Amazon released its annual Brand Protection Report in April. The report details Amazon’s growing efforts to tackle counterfeit products for sale on the marketplace.
Amazon ranks No. 1 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest online retailers in North America by web sales. It also ranks No. 3 in the ranking of top online marketplaces.
Fraud remains a major problem
Amazon acknowledges the serious nature of the counterfeit problem on the platform. It spent $1.2 billion and employed 15,000 people to fight fraud on the marketplace in 2022, per the report. Counterfeit products are a “huge problem,” according to Robert Freund, a lawyer who works on ecommerce and social media marketing cases.
Counterfeiters aren’t new to Amazon. In 2016, Birkenstock USA CEO David Kahan said in a letter the footwear company would no longer list its products on Amazon because it was an “environment where we experience unacceptable business practices, which we believe jeopardize our brand.”
In 2019, Nike also stopped listing products directly on Amazon, a decision in part reportedly due to struggles with fake products. Even Amazon’s own products are at risk of fakes.
For brands that rely on Amazon sales, it can be difficult and expensive to “play whack-a-mole in the courts against counterfeits,” Freund said. Some companies, like Disney and Nintendo, have a “war chest” for these legal battles, but many don’t.
The swaths of knockoffs are making shopping unpleasant for some consumers, some of whom note a decline in quality. In 2020, The New York Times’ Wirecutter dubbed our time “the era of fake products.” A 2022 study from consulting firm Brooks Bell of more than 1,000 Amazon shoppers found that about one-third reported receiving items late or receiving a low-quality product at least monthly. Some consumers may be worried about counterfeit goods on other platforms, too. A March 2023 survey of 1,053 consumers from Digital Commerce 360 and Bizrate found that 12% of beauty buyers don’t shop online because of worries that they might receive counterfeit products.
Reasons to be optimistic
The state of counterfeit products on Amazon seems to be improving, Freund says. It’s encouraging that Amazon has a clear investment in making the marketplace usable for consumers.
“I think that part of the reason they’re [Amazon] so interested in addressing the issue and at least appearing like they’re doing everything they can do, in addition to restoring goodwill with sellers, is good publicity.” They also face potential liability themselves for allowing counterfeits on their platform, Freund says.
The report from Amazon also shows a decline in counterfeit attempts in 2022 compared to the previous year. According to Amazon, there were 800,000 attempts by bad actors to create seller accounts in 2022. That’s down from 2.5 million in 2021, and 6 million in 2020, an 87% decrease over the two year period.
Counterfeit products will probably always be an issue
Despite Amazon’s reports of fewer counterfeit reports, the problem is definitely not going away.
“It’s hard to imagine setting up some kind of framework where you just completely eliminate the business of counterfeiting,” Freund said, pointing to the massive scope of Amazon.
In 2022, Amazon said its Counterfeit Crimes Unit pursued more than 1,300 counterfeiting criminals in the U.S., U.K., EU, and China, and disposed of more than 6 million counterfeit products. While that’s progress, Freund says it also shows the difficulty of wiping out counterfeits completely.
Selling counterfeit products is “so easy to do, especially if you’re located in a country like China,” Freund said, which is hard to prosecute from the U.S.
China is responsible for 75% of pirated and counterfeit goods seized by the U.S., according to the Office of the U.S. Trade Representative 2022 Review of Notorious Markets for Counterfeiting and Piracy. Counterfeits from the Chenghai district of Shantou are particularly hard to stop, according to the report, because of “close relations businesses have with local administrative and criminal law enforcement authorities.”
“Right holders describe local officials as unhelpful or unwilling to pursue investigations recommended by either firms or enforcement officials from other cities,” limiting what U.S.-based retailers and marketplaces can do.
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