Amazon.com Inc. has taken another step in a series of efforts to curb the sale of counterfeits on its marketplace. The ecommerce giant earlier this month filed a lawsuit alleging a group of 13 Amazon sellers and influencers worked together to sell fake goods and engage in false advertising.
But in this instance, the alleged perpetrators got extra creative in their attempts to skirt Amazon’s counterfeit detection tools.
The lawsuit, filed in the United States District Court for the Western District of Washington, says two of the 13 defendants, Kelly Fitzpatrick and Sabrina Kelly-Krejci, conspired with Amazon sellers to evade Amazon’s anti-counterfeiting protections by promoting counterfeit products on social media platforms Instagram and TikTok as well as their own websites. Amazon is No. 1 in the 2020 Digital Commerce 360 Top 1000.
Here’s how the scheme worked according to Amazon’s 114-page suit: The two influencers posted side-by-side photos of a generic, non-branded product and a luxury counterfeit product with the text, “Order this/Get this.” “Order this” referred to the generic product falsely advertised on Amazon, such as a basic black men’s wallet and “Get this” referred to the counterfeit luxury product, such as a fake Gucci quilted wallet, the consumer would actually receive after ordering the generic item.
Fitzpatrick and Kelly-Krejci—and the sellers they coordinated with—attempted to evade Amazon’s anti-counterfeit protections by posting only generic products on Amazon, while using social media to let shoppers know that they would actually receive a counterfeit version of a luxury item. Fitzpatrick and Kelly-Krejci also posted numerous videos describing the alleged high quality of the counterfeits they promoted, Amazon says.
For example, in one video promoting a counterfeit Gucci belt, Fitzpatrick celebrated a false “Made in Italy” designation of origin, according to the lawsuit. While in these cases many consumers knew they were getting fake goods, Amazon’s aims to curb counterfeiting on its site to protect consumers who may not be aware an item is fake as wells as protect brands.
”These defendants were brazen about promoting counterfeits on social media and undermined the work of legitimate influencers,” says Cristina Posa, associate general counsel and director for the Amazon Counterfeit Crimes Unit. “This case demonstrates the need for cross-industry collaboration in order to drive counterfeiters out of business. Amazon continues to invest tremendous resources to stop bad actors before they enter our store, and social media sites must similarly vet, monitor, and take action on bad actors that are using their services to facilitate illegal behavior.”
Amazon in June 2020 launched its Counterfeit Crimes Unit, a global team with experts experienced in investigating and bringing legal action against bad actors.
Fitzpatrick was previously a member of the Amazon Influencer Program, but after Amazon detected her counterfeiting activities, she was removed from the program, Amazon says. The Amazon Influencer Program allows influencers with large followings and who post frequently on social media or blogs to create their own page on Amazon to showcase the products they recommend to their followers on their blogs, social media or websites and collect commissions on sales of those goods.
After being removed from the program, Amazon claims Fitzpatrick continued to advertise counterfeits on social media sites and directed followers to Amazon to buy. Amazon also says it detected and blocked a similar scheme by Kelly-Krejci. The defendants also began directing their followers to other ecommerce websites to purchase fakes, Amazon says.
“Amazon strictly prohibits counterfeit products in its stores, and in 2019 alone, invested more than $500 million to protect customers and brands from fraud, abuse and counterfeit,” Amazon says in a release announcing the lawsuit.
Amazon has filed a series of lawsuits recently against counterfeiters in an effort to clean up its site, including joint lawsuits with Italian luxury fashion house Valentino, cosmetics retailer KF Beauty and JL Childress, a seller of travel products for parents.
James Thomson, chief strategy officer at Amazon marketing agency Buy Box Experts, says this most recent move is yet another effort by Amazon to deal with counterfeit problems on its site. Amazon has made a push to be more stringent against fakes on its site after it warned investors early last year in its annual report of its counterfeit issues.
“We also 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,” the report notes. “Under our A2Z Guarantee, we reimburse buyers for payments up to certain limits in these situations, and as our third-party seller sales grow, the cost of this program will increase and could negatively affect our operating results.”
