actual sales figures on eBay and Alibaba listings indicate consumers purchased over 693,391 counterfeit or fake items from just the small product sampling enforced by The Counterfeit Report. Amazon and Walmart listings do not reflect sales.
Amazon
Apple® reported that 90% of Apple products it purchased from Amazon as a direct seller 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, while Birkenstock® pulled the plug on Amazon sales of its popular sandals citing counterfeit enforcement problems. A Tennessee family is suing Amazon for $30 million after a counterfeit hoverboard caught fire and completely destroyed their $1 million Nashville home and personal property in 2016, injuring two of the family’s four children. About 50% of Amazon sales are not from Amazon directly, but from outside global sellers, many from China, who can list just about anything they want, including counterfeits.
“In Amazon's quest to be the low-cost provider of everything on the planet, the website has morphed into the world's largest flea market — a chaotic, somewhat lawless, bazaar with unlimited inventory” says a recent CNBC Report.
eBay
eBay is migrating from the auction house of garage sale items and concentrating on global Marketplace sales of new items (80%) at a fixed price (86%) from unvetted global sellers. The counterfeit products are visually deceptive and may be dangerous or deadly. The Counterfeit Report purchased and received over 2,300 products from eBay sellers - all were counterfeit.
Instead of embracing The Counterfeit Report's research, eBay blocked The Counterfeit Report's test purchase accounts and, by extension, protections afforded eBay consumers. Consumers are best advised to avoid trademarked items on eBay and buy directly from the manufacturer or authorized retailers.
Walmart
Walmart’s decision to participate in online e-commerce sales comes with a cost. Consumers are being deceived and losing money, and Walmart is damaging its reputation. Walmart is allowing and enabling the sale of counterfeit products as both a direct seller, and through unvetted global third-party "Marketplace" sellers. Counterfeit products can appear right next to authentic items conveying Walmart's endorsement and the illusion they are from Walmart. Responses from Walmart to remove counterfeit listings are slow, or not at all. Global sellers and acquisitions have helped to increase the total number of SKUs available online from 15 million a year ago, to 67 million.
Walmart offers this confidence destroying disclaimer in its listings; "While we aim to provide accurate product information, it is provided by manufacturers, suppliers and others (emphasis added), and has not been verified by us."
Alibaba
The Office of the United States Trade Representative publicly condemned Alibaba, appropriately named after the fable “Ali Baba and the 40 Thieves,” adding the e-commerce giant (again) to the U.S. Notorious Markets List – reserved for the world’s most notorious markets for counterfeit goods. The action is well deserved, but has done little to stem Alibaba's growth of counterfeit sales.
Alibaba claimed it tightened policies against infringement, touting that it took down 380 million infringing product listings and closed about 180,000 stores, just on its Taobao.com subsidiary in the previous 12 months. What Alibaba didn’t reveal in the PR stunt is why more than double the counterfeit items of 2015 were allowed to be listed, how many duped consumers already purchased the products, and how many items were simply relisted – a common practice.
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. The very real consequence is the destruction of U.S. retailers and commerce through consumer deception.
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.
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