Amazon files first lawsuits against counterfeit sellers

Dive Brief:

  • For the first time, Amazon on Monday filed two lawsuits against marketplaces sellers it claims are selling counterfeit goods, media outlets including Fortune report.

  • One suit alleges that seller ToysNet is marketing a knockoff of the Forearm Forklift, a wearable strap that makes lifting heavy things easier, while the other suit targets Joana Ferreira, who allegedly sells a bootleg version of a TRX-branded fitness strap sold by Amazon in partnership with training products and exercise program firm Fitness Anywhere, according to Bloomberg.

  • Amazon is increasingly under fire to address the counterfeit goods found on its site, with CNBC detailing in several reports this year that fakes are being sold not just by third-party Amazon Marketplace sellers but also by Amazon itself. 

Dive Insight:

While Amazon has largely escaped counterfeit controversies in the past, the problem appears to be growing as its Marketplace grows. In addition to pressure from customers, Amazon has to contend with mounting scrutiny from brand partners that have become frustrated with a glut of counterfeits on marketplace sites like eBay, Etsy and China's Alibaba. 

Citing concerns over counterfeiting and unauthorized selling, Birkenstock USA, for example, this summer informed Amazon that as of Jan. 1, it will no longer offer its footwear on the e-commerce site or its Marketplace. In addition, an Amazon seller is facing a lawsuit from Apple, which contends that Amazon’s Marketplace sold counterfeit Apple products supplied by New York vendor Mobile Star. Some 90% of the Apple products that “were directly sold by — not a third party seller” turned out to be counterfeit, according to court documents. Amazon appears to be cooperating in the dispute, handing over other products produced by Mobile Star to Apple.

CNBC in July further detailed the growing problem of counterfeit merchandise on Amazon, noting that many knockoffs are found in warehouses alongside genuine articles sold via the e-retailer’s Fulfillment by Amazon shipping and packing program — a problem that's rife for smaller merchants and artisans as well as larger brands.  

Many customer complaints similarly have to do with product authenticity, expiration dates and other quality measures, though some sellers say that many Amazon customers are taking advantage of its customer-slanted policies to obtain refunds on perfectly good orders. Amazon policies maintain that sellers are responsible for the authenticity of their goods and could face delisting if they’re found to offer fakes.

“Customers trust that they can always buy with confidence on,” the policy reads. “Products offered for sale on must be authentic. The sale of counterfeit products, including any products that have been illegally replicated, reproduced, or manufactured, is strictly prohibited.” 

In response to counterfeiting concerns, Amazon is now requiring third-party sellers to pay a one-time, nonrefundable fee of up to $1,500 per brand. This “brand gating” effort, in addition to other requirements (like showing as evidence invoices or other paperwork from brands or manufacturers such as Nike and Adidas) will likely be prohibitive for many smaller Marketplace sellers. While ToysNet provided invoices to prove the items in question were genuine, Amazon's lawsuit contends those records were forged. 

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Filed Under: E-commerce