That 2018 annual report is reportedly the first time Amazon mentioned the word ‘counterfeit’ in a regulatory filing. What’s more, counterfeits will likely only become more difficult for Amazon to police as the marketplace continues to grow third-party sales. 60.5% of sales on Amazon are from third-party sellers while 39.5% stem directly from Amazon selling its own goods, according to Digital Commerce 360 estimates.
In this particular case, experts say the individuals were likely targeted because of their brazen approach.
“There is a lot of black hat stuff going on, but most of the time the mouse [counterfeiters] outruns the cat (Amazon),” Thomson says. “These influencers must have been pretty obvious to be caught.”
Mike Begg, co-founder of AMZ Advisers, which helps manufacturers and brands sell on the marketplace, says Amazon is beginning to push its influencer programs more and wants to weed out bad actors as it grows these initiatives. One example of its increasing focus on influencer-type marketing is its Amazon Live livestreaming service that allows sellers to “promote discovery” of their products by hosting their own livestreams for customers on Amazon, Begg says. It’s akin to an HSN or QVC within Amazon.
“I believe the lawsuit is being brought by Amazon against these individuals to prevent future influencers from trying to help unethical sellers manipulate the platform,” he says. “It appears that these influencers were targeted because of how blatant they were in the marketing of counterfeit goods and that they were previously part of the Amazon Influencers Program.”
Still, despite Amazon’s increased diligence, many black-hat workarounds are bound to slip through the cracks on such a massive marketplace, Begg says.
“There will always be bad actors trying to play around Amazon’s Terms of Service. We’ve seen this before with fake product reviews and review hijacking,” he says. “There is almost an unlimited amount of ways for bad actors to use black hat tricks within the Amazon platform to move their products.”
Amazon’s investments to curb counterfeiting
However, Begg adds that increased attention from regulators both in Europe and in North America is prompting Amazon to take the counterfeit issues more seriously and spend ample time and money to curb them.
“Counterfeit products previously seemed like a fire Amazon was willing to let burn,” Begg says. But recently, he says, Amazon has continued to roll out new programs to fight counterfeit products.
Those programs include:
- Amazon Brand Registry: Designed for brands that hold the trademarks on their products, the service allows registered brands to complain, for example, when an Amazon seller offers a counterfeit product using a brand’s registered ASIN, or Amazon Standard Identification Number, the ID Amazon uses to display identical products from several sellers. The brand can also complain if a seller of one of its products, such as a handbag, uses improper product descriptions or images, or outdated logos. Amazon can prevent the violator from selling that handbag using the ASIN for that product, making it less likely that the seller would show up if a shopper searches for that product. One way to use Brand Registry to fight unauthorized sellers on Amazon is for the brand to make a small variation in a product, even if it’s just to its label or warranty. That way the brand can complain that a seller listing a product without the minor change is guilty of trademark infringement and ask that the seller be removed from that ASIN. Amazon says more than 350,000 brands are enrolled in the free service.
- Transparency: This service allows brands to add unique codes to their products or packaging to identify each unit they produce. These codes enable Amazon to inspect and authenticate every unit enrolled in the Transparency program and detect and stop counterfeits before they are shipped.
- Project Zero: Project Zero uses machine learning to scan products and remove suspected counterfeits. Brands provide key data points about themselves such as trademarks and logos and Amazon’s Project Zero technology scans more than 5 billion daily listing update attempts, looking for suspected counterfeits. More than 10,000 brands are enrolled in the program.
While some consumers seek out ‘dupes’ on Amazon.com, experts say these anti-counterfeiting efforts are mainly focused on improving the customer experience as most shoppers don’t want to be fooled into purchasing fake goods. That focus on the customer is made clear in the boilerplate messaging included in every Amazon press release: “Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking.” The customer comes first.
“At the end of the day, customers having negative experiences because they’ve purchased a counterfeit good is the main issue that Amazon wants to avoid,” Begg says. “Not so much to help the brands themselves.”Favorite