The Amazon Effect   //   March 26, 2024

Amazon says its stopped 700K counterfeiters from making accounts last year

For all its data collection efforts, Amazon doesn’t keep track of how many individual counterfeit listings it pulls down. But in the physical world, the world’s largest e-commerce platform says it helped stop 7 million counterfeit products from entering its fulfillment centers and reaching consumers last year– one million more than it did in 2022.

“We know that this a very large problem where everyone plays a key role,” Anna Dalla Val, director of global brand relations at Amazon, told Modern Retail. “But we have invested in being proactive, and protecting the store.”

The company is spending roughly 2% of its net sales on cracking down on counterfeits, Amazon said on Tuesday. It released its annual Brand Protection Report, which sums up the efforts it took in 2023 to crack down on counterfeits.

Amazon estimates it spent about $1.2 billion on anti-counterfeit efforts last year. That same year, it saw a 12% bump in annual net sales hitting $574.8 billion. It also said it now has 15,000 employees tasked with the issue, roughly 1% of its 1.5 million-strong workforce. In addition to stopping fake products from getting into the U.S., Amazon’s efforts include preventing people from making accounts unless they have verifiable identification, using AI to scan images and product listings for red flags and working with law enforcement around the world to find and prosecute counterfeiters.

Amazon’s report comes amid increasing concerns from brands and scrutiny from lawmakers. Counterfeits are hardly a new plague on marketplaces, and Amazon has rolled out new attempts at safeguards year after year, from its Brand Registry program in 2017 to creating its Counterfeit Crimes Unit in 2020. The issue has made its way into the courts, with likes of Chanel and Christian Louboutin once suing Amazon over claims related to counterfeit sales. But camera manufacturer Canon last spring teamed up with the platform and filed a joint lawsuit against 29 companies over alleged fake products.

But the efforts of a single platform — even one as massive as Amazon — are not enough to stop counterfeiters in their tracks. Experts in the space said it will take collaborative efforts from marketplaces, brands, governments and regulators to truly ferret out bad actors and imitators that are siphoning sales.

Last year saw the somewhat rocky rollout of the Inform Act, which requires marketplaces to verify sellers’ identification and bank account information. Dalla Val said Amazon is building “a strong platform for compliance” with the Act and aims to vet every prospective seller as quickly as possible. These efforts led to the lockout of 700,000 attempted account creations.

“We’re continuing to innovate the technology and that’s definitely something that we continue to invest in,” she said.

Yet those efforts may be a drop in the bucket compared to the overall problem.

Saleem Alhabash, professor and a researcher at Michigan State University’s Center for Anti-Counterfeiting and Product Protection, said it’s impossible to determine the size and scope of counterfeiting overall. But the center’s most recent research shows seven in 10 customers have bought a counterfeit product.

“The issue has gotten so large and so uncontainable with the proliferation of digital media and e-commerce and social commerce platforms,” he said. “By the time the platforms figure out what’s going on, the counterfeiters have moved on.”

Avoiding brand harm

Steve Greenspon, CEO of home organizational products company Honey-Can-Do International, said counterfeit items are a persistent problem for his company. Imitations pop up claiming to be from the same company; others sell seemingly identical products being sold under other brands’ names.  

“People think they’re getting a Honey-Can-Do product or a product from a brand you might know and trust and rely on,” he said. “Instead, they’re getting a complete copy. And in almost every case it’s a bad copy.”

Honey-Can-Do pays a third-party vendor to scour marketplaces for copycats, and then requests they get taken down. While it’s an extra annual expense, Greenspon said it’s worth it to have someone ensuring his brand reputation is intact.

Dalla Val couldn’t say how long it takes Amazon on average to respond to a claim of an infringing product. Nor could she say how many listings are getting taken down for infringement concerns. But that’s partly because Amazon’s own tools are constantly scouting for potential infringement, triggered every time someone makes a new listing or changes a page.

“It’s a lot of work that you can’t see,” she said, “really scanning the store and all the change that happens in the store to proactively remove any potentially infringing products.”

Brian Cairl, senior managing director and director of investigations at risk consulting firm K2-Integrity, said the harms of counterfeiting can go beyond brand concerns.

Cairl specializes in looking at counterfeit cases involving medical and health products. In this area, there is an increased risk of human harm from products that may not be safe or sterile. He said brands that suspect counterfeits are best served by immediately reaching out to a lawyer, consulting group or law enforcement to take action.

“You’re dealing with an element that cares about one thing — and one thing only. And that’s making money,” he said. “They don’t care about hurting people.”

Cairl said that while it’s difficult for law enforcement and investigators to stay ahead of counterfeiters, Amazon’s capacity to kick an infringer or counterfeiter off of a platform is a bigger deal than it seems. The counterfeiters often can’t continue operations when they don’t have a profit coming in from selling their faked wares, he said. But such players may simply go and make another fraudulent account — or create other ways to reach out to customers to sell their fake products.

“It’s an ever-changing environment,” he said. “The smarter we get, the smarter the bad guys get.”

Broadening the efforts

Amazon’s Dalla Val said that cracking down on counterfeit involves partnerships with law enforcement and regulators from around the world. This includes U.S. Customers and Border Patrol to help stop shipments of allegedly infringing products from ever coming in. Amazon has also worked to strengthen its ties with Chinese law enforcement, and conducted 50 raids last year that led to detaining more than 100 alleged counterfeiters. It also signed an MOU with the Italian Ministry of Internal Affairs to share more information and support policy development around counterfeits in that country.

“Everybody has to play their part and has a role in this global fight against counterfeit that touches the entire retail industry across the entire supply chain,” she said.

Inside its own operations, Amazon aims to equip brands with proactive tools, Dalla Val said. Its Intellectual Property Accelerator is a network of legal sources that can help new brands get trademark protection so they are legally protected in the event of a copycat product. So far, 15,000 brands have joined.

Brands are also incentivized to register their IP with Amazon so it can cross-check and remove listings. The platform also has the Amazon Patent Evaluation Express service available to sellers who have utility patents to help them resolve infringement disputes outside of the complex and slow-moving U.S. legal system.

Dalla Val said one of the biggest takeaways from this past year was how having new tools backed by artificial intelligence can help scan listings faster. These tools are better at detecting potential signs of fraud, like obscured brand logos, she said.

Of course, AI is also being wielded by the counterfeiters, Dalla Val said.

“We need to stay a step ahead, and continue to stay vigilant and innovate,” she said.