Amazon intends to show its awareness of the problem of counterfeit sales on its online market. To quote the platform: “We may not be able to our vendors or vendors from other stores from selling counterfeit, illicit, pirated, or stolen products, from selling them in an illegal or unethical way, from violating property rights or from violating our policies.”
That the word “counterfeit” has apparently been added to the Amazon lexicon matches with the actions that have been undertaken by Bezos’ company. In March of 2017, Amazon launched the enhanced version of its Trademark Registry, a platform for rights owners to register their trademarks to protect them from counterfeiting. This service provides brand owners with search tools to obtain a list of items sold on the platform using their logo or the description of their products to more easily find counterfeits. According to Amazon’s teams, registering branding information must also enable “automated safeguards that use machine learning to predict and prevent future failures.”
Some Find Measures to be Insufficient
Despite measures taken by the American e-commerce giant, the company had to defend itself publicly in March 2018 following accusations of “complicity” with vendors of counterfeit products. The complaint came from telephone accessories company Elevation Lab. Amazon responded by saying that it would make significant investments in automating its fraud anticipation system, and called for a “zero tolerance” policy. The previous year, German automaker Daimler AG had filed a trademark infringement lawsuit against Amazon, a heavy measure in an attempt to prevent the sale of counterfeit Mercedes-Benz parts.
Could the Trust of Major Brands be Imperiled?
Since 2017, more than half of Amazon’s sales have come from its system of third-party sellers. In the 3rd quarter of 2018, these sales accounted for 52% of the products sold through Amazon. This trend highlights the problems related to the fight against counterfeiting, and make clear how difficult it is to verify products. Criticism of the company has consequently groan and several companies – including Birkenstock, Swatch, Mercedes-Benz and the Recording Industry Association of America (RIAA) – have called out the platform’s failures to combat counterfeiting.1
“If we look at Alibaba, we can see that they try above all to provide a service to consumers while earning money. And yet they are actively fighting against counterfeiting. Yet Amazon is not doing anything at all”
Nik Hayek, CEO of Swatch Group
In October of 2018, the American Apparel & Footwear Association, which represents more than 1,000 brands, took a step further, and asked that the Canadian, UK and German Amazon sites be included in the “Notorious Markets” list which identifies e-commerce sites facilitating the sale of counterfeit products.
By mentioning counterfeiting in its annual report, Amazon recognizes the risks associated with the development of illegal trade on its online sales platform. The recognition, though it comes late, reflects its awareness of the risks posed by fraudulent merchandise, both to the economy and to the company’s reputation. As the conclusion to its annual report points out, “[counterfeiting] could harm our market and damage our reputation, and we could face legal action for the illegal activity of our vendors.”
1 ‘Amazon cites counterfeit issue in 2018 annual report‘, Securing Industry, 02/05/2019.