Amazon may finally be taking off the gloves in its fight to deal with counterfeiters. Although it was well-known that third-party sellers took advantage of the Amazon marketplace to pilfer knockoff products, the problem went unacknowledged for years. Just recently, in 2018, Amazon’s annual report admitted that the company had a counterfeit problem for the first time. The report even acknowledged that Amazon might not be able to fully stop this abuse of its marketplace.
The recent rollout of Project Zero marked Amazon’s most ambitious effort to date in controlling counterfeiting. But some recent developments suggest Amazon may also start using the law in its fight against counterfeiters.
Increasingly, Amazon is joining brands in lawsuits against suspected counterfeiters. Last year, Amazon filed a joint lawsuit with Vera Bradley (one of the first brands to sign on to Project Zero) against producers of knockoff products, which the pair won in April for a reported $500,000. Now, in June, Amazon has filed another joint lawsuit, this one with phone-mount manufacturers Nite Ize. The lawsuit alleges that Nite Ize’s Steelie product, a dashboard phone mount, has been counterfeited numerous times by two Chinese manufacturers. The products were then shipped through Portland, Oregon, and eventually made it to a warehouse where an Amazon account holder would sell them from. The lawsuit names the account holder, the two Chinese manufacturers, and several individuals based throughout the US and Canada as defendants for their involvement in the counterfeit scheme. If the successful Vera Bradley lawsuit is any indication, then it looks as if Amazon and Nite Ize have a good chance of success in this case.
But what does this mean for counterfeiting overall an Amazon? Involving the law is a clear escalation from Amazon’s past anti-counterfeit measures. Likely, Amazon considers its new use of lawsuits as an attempt at deterrence. Realistically, the company can’t sue every single counterfeiter on the site. But the threat is there. The potential threat of legal action increases the consequences and will serve as a deterrent for some would-be counterfeiters. Losing one’s Amazon selling privileges is one thing; a costly lawsuit is another. Amazon is now setting the example that it’s willing to use legal action in its fight against counterfeiting, which may deter those who find that too high of a risk.
On the other hand, others will still find the risk worth it. The simple reason is profits. The Organisation for Economic Co-operation and Development estimated that the counterfeit market’s value was $509 billion and represented 3.3% of world trade. With the amount of money to be made, it’s no wonder counterfeiters keep coming back.
The unfortunate truth is that even with increasing attempts at enforcement, controlling counterfeiting is ultimately reactive. The Colorado Sun, which broke the Nite Ize story, compared enforcement to a game of Whack-A-Mole. Companies can take out one threat, only for two more to pop up in different spots. Such is the challenge that Amazon and other companies face in their fight against counterfeiting. Amazon in particular, with its reliance on third-party sellers, faces an uphill battle. Vendors can easily fake the necessary documentation making goods appear authentic, and if accounts are removed the vendors can make another. It’s a constant back-and-forth that Amazon hasn’t solved yet.
Still, challenges aside, Amazon’s activities in recent years demonstrate a clear trend that the company wants to get counterfeiting under control. With its customer-centric philosophy, Amazon can’t allow it’s marketplace to be abused by counterfeiters who erode customer trust.
The company is clearly ramping up its efforts. In 2016 it started the brand registry program, protecting registered brands from counterfeiters. Now Project Zero gives brands the power to remove suspected counterfeit items themselves. Lawsuits might be the next tool Amazon adds to the kit. The combination of protecting brands, using its own machine learning technology, and involving the law could form a potent weapon in the fight against counterfeiting. Time will tell if it’s successful.