Counterfeits Thrive During China Tariff War

Fakes fly under the radar via Amazon, eBay, Alibaba, and Walmart

August 22, 2019 - Los Angeles, CA – The $1.3 trillion criminal counterfeit industry got an unexpected boost from the tariff war -- consumers are looking to e-commerce websites to blunt the impact of a 25% tariff on legitimate goods. Unsuspecting consumers have a good chance of unknowingly receiving a counterfeit from the e-commerce giants; Amazon, eBay, Alibaba, and Walmart.

The 60,000 cargo containers that enter the U.S. each day are no longer the primary transportation for China counterfeits. E-commerce giants Amazon, eBay, Alibaba, and Walmart, are now the perfect platforms to flood the consumer marketplace with consumer direct mailings of an inexhaustible supply of counterfeit, fraudulent, and replica merchandise, OTC drugs, medical devices, and books, without liability.

China provides about 85% of the world's counterfeits while receiving substantial postal discounts through decades-old trade treaties. Chinese companies account for about 60% of packages shipped into the United States, and the U.S. Postal service loses millions. 80% of eBay sales and 60% of Amazon sales are from global "Marketplace" sellers who exploit this cheap, effective way to deliver goods, including counterfeits.

Many Amazon items skirt consumer suspicion when the sellers ship directly from China to Amazon's Fulfilled by Amazon ("FBA") distribution centers to hide the origin of the China goods and expedite delivery to just days

Consumers just don't have a chance against the counterfeiters;

• In Operation Mail Flex, a 2017 Customs and Border Protection investigation, officers randomly examined more than half of the express-mail packages arriving daily from Hong Kong and mainland China over five days -- and seized 43% of them. These seizures included 1,297 noncompliant imports, such as counterfeit pharmaceuticals (along with controlled substances, including fentanyl).
• The U.S. Government Accountability Office ("GAO") conducted an undercover investigation of e-commerce websites and reported that about 50% of the items it purchased from e-commerce websites, including Amazon, eBay, and Walmart were counterfeit.
• The Recording Industry Association of America (RIAA) reported that 100% of sample purchases through eBay or AliExpress in the U.S. of new high-quality box CD sets were counterfeit. 25% of all CDs "Fulfilled by Amazon" in the U.S. were counterfeit.
• The Counterfeit Report, an award-winning consumer advocate and counterfeit watchdog, has removed over 370 million fake, fraudulent, and replica items from e-commerce websites for just a handful of infringed brand owners. The Counterfeit Report purchased over 3,000 counterfeit items, usually finding the attached Custom's Declaration was patently false. A false item is listed at a fraction of the purchase price.
• Amazon reports they receive an infringement notice for 1 of every 100 customer page views, and over 100,000 brands have signed in to fight counterfeits on Amazon -- a shocking revelation of the enormity of Amazon's counterfeit problem.

Peter K. Navarro, White House assistant to President Trump for trade and manufacturing policy, recently wrote a harsh condemnation in the WSJ; "when you purchase brand-name goods through online third-party marketplaces like Alibaba, Amazon, and eBay, there’s a good chance you’ll end up with a counterfeit."

Alibaba was publicly condemned by The Office of the United States Trade Representative and landed on the U.S. Notorious Markets List - a designation reserved for the world's most notorious markets for counterfeit goods. The American Apparel & Footwear Association (AAFA), which represents more than 1,000 brands, has recommended that Amazon be added to the list.

The 2018 Global Brand Counterfeiting Report found that two-thirds of consumers who had unintentionally bought counterfeit goods lost trust and then often avoided the legitimate brand. Brands are tarnished, while companies and jobs are destroyed.

The value of counterfeit and pirated goods is forecast to grow to $2.8 trillion and cost 5.4 million net job losses by 2022 states a 2017 International Chamber of Commerce Report.

America was founded on free trade, but that also has to include fair trade. America has the obligation to protect intellectual property rights and impose tariffs or restrict access to our markets in the same way competitors do to us. Intellectual property theft is a negotiating point in China trade deliberations, but counterfeit products will continue to fly under the radar.

America's security and future is at risk -- it's just common sense.