Amazon Establishes Counterfeit Crime Unit To Combat Fake Products

By Patrick Moorhead - July 24, 2020

Last week, Amazon announced that is has established a Counterfeit Crime Unit to help combat the billions of counterfeit listings that are attempted each year on Amazon. You can access Amazon's full announcement post here. Everyday counterfeiters are trying to sell inferior quality goods on Amazon under the brand name of other companies. These counterfeiters often infringe on the trademark, patent, and copyright laws in the process. The new Counterfeit Crime Unit is focused on identifying those who sell counterfeit products on Amazon, bringing about legal action, and preventing future fake product listings before they happen. Millions of different sellers sell hundreds of millions of products on Amazon. It makes sense that one of the company's most significant issues is counterfeiting operations that knock-off name brand products. Amazon's aggressive stance against counterfeit products is warranted, and I will dive into why it matters below.    

Customer, seller, and governmental pressure   

Recently there has been significant pressure on Amazon by sellers, consumers, and governmental agencies to fight against counterfeiters or, as Amazon calls them, "bad actors." These bad actors steal revenue from a legitimate business and provide the customer with a knock-off product vs. what they intended to purchase. Many credible companies that compete against counterfeit products on Amazon will further lower prices to compete with knock offs. Often these businesses are already operating on slim margins and by dropping prices to compete, it can be extremely detrimental to the company.   

The Numbers  

In 2019, Amazon expressed a firm stance toward counterfeiters and backed it up with capital and employee resources for fighting fraud, which includes counterfeit products. Below are the 2019 numbers that reflect the full extent of Amazon's efforts to stop fraud.   

  • Over $500 million invested in fighting fraud, including counterfeits  
  • 8,000 employees dedicated solely to combating these issues   
  • Blocked more than 6 billion suspected harmful listings   
  • Blocked over 2.5 million suspected bad actors before they were able to post a single product available for sale  

The Goal   

In the last year, Amazon's efforts to stop counterfeit products from being listed on the Amazon marketplace was extensive. Last year, 99.9% of products on Amazon didn't have a single counterfeit complaint. That number may seem very significant by most standards, but Amazon will not settle for that standard. The goal of the new Counterfeit Crime Unit is to drive the number of counterfeit products to zero. Initially, this goal seems nearly impossible, but there isn't another company in the industry willing to assign the amount of capital and resources to combat counterfeiting than Amazon will. The company hangs its hat on being customer obsessed. Making sure sellers and buyers can use a marketplace free of counterfeit products is the exact reason the Counterfeit Crime Unit now exists. Amazon has set a lofty goal, but it did not reach its current level of success by settling for good enough.  

Amazon
 AMAZON

How the Counterfeit Crime Unit works  

Amazon's new Counterfeit Crime Unit is full of global professionals across multiple disciplines, including former federal prosecutors, experienced investigators, and data analysts. The global team will focus on investigating cases where "bad actors" have attempted to evade Amazon's security systems and list counterfeit products that violate Amazon policies. The implementation of this team will allow Amazon to be more resourceful in aiding law enforcement officials while pursuing prosecution and civil litigation. The team will also work independently and jointly with brands that have been affected by the selling of counterfeit products. The most compelling piece of this announcement is the wealth of prosecution, litigation, and data mining experience that comes from hiring previous federal prosecutors, experienced investigators, and data analysts. It is easy to understand how federal prosecutors and investigators stack the odds in Amazons' favor, but data analysts may not be as self-explanatory. Data analysts can be leveraged to mine Amazons data, cull information from external resources such as payment providers, and use resources in the region to connect the dots and pinpoint criminal activity.   

The sentiment that I got from Amazon's press release announcement is that counterfeiters will be prosecuted to the furthest extent that the law will allow.   

 "Every counterfeiter is on notice that they will be held accountable to the maximum extent possible under the law, regardless of where they attempt to sell their counterfeits or where they're located" Dharmesh Mehta, Vice President of Customer Trust and Partner Support at Amazon. 

Wrapping up  

Counterfeit products are not a new occurrence within online marketplaces. Since Amazon operates the world's largest online retailer, it's no surprise that counterfeit products are one of the business's most significant customer and seller complaints. The bright side of this discussion is that Amazon is taking ownership and promising to hold those counterfeiters accountable for their actions. If the number of counterfeit products in the marketplace drops due to the help of the Counterfeit Crime Unit, the customer and the credible sellers reap the benefit. It is great to see Amazon addressing customer, seller, and governmental complaints with many resources and capital. Counterfeiting attempts on Amazon will continue to happen, but with the right precautions and actions taken against counterfeiters, we can enjoy a more trustworthy, clean online marketplace.   

Note: Moor Insights & Strategy writers and editors may have contributed to this article.

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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.