Opinion: It’s Past time for Amazon, Facebook Marketplace, and other E-commerce Sites to Ban Counterfeit Goods – Legislators must consider practical solutions that boost transparency online to support these small businesses while ensuring that buyers are protected from hazardous products.
As someone who works with brands daily, I know that the majority of third-party sellers on popular e-commerce platforms like Amazon AMZN, +0.61 percent, and Facebook Marketplace F.B., -0.57 percent are reputable, law-abiding businesses—just like any other small business in your neighborhood. While customers may only interact with e-commerce sellers through a computer screen, they still work tirelessly to go above and beyond for their customers, just like their traditional brick-and-mortar counterparts.
Currently under attack
However, criminals who sell illicit merchandise online target these online businesses and the long-term relationships they have built with customers. Criminals peddle stolen and counterfeit goods for profit, with little regard for how their actions affect honest sellers and consumers. When fake, often dangerous merchandise is sold below market value alongside legitimate products, legitimate merchants pay the highest price.
I’ve heard far too many horror stories from law-abiding business owners who these shady tactics have burned. Sellers may be forced to spend hundreds of thousands of dollars to defend their intellectual property and their businesses against counterfeiting networks as part of an effort to protect their own businesses from counterfeiting networks.
While some online marketplaces have attempted to create self-reporting methods for reporting violations, they frequently cause even more trouble for sellers, especially when sellers are forced to defend false claims against honest businesses after bad actors use these tools against them.
Take, for example, Amazon. Amazon announced in 2019 that they had spent $500 million and hired 8,000 employees to combat fraud, abuse, and counterfeits. The company won’t say that this sum represents less than 1% of their gross merchandise value (GMV) or total Amazon.com sales for a problem that affects tens of thousands of small businesses. Are 8,000 employees—less than 1% of Amazon’s workforce—enough to deal with an issue of this magnitude, with millions of potentially counterfeit products on its platform?
Amazon’s P.R. department has a habit of only sharing the numerator and not the denominator.
Chinese sellers, who have flooded e-commerce platforms with knockoff products, are largely to blame for the rise in counterfeit merchandise. China-based sellers now account for a whopping 75% of all new Amazon sellers. Despite this, according to a government report from 2020, eight out of every ten contraband items seized by the U.S. Hong Kong and China provided Customs and Border Protection.
It’s clear that courting these Chinese sellers and allowing them to sell anonymously on these platforms is endangering more innocent customers.
A Significant Step Forward
This issue has not gone unnoticed by federal lawmakers, especially now that a record number of people are shopping on e-commerce websites. The INFORM Consumers Act, which a bipartisan group of lawmakers recently reintroduced, would require online marketplaces to verify sellers using basic details that any legitimate business would have readily available, such as bank account information, contact information, and tax I.D.—essentially forcing e-commerce platforms to lift the veil and reveal who is selling what.
The vast majority of sellers who follow the rules applaud this type of common-sense legislation. According to them, this bill represents a viable approach to weeding out bad actors lurking in the shadows. If signed into law, the INFORM Consumers Act would help clean up e-commerce platforms and provide additional assurance to U.S. shoppers that the products they buy are safe and legitimate.
While the legislation will not solve the counterfeit and stolen item problem overnight, it is a practical solution that is a significant step forward. Meanwhile, greater transparency will make it more difficult to sell counterfeit goods and improve the e-commerce environment for hardworking third-party sellers.
Third-party sellers have had enough of waiting for e-commerce platforms to take effective action on this issue, and I am proud to support this long-awaited legislation. Now is the time for the federal government to step in and ensure that online marketplaces remain a safe and fair environment for both sellers and buyers.