Fake reviews and counterfeiters have eroded consumers’ trust in the ability to make safe and rational decisions while shopping online. Counterfeit goods account for almost 10% of worldwide trade, valued at $500 billion in 2016 and estimated to reach over $1 trillion by 2020. As the counterfeiting industry continues to experience hypergrowth, ecommerce retailers like Walmart and Amazon are caught in the war for greed, ultimately victimizing consumers.
Amazon and Walmart were recently cited in a report by the U.S. Government Accountability Office that found counterfeit cosmetic products contained dangerous substances such as cyanide and lead. This report also noted that in a random sampling 1 in 5 products purchased were counterfeit.
Counterfeiters know how to game platforms like Amazon and Walmart with fake reviews that dupe consumers into buying counterfeit and knockoff products. Recent research from Fakespot found that 52% of reviews posted on Walmart.com are inauthentic and unreliable. The same research from Fakespot also found that 30% of Amazon reviews are inauthentic and unreliable.
However, when it comes to counterfeits, Amazon faces the biggest challenge to regain control of their platform from counterfeiters because third-party sellers account for over 50% of products sold on Amazon. Even though the FTC brought its first case against an Amazon seller for using fake reviews to boost their product ranking, other counterfeiters who operate outside the reach of the FTC will keep using brazen tactics because the risk is worth the reward.
In 2017, Amazon announced an improvement in its brand registry service that allows brands to register their logos and intellectual property to help remove infringing sellers from the platform. In addition, Amazon expanded its services to include Transparency. This program provides item-level tracing for improved inventory control via special labeling and allows customer cross-verification of products against official information.
However, even with these measures, counterfeiters are thriving by abusing Amazon’s own reporting system to take down honest sellers and boost their own ratings by buying fake reviews for competitors and flagging them until they are removed. Unable to successfully combat fake reviews and counterfeit products, Amazon admitted in its 2018 annual report that it “may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies.”
As a result of previous failures to address the problem, Amazon announced Project Zero this year. Project Zero is an invite-only program that will leverage AI to combat counterfeit products. Currently their pool of participants is low, counting Vera Bradley, Thunderworks and ChomChom Roller as a few selected members that have benefited from this program.
Even though Amazon reported 100x improvements in detecting counterfeit products over its previous reporting system, there isn’t any hard data on how much it is helping as a whole. With only limited access for 15 brands, consumers are still at the mercy of unscrupulous sellers and counterfeiters who use every available trick to circumvent measures by online retailers.
As we have experienced, counterfeiting and fake reviews are causing significant damage to the ecommerce ecosystem, negatively affecting e-commerce platforms, brands, and consumers. Amazon’s rush to achieve the largest product mix and inventory has allowed nefarious sellers to game its systems, thereby destroying brands’ reputations when consumers unknowingly buy counterfeit products.
While Amazon is trying to combat this dire issue, the impact of platform-side solutions remain unclear. Instead of waiting for Amazon and other retailers to implement real solutions, brands and consumers can use tools, including Fakespot and others, to find out if there are fake and unreliable reviews in any listing as well as potential counterfeit issues.
Fakespot analyzes online customer reviews to determine which ones are authentic.