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Amazon.com, Inc. (AMZN) Using Courts to Quash Fake Goods

Amazon.com (AMZN) Amazon

Amazon.com, Inc. (NASDAQ:AMZN) is finally cracking down on merchants selling faked goods. No, it won’t simply consist of the website taking the items down from the marketplace. Instead, Amazon is taking one drastic measure: taking the counterfeiters to court. Reports say that the online retail giant is suing third-party sellers who peddle fake merchandise.

Amazon.com, Inc. Using the Courts to Quash Fake Goods

For years, longtime Amazon customers and businesses have complained about fake goods on the website. Amazon has listened and it has filed lawsuits against alleged counterfeit sellers.

Amazon.com Inc (AMZN)

Earlier this week, the tech titan submitted two lawsuits against groups of sellers. The first case will see Amazon accusing counterfeit sellers of infringing on athletic training equipment created by TRX. The second case includes Amazon suing merchants selling fake versions of Forearm Forklift, a patented moving product.

“When customers purchase counterfeit goods, it undermines the trust that customers, sellers, and manufacