Amazon, eBay, Alibaba Get An "F" For Counterfeit Enforcement

Brand-owners snubbed as fakes flood the websites.

February 26, 2020 - Los Angeles, CA – Most consumers are no longer surprised that Amazon, eBay, and Alibaba enable and facilitate the sale of an enormous amount of counterfeit, fraudulent, and replica products. The global giants are ideal distribution conduits for the $1.3 trillion criminal counterfeit industry, but haven't escaped the attention of global government regulators, the White House, and law enforcement.

“Online counterfeit trafficking is defrauding consumers at the very least and harming or even killing Americans with the fakes coming into our homes and businesses,” says Peter K. Navarro, Ph.D., top economic and trade advisor to the President. “For all practical purposes, these e-commerce hubs are basically laundries for counterfeits,” adds Dr. Navarro.

However, the fakes persist and the websites operate virtually immune to prosecution, IP laws, and safety standards. Consumers just don't have a chance against the counterfeiters, while the removal process is an ineffective, obstructive, and inefficient process that puts an unnecessary and expensive burden on brand-owners in favor of profits for the e-commerce websites.

About 80% of eBay sales and 60% of Amazon sales are from unvetted global "Marketplace" sellers, mostly from China, who exploit e-commerce websites as a cheap, effective way to deliver counterfeit, fraudulent, and replica goods. Alibaba and subsidiaries AliExpress and Taobao are the "go-to" websites for counterfeits and replicas, which by extension, end up on, or sold through Amazon, eBay, Walmart, and other websites. All should be avoided.

• The Counterfeit Report, an award-winning consumer advocate and counterfeit watchdog, has removed over 394 million counterfeit, 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, and a fictitious item listed at a fraction of the purchase price.
• The U.S. Government Accountability Office ("GAO") conducted an undercover investigation of e-commerce websites, including Amazon, Walmart, and eBay, reporting that about 50% of the items it purchased from e-commerce giants were counterfeit.
• 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).
• Federal Communications Commission ("FCC") Director Michael O'Rielly sent a letter to Amazon, and eBay's then CEO, Devin Wenig, telling him to knock off the counterfeit electronics.
• The Recording Industry Association of America (RIAA) reported that 100% of sample purchases through eBay or Alibaba subsidiary, 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.

In response, the White House initiated strong sanctions via Executive Order on January 31, 2020, along with "best practices" recommendations that will be the active role e-commerce platforms, online third-party marketplaces, and other third-party intermediaries such as customs brokers, fulfillment shippers, and express consignment carriers must take for monitoring, detecting, and preventing trafficking in counterfeit and pirated goods. The Trump administration said it would begin imposing fines and other penalties on merchants, warehouses, and third-party websites such as Amazon that facilitate the import and sale of counterfeit and pirated goods. The order seems to be effectively ignored in the first month.

Amazon

Amazon has established a pattern of ignoring counterfeit complaints. Even with the oversight of two Amazon Global Brand Managers assigned to The Counterfeit Report, thousands of complaints are ignored. Unrelated replies from a grab-bag of template responses are common. Legal notice served on Amazon for dangerous fraudulent products was ignored, and now in litigation.

• Amazon acts as both a direct seller as well as enabling the advertising, sale, distribution, and delivery of counterfeit and fraudulent goods through an organized, invasive, and manipulative global system of fraud, deception, misrepresentation, employee bribes, and data leaks.
• 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. Counterfeits may include Amazon's coveted "Prime" and "Amazon's Choice" endorsements.
• 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.
• The American Apparel & Footwear Association ("AAFA"), which represents more than 1,000 brands, has repeatedly recommended that Amazon be added to the U.S. Notorious Markets List.
• 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.

eBay

eBay hasn't escaped scrutiny for its shady practices, illusory counterfeit policies, and ineffective website policing. eBay has migrated from the auction house of garage sale items to a global "Marketplace" seller model like Alibaba and Amazon. Unvetted marketplace sellers are about 80% of eBay business and can sell just about anything they want on eBay, including counterfeit, fraudulent, and replica items.

