Amazon: Ethical Business or Criminal Enterprise?

Research exposes a shocking pattern of corporate behavior

November 14, 2019, Los Angeles, CA – Amazon has engaged in a pattern of conduct that enables a hierarchy of individuals to facilitate an organized, invasive, and manipulative global system of fraud, deception, misrepresentation, employee bribes, data leaks, and the advertising, sale, distribution, and delivery of counterfeit and fraudulent goods.

Amazon's credibility is crumbling, its reputation dissolving, and it's facing investigations by EU anti-trust regulators and the U.S. Federal Trade Commission (FTC). The U.S. Department of Defense awarded its $10 billion cloud computing contract to Microsoft over Amazon. Did Amazon's corporate ethics influence the decision?

Amazon has exhausted its usual illusory public response, "Products offered for sale on Amazon must be authentic. The sale of counterfeit products is strictly prohibited" -- it's patently false. Amazon consumer CEO Jeff Wilke has segued into a sympathy ploy that the company is lobbying for stiffer federal penalties for counterfeiters and the superpower may need to spend billions of dollars to prevent the sale of counterfeit goods on its platforms. Not very convincing -- Amazon continues as both a direct seller and enables "bad actors" to list and sell counterfeit and fraudulent merchandise, expired food items, and dangerous products on its websites.

Amazon claims that in 2018, it blocked more than three billion suspect listings for various forms of abuse. How many listings did Amazon miss? How many did brand-owners still find?

• Amazon's own reports reveal they receive an infringement notice for 1 of every 100 customer page views, and 200,000 brands have signed in to fight counterfeits on Amazon -- a shocking revelation of the enormity of Amazon's counterfeit problem. Over 7,000 brands have enrolled in Amazon's Project Zero, a plan where Amazon charges brand owners to remove infringing listings across the US, Europe and Japan. Why?
• Amazon actively recruits China manufacturers to sell on it platform. Many items are shipped directly from China to Amazon's Fulfilled by Amazon ("FBA") worldwide distribution centers to hide the origin of the China goods and expedite consumer delivery to just days. The seller’s true name, physical address, and country are masked from consumers who believe the items are coming from Amazon. China merchants collectively represent more than half of Amazon’s physical gross merchandise sales.
• Amazon escapes liability, and turns a blind eye to the counterfeits, deceptive products, and actions of its third-party Marketplace sellers. While publicly denouncing counterfeits on its websites, sharply contrasting activity occurs in the background. Amazon argued and won a U.S. Appeal's Court decision to disavow itself from any responsibility for 'offering to sell' counterfeit products, claiming they are "just a venue" and immune from prosecution and liability. (Milo & Gabby, LLC. v. Amazon.com, Inc.). Counterfeits, trademarks, and copyrights are the brand-owner's problem.
• A mother sued Amazon, alleging a counterfeit and fraudulently labeled motorcycle helmet sold on Amazon was flawed and resulted in her son's death. Amazon argued in court it didn’t sell the helmet but merely listed it on the seller’s behalf. It settled for $5,000 without admitting liability.

The first step in solving a problem is recognizing there is one. Amazon's lip-service isn't helping. Dharmesh Mehta, Amazon's vice president of customer trust and partner support, reported in an interview that 99.9 percent of what customers see on the site is legitimate. Legitimate what? Consumers are deceived into spending good money for bad products, while profits pour in for Amazon. Amazon paid no federal income taxes on $11.2 billion in profit in 2018 and $5.6 billion in 2017.

• The Wall Street Journal detailed crushed manufacturers and the availability of more than 10,870 Amazon items that had been declared unsafe by federal agencies.
• The Counterfeit Report, an award-winning consumer advocate and counterfeit watchdog, found over 170,000 fake, fraudulent, and replica items on Amazon. Even with the claimed supervision of two Amazon managers, counterfeit and fraudulent items remain, including dangerous and deadly goods. Some are sold by Amazon as a direct seller.
• Apple® reported that 90% of Apple products it purchased directly from Amazon were counterfeit. Birkenstock, the global footwear icon, slammed Amazon as "an accomplice" of the fraudsters. The Recording Industry Association of America (RIAA) reported that 25% of new CD's it purchased and were “Fulfilled by Amazon” in the U.S. were counterfeit. Swiss watch company Swatch (Longines, Omega and Blancpain) scrapped selling on Amazon when Amazon refused to "proactively police its site for counterfeits and unauthorized retailers."
• Amazon's counterfeit practices caught the attention of federal investigators. The U.S. Government Accountability Office ("GAO") conducted an undercover investigation of e-commerce counterfeit goods sales, reporting that about 50% of the items it purchased from e-commerce websites, including Amazon (AMZN), were counterfeit. The Federal Communications Commission ("FCC") sent a letter to Amazon's CEO, Jeff Bezos, telling him to knock off the counterfeit electronics.
• The American Apparel & Footwear Association (AAFA), which represents more than 1,000 brands, has repeatedly recommended that Amazon (AMZN) be added to the U.S. Notorious Markets List - a government list reserved for the worst online markets that enable and facilitate the world's largest criminal enterprise; copyright piracy, trademark infringement, and counterfeit product sales.
• Washington state’s attorney general’s office said Amazon agreed to pay $700,000 as part of a legally binding agreement after an investigation revealed dozens of products marketed toward children had excessive lead and cadmium. The products were made in China, the office said, some sold by China-based third parties. Amazon didn’t admit wrongdoing.
• Peter K. Navarro, White House assistant to the President for trade and manufacturing policy, 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."

Amazon is not making a better marketplace that serves consumers. Amazon is no more than an arena of creative destruction, leaving consumers on their own to sort the legitimate, honest sellers from all the bad actors under an umbrella of legal immunity. They are voracious churners of counterfeit and fraudulent items, indifferent to the damage they cause to consumers, legitimate sellers, and manufacturers while fulfilling their desire to be the sole source of items for purchase. There is no incentive to clean up their websites -- they make too much money.

America has a complexion blemished with corporate fraud, corruption, and scams; Enron, Tyco, Madoff, Lehman Bros., Cendant, HealthSouth, WorldCom...and more.

Will Amazon be added to the list?