Amazon said that one of its main goals for 2017 was to fight counterfeits, and it vowed to work with brands on a registry that would require any merchant offering its products to prove that it's an authorized seller. The year before that, the company rolled out a plan that required third-party sellers on its site to pay a fee of $1,000 to $1,500 and provide proof of purchase to list items from Adidas, Asics, Hasbro, Nike and Samsung. Amazon told Engadget recently that there are more than 60,000 companies on its Brand Registry program, and that it encourages those with concerns about fake versions of their products to notify it.
Of course, Amazon isn't alone in its fight against fakes. Sites like eBay also have programs in place to combat counterfeits, such as VeRo (Verified Rights Owner), which allows intellectual property owners and their authorized sellers to report eBay listings that may be fake. The problem with that, Crosby said, is that it's reactive, not proactive, and requires brands to be constantly monitoring the sites.
Meanwhile, Chinese e-commerce giant Alibaba last year created the Big Data Anti-Counterfeiting Alliance with 20 international brands, including Samsung and Louis Vuitton. The goal, Alibaba said, is to use technology to remove pirated goods from its online retail sites, such as its namesake one and Taobao, which has a reputation for being flooded with fakes. Unlike eBay's VeRO, what Alibaba is building is a proactive system, powered by artificial intelligence, that can detect anomalies in customer reviews, product listings and specs. In addition, the company said it would work closely with Chinese authorities to seize and arrest the people selling the counterfeits. These efforts, Alibaba said, led to the seizure of $207 million worth of fake goods.
Amazon said that, along with using machine learning and automated systems, it employs dedicated teams of software engineers, research scientists, program managers and investigators to operate and continually refine its anti-counterfeiting program. The company claims that, as a result of the Brand Registry, it has managed to reduce the number of suspected infringements by 99 percent. What's more, the company said, it usually investigates and takes action on about 95 percent of reports from brands in that program within eight hours. And if a customer happens to buy a fake, Amazon says it will refund the order. While these figures seem promising, it also means that if a brand you like isn't part of the registry, there's a higher risk of counterfeit items from it being on Amazon.
Crosby said that another issue is whether Amazon actually prevents the counterfeit items it removes from reappearing on it site, which is just as important as removing them in the first place. "If 60,000 brands had to register to protect their intellectual property," he said, "Amazon's counterfeit problem must be significantly greater than [it] reports." (Crosby said that clients of the Counterfeit Report do not use Amazon's Brand Registry, since the program requires disclosure of confidential counterfeit identifiers, like special tags.)
Although Amazon is not be liable for the sale of counterfeits on its marketplace, thanks to its FBA program, that may not be the case for long.
Although Amazon is not be liable for the sale of counterfeits on its marketplace, thanks to its FBA program, that may not be the case for long. Mark Schonfeld, a partner at law firm Burns & Levinson LLP, in Boston, who focuses on intellectual property cases, said that Amazon has been able to shield itself because when it started its business, it acted only as an intermediary between buyer and seller. But that's clearly changed in the past few years as Amazon has taken on the approach of being more of a direct seller, be it through its own sales or those that are Fulfilled by Amazon.
He added that, because the sale of counterfeits is subject to strict liability, Amazon should be legally responsible if a fake good is being sold by a seller using FBA. Schonfeld said that while this hasn't caught up with Amazon yet, it's only a matter of time. A legal case that has kept the company from being held accountable dates back to 2010, when the US Court of Appeals for the Second Circuit found that eBay wasn't liable for the sale of Tiffany & Co. fakes on its site.