5 Things You Should Know About Amazon’s Issues With Counterfeits

Image courtesy of Alan Rappa

When you see a brand-name handbag or laptop being sold on Amazon for well below its retail price, it’s hard to not hit the “Buy” button. But is it a good deal or just a counterfeit in brand-name clothing?
A new report from CNBC claims that a growing number of products sold by third parties on Amazon are fakes, and that the e-tail giant is having a difficult time getting a handle on the problem.

As a result, sellers of legitimate goods say their revenues are hurting as more and more companies copy their products and offer them at steep discounts, while customers are complaining that their newly acquired items aren’t the real deal.

Here’s what we learned about Amazon’s counterfeit problem, and what the company is doing to make it right.

#1: Opening the floodgates: CNBC reports that counterfeiting on Amazon has grown significantly in recent years as the company welcomed Chinese manufacturers into its operations. Sales from China-based sellers more than doubled last year.

#2: A mixed bag of products: The increase in sales from Chinese companies on Amazon has been made possible, in part, because the company has made it easier for these manufacturers to get their products to customers quickly.

For example, Amazon registered with the Federal Maritime Commission to provide ocean freight for Chinese companies to ship goods directly to Amazon fulfillment centers, cutting out costs and inefficiencies.

#3: Commingling and false security: The increase in products from Chinese merchants has led to commingling of products at Amazon fulfillment centers.

This allows the company to put together orders with products from different sellers, making it difficult to know you’re purchasing a counterfeit item.

These orders, because they come from an Amazon fulfillment center, often contain a FBA (Fulfilled By Amazon) tag. Critics say this gives customers a false sense that their products are legitimate.

CNBC suggests that a counterfeit jacket could be sent to an Amazon facility by one merchant and actually sold by another.

#4: A lack of safeguards: Critics say that Amazon hasn’t done enough to prevent the influx of counterfeit items or prepare shoppers for the possibility that they might not be buying what they thing they are.

This is evidenced, CNBC says, in the number of sellers that offer high-end products at deep discounts. While these sales should raise a red flag for both customers and Amazon, that simply doesn’t appear to be occurring.

“As long as the logo looks legit, people assume you have that item,” a Canada Goose seller offering a $1,000 jacket for $650 on Amazon, tells CNBC.

#5: Trying to make it up: CNBC reports that while counterfeiting is supposedly on the rise at Amazon, the company is trying to help customers after the fact.

If customers can verify that they’ve bought counterfeit goods, Amazon will push sellers to refund the purchase or they kick the sellers off the site, Walter Price, a portfolio manager at Allianz Global Investors, tells CNBC.

“Amazon does stick up for the consumer,” he says. “They put the customer first, not the merchant.”

However, some customers and sellers have run into issues with these policies. Back in 2012, a man who purchased a pair of headphones from a third-party seller on Amazon told Consumerist that when he tried to resell them on the site they were flagged as counterfeit.

Additionally, Amazon does have an anti-counterfeiting policy that works to respond to infringement notices submitted by sellers who feel their products are being ripped off.

CNBC reports that the fraudsters often make it difficult by changing the names of their stores and relaunching as quickly as they were removed from the site.

“They’ve been reactive, not proactive,” Chris McCabe, a former Amazon merchant account investigator, tells CNBC. “Amazon can’t watch everyone all the time, and they don’t pretend they can.”

Amazon’s Chinese counterfeit problem is getting worse [CNBC]