Counterfeit Products Await eBay, Amazon & Walmart Holiday Shoppers

The e-commerce giants provide an inexhaustible supply of deceptive fakes.

December 14, 2017 - Los Angeles, CA – Holiday gift givers flock to the internet in hopes of finding bargains, but that good deal may not be what you think. You may have received a fake from online sellers peddling an estimated $1.7 trillion in counterfeit goods to unsuspecting consumers this year. How would you know if you received a fake?

In their quest to maximize profits, eBay, Amazon and Walmart have chosen to enable, facilitate or directly participate in the sale of an inexhaustible supply of counterfeit goods. Cross-border and U.S. scam artists can freely unload counterfeit merchandise, mostly from China, right alongside authentic items. Sellers of authentic items can't compete, and consumers don't have a chance of identifying dangerous, deadly and often visually indistinguishable counterfeit goods.

The websites operate under a huge legal loophole¹, virtually immune to prosecution, IP laws and safety standards. Counterfeit trafficking is profitable, hard to enforce, and foreign sellers are difficult to identify and escape liability.

The problem isn’t just the well-known fakes; watches, shoes and handbags, but a vast counterfeit universe of auto parts, cosmetics, drugs, electronics, sporting goods, toys, and much, much more. Consumers can see the authentic and deceptive counterfeits on The Counterfeit Report® website, a popular consumer advocate and industry watchdog.

While Amazon, eBay, and Walmart all have illusory policies prohibiting the sale of counterfeit, fake or replica products, the items remain and enforcement is completely arbitrary. Listings may remain for weeks until inventory is exhausted, or sellers simply relist the counterfeit items.

The Counterfeit Report identified over 26 million counterfeit items on e-commerce websites, and purchased thousands of counterfeit name-brand products from the e-commerce giants. The Counterfeit Report issued infringement complaints, authorized by the right holders, and removed over 22.6 million items destined for consumers. Despite the infringement notifications, the websites continue to engage in alarming and despicable practices;

• Listings of inarguably fake items - trademarked items that don't even exist in an authentic product line - still remain.
• Buyers are not told they may have received a counterfeit item, even if it's dangerous or potentially deadly.
• The counterfeit sellers often remain, and are allowed to relist.
• There may be no indication in seller profiles of a counterfeit sales history.
• The U.S. Postal Service loses millions delivering counterfeits from China under reduced "terminal fee" postage agreements².

Agitated by test purchases and criticism of eBay's guarantee and refund process, eBay blocked all of The Counterfeit Report's test purchase accounts, and by extension, any protection afforded eBay consumers.

The popular gift items below were all purchased online - they are all counterfeit.

(Photo: The Counterfeit Report®) Vans® does not make iPhone® 6&7 cell phone cases, counterfeit fragrances and cosmetics may contain lead, urine, antifreeze, beryllium, cadmium or other carcinogens. Monster® never made a 'Tron" headphone, and there is no such product as a SanDisk® 64GB microSDHC® memory card. Counterfeit Lego® toys may contain lead, shatter and do not meet U.S. safety standards. The EOtech® rifle sight lacks the correct optics components and the Bear Grylls® knife cracked during the photo shoot.

Amazon, eBay and Walmart are no strangers to allegations of selling counterfeit goods. The e-commerce giants face a credibility crisis fueled by their failure to crack down on the profitable counterfeit goods.

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 losses³ by 2022, while manufacturer's brand integrity is tarnished or destroyed.

Consumers purchasing online receive little if any value from counterfeits, yet support terrorists and other criminals while destroying U.S. jobs. Consumers would be better served and support their community, buying from directly from the manufacturer or local retailers. Would you like to receive a counterfeit gift?

Footnotes:
¹ In a devastating blow to manufacturers and consumer protection, the U.S. Court of Appeals upheld a U.S. District Court decision by Judge Ricardo S. Martinez excusing Amazon (NASDAQ: AMZN) from liability in the sale of counterfeit items on its website. (Milo & Gabby, LLC. v. Amazon.com, Inc.)

² The United States Postal Service (USPS) Inspector General's Office reported that the USPS lost $308 million between 2010 and 2014 delivering foreign treaty mail. In terms set out in the UPU treaty, the USPS in 2014 was paid no more than about $1.50 for delivering a one-pound package from a foreign carrier. Packages receive USPS First-Class Mail service with Delivery Confirmation Service which makes it hard for the USPS to cover costs or U.S. retailers to compete. These postal rates are generally far below rates paid by U.S. retailers and shippers. For example, in 2012, the terminal dues on items from China to the U.S. were about $1.60 per kilogram (2.2 pounds).

³ THE ECONOMIC COSTS OF COUNTERFEITING AND PIRACY
The report was prepared for The International Chamber of Commerce Business Action to Stop Counterfeiting and Piracy unit (ICC BASCAP) and The International Trademark Association (INTA)
January 2017
Frontier Economics, Ltd.