At the beginning of March, the owner of a small US business accused online retail behemoth Amazon of profiting from the sale of cheap Chinese counterfeits. In a blog post on his company’s website, Elevation Lab founder Casey Hopkins, whose firm makes an under-desk mount for headphones, called out Amazon for failing to do enough to prevent inferior-quality knock-offs being listed for sale on its platform. Hopkins outlined how an anonymous manufacturer in China was able to reverse engineer his under-desk headphone mount and offer it for sale on Amazon at a reduced price, depriving his company of sales, and resulting in buyers receiving substandard products. Amazon moved against the offending seller after Hopkins’ blog post was picked up by a number of technology websites, removing its listings from its platform. The Jeff Bezos-owned firm also issued a platitude-laden statement talking up its efforts to crack down on fraudsters using its marketplace.
Whether or not the seller that faked Hopkins’ product would have been dealt with in this manner if his post had not attracted media attention is debatable, but what is clear is that sales platforms such as Amazon, eBay and Walmart simply are not doing enough to prevent counterfeit goods being listed on their websites. The week before Hopkins posted his blog, a US government report warned that an increasing number of counterfeit goods are being offered for sale on ecommerce platforms. The study, published by the Government Accountability Office (GAO), noted how the growth of ecommerce had created a new and increasing threat to intellectual property rights holders, and had made it much more difficult for consumers to determine whether or not the goods they buy are genuine.
Warning that cheap counterfeit products offered for sale on ecommerce platforms are endangering legitimate manufacturers and the wider US economy, not to mention posing a significant threat to the health and safety of consumers, the GAO recommended a review of its efforts to enhance intellectual property rights enforcement, and increased cooperation between its officials and the private sector. Commenting on the contents of the report, Beverly Baskin, CEO of the US Council of Better Business Bureaus, said: “If marketplace leaders struggle to keep out counterfeit products, and if consumers cannot rely on those leading companies to protect them from counterfeits, we have a serious problem that can undermine consumer confidence in the entire retail market.”
Bizarrely, the GAO’s recommendations omitted any mention of the enhanced role ecommerce platforms themselves could play in keeping counterfeiters off their websites. Technology giants have proved very adept at reacting quickly to any threat that might impact their bottom lines, but are typically less responsive if a problem does not directly affect them financially. In much the same way that social media companies are slow to remove illegal content from their platforms, the likes of Amazon, Walmart and eBay appear reluctant to invest serious resources into ridding their networks of counterfeit products. Not only is it not profitable for them to do so, in most cases they actually make money from the sale of fake items on their websites. Generally speaking, every time a counterfeit product is sold on an ecommerce platform, its owner takes a cut of the price. As such, it simply does not make financial sense for them to make any real effort to crack down on companies and individuals that use their properties to peddle knock-offs, a situation which has resulted in them only paying lip service to doing so. While ecommerce routinely boast about their initiatives to target fraudsters, an overwhelming amount of evidence clearly shows they are not doing enough.
Sadly, it appears the only way to persuade the owners of these online marketplaces to get serious about properly policing their websites is through the drafting of new legislation that forces them to do so. Last week, the European Commission told technology firms such as Google, Facebook and Twitter that they could face fines if they fail to take down extremist material within one hour of it being reported. If lawmakers are serious about protecting intellectual property rights holders and small businesses, it would be sensible to introduce similar punishments for ecommerce firms who allow fake goods to be offered on their platforms. If Amazon, Walmart and eBay faced a substantial fine for every counterfeit listing they allowed to stay live on their websites for 24 hours, it would be likely that some of the brilliant minds they employ would quickly be put to work on developing technology that would ensure these listings are taken down as quickly as they appear.
Large internet firms have proved time and again that they care little for members of the societies they purportedly serve, be they victims of terrorist attacks that have been inspired by material spread online, or small business owners losing money to Chinese counterfeiters who are able to sell knock-offs on ecommerce platforms with near impunity. The time has come for these companies to be held accountable for their behaviour. If they fail to take action of their own accord, they should be forced to protect members of the public and businesses from the bad actors who are currently able use their products all but freely.