The Dark Side of Amazon: Counterfeits

The Dark Side of Amazon: Counterfeits

I recently ordered a used Bose noise-canceling headset on Amazon. It was advertised in very good condition with new ear covers(!) for $120. Since I have lost a few new sets of these in my travels, I decided I might as well go for the used pair and save myself a bit of money.

A few days later, I received my used headset and to my surprise, it looked brand spanking new! At first I was high-fiving myself on the score. I plugged in, listened to some beats, and everything was perfect.

Then, the more cautious, more realistic consumer in me started acting up. The realistic part of me wasn’t satisfied. I recalled several times browsing the Shenzhen and Guangzhou markets, marveled at the level of sophistication of counterfeits from watches to purses to iPhones. To the untrained eye, they look and feel just like the real thing. Jack Ma, the founder of Alibaba said in June, “Fakes are often better then the real thing.”

I examined the case and the quality of the headset. Something seemed a bit off. I found a site called DetectaFake and that’s when reality hit. After examining my headset, 4 of the 6 tests they suggested failed. I had a counterfeit headset. Damn.

No problem, right? I would notify Amazon, provide visual evidence of the counterfeit, and the seller would be shut down. I’d get a refund, too. Yeah.

Yeah, right.

After 30 minutes poking away on Amazon, I realized it was extremely difficult to report a counterfeit in any meaningful way. There is no simple way in their drop-down menus to identify that “counterfeiting” is the issue you have with your order.

After a bit of frustration with my online efforts, I decided to get a customer service person on the phone. That turned out to be a dead end as well. The customer service call went something like this…

“OK, we’ll make a note on this order that you believe it is counterfeit.” Then I received an email saying that the issue had been noted and that I should contact seller for the refund.

Really?

I waited several days and noticed the seller was still advertising the “one” used set of headphones they had. Several weeks pass, and they still have that same set of used headphones – that one set – for sale. A month more. Same.

At this point, I had already communicated with the seller and sent the headset back. They responded that they had never encountered inauthentic goods like this before, and of course they would offer a full refund.

There is not a lot that Amazon and other marketplaces are doing to stop this type of abuse. They have their published counterfeit policies, but the actual implementation of any penalties for selling counterfeit goods seems to be pretty much absent. A countless number of testimonials suggest that the seller plays a cat and mouse game, and ultimately wins because of the difficulty of policing the issue.

I question the incentives of the marketplace, which is driven by profits. Ifone marketplace tries to squeeze the counterfeits out of their system, the goods will just show up on another marketplace (which will in turn be rewarded with additional sales).

There has been a significant amount of public finger pointing at Chinese marketplaces like Tmall, Taobao, JD and Aliexpress but the same amount of public scrutiny does not seem to apply to Amazon, eBay, Etsy and others even though they seem to be similarly complacent.

According to the International Chamber of Commerce, global counterfeiting has passed the 1.5 trillion dollar mark and has a huge impact on trade – including jobs. An estimated 2.5 million jobs have been destroyed across the G20.

I spoke with a few of our GRIN retailer members who have had disputes with Amazon and eBay in the past. Even with evidence supporting their claims, they’ve found it difficult to shut down sellers.

This information will not come as a shock to many reading it, but we at the GRIN are very interested to get a reality check here. How do companies combat counterfeits in marketplaces? Is it just the cost of doing business? As an industry, how do we move forward together to deal with this problem?

For those interested, counterfeit sellers can be reported to the FBI’s IC3, a federal agency that works to develop criminal complaints.