Amazon criticised for counterfeits

Katrina Megget, 11-Jul-2016

Amazon is feeling the heat after an increasing number of third party sellers have accused the online shopping site of selling counterfeit products from China.

The sellers claim that Chinese counterfeiters are undercutting prices and creating fake reviews, according to a report by CNBC, which also highlights the e-commerce giant's weak policing measures and loopholes that allow counterfeiters to continue to sell fakes under different seller names. Some authentic sellers have described the website as a "game of whack-a-mole, where fakes pop up more quickly than they’re taken down".

The report alleges that the problem has been made worse after recent moves by Amazon to "openly court Chinese manufacturers" and streamline the shipping process, with sales from Chinese-based sellers more than doubling last year. The report states that Amazon is turning into "the world’s largest flea market – a chaotic, somewhat lawless, bazaar with unlimited inventory".

Third party sellers, which represent almost 40% of the products sold on Amazon, are now demanding action by the online store to address the problem, which they say has seen them lose shares and revenue to the Chinese fake artists. They want tighter regulation and more checks, and have started Facebook and WhatsApp groups to discuss the issues and possible solutions.

Chris Johnson, an attorney at IP law firm Johnson & Pham LLP, told CNBC that it’s open season for counterfeiters on Amazon. "Amazon is making money hand over fist from counterfeiters, and they’ve done about as little as possible for as long as possible to address the issue."

In a statement, Amazon said: "Amazon does not allow the sale of counterfeit items on its Marketplace and occurrences of counterfeit products are very rare. Every customer who orders on Amazon is covered by our A-Z guarantee and if they do receive counterfeit goods from a marketplace seller, we will refund or replace that item."

Amazon is not the only online marketplace criticised for enabling counterfeiters to have a platform. Chinese e-commerce giant Alibaba is also battling continual claims of counterfeits.

Amazon’s revenue was more than $100 billion last year.