• The Counterfeit Report found over 3.4 million counterfeit, fraudulent, and replica items on eBay and removed over 2 million, authorized by the brand-owners. The eBay listings reveal that over 915,000 fakes and replicas of just a handful of selected products were sold to consumers.
• Recently, counterfeit complaints to eBay have languished for days, even weeks, as "We are currently experiencing an increase in volume," explains Jim B. of eBay's Verified Right Owners (VeRO) counterfeit enforcement program.
• Delays and inaction aren't eBay VeRO's only problems. For example, Guy Tal, CEO and brand-owner of popular Maglula® branded-products, has repeatedly complained to eBay about sellers relisting counterfeits -- some in just hours. A directed complaint to eBay's Senior Director of Global Trust, Gary Fullmer, went unanswered and without any identifiable results. Fed up with online counterfeits, Mr. Tal recently filed a lawsuit in Federal Court for Amazon's direct sale and third-party sales of his counterfeited products.
• Forbes deemed the e-commerce giant a "cesspool of counterfeits and other illegal and potentially dangerous goods."

Complaints to eBay senior management and corporate counsel, Marie O'Huber, fall on deaf ears. eBay's solution was to block The Counterfeit Report's accounts, ban test purchases, and commission the global law firm giant, O'Melveny and Myers, to threaten; "Any attempt to circumvent that ban may result in eBay taking further steps, including but not limited to legal action." Consumers lose, but a clear win for eBay profits and counterfeiters.

Alibaba / AliExpress

Alibaba and subsidiary AliExpress are the "go-to" websites for counterfeit, fraudulent, and replica goods and should be avoided. Alibaba websites serve as a first-stop for brand owners to check if their products are counterfeited. Well-deserved criticism describes China's bad-boy of counterfeits glaring inaction on infringement complaints, its ineffective and dysfunctional reporting system, and the counterfeit sellers who often relist. Recently, while employees and China celebrated Chinese New Year, counterfeit complaints languished for weeks while brand-owners, manufacturers, and retailers are harmed in a big way with little recourse. Now under the coronavirus cloud, counterfeit complaints are ignored, yet the global giant has no problem adding new listings.

• The Counterfeit Report found and removed over 370 million infringing items from Alibaba websites on behalf of just a handful of brand-owners. That's one counterfeit for every man, woman, and child in the USA. The counterfeits continue to be relisted.
• Counterfeit complaints are ignored for weeks. Alibaba's server may respond, "host mx01.ocm.aliyun.com [140.205.94.3] said: 503 Bad sequence of commands" indicating an overwhelmed or failed system, adding to the aggravation of Alibaba's unreachable and unresponsive platform.
• 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.
• Crushing China's intellectual property theft was a White House negotiating point in recent China trade and tariff deliberations, but counterfeit products continue to fly under the radar. It is simply too profitable and almost impossible to stop.

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. Search results and product reviews are no indication of authenticity or quality and may not even be related to the product searched. Worldwide scammers work to outsmart and trick ranking systems with fake reviews and ratings. Amazon and eBay block or remove negative consumer reviews.

America was founded on free trade, but that also has to include fair trade. America has an obligation to protect intellectual property rights, punish lawbreakers, and impose tariffs or restrict access to our markets in the same way competitors do to us. America has a complexion blemished with corporate fraud, corruption, and scams; Enron, Tyco, Madoff, Lehman Bros., Cendant, HealthSouth, WorldCom...and more. Will e-commerce giants be added to the list?

America's security and future are at risk. While waiting for Congress to act, consumers would be better served to shop at local retailers or online with the major authorized retailers (Kroger, Costco, Home Depot, Target, Lowes, Best Buy, etc.) who offer consumers competitive purchase options for authentic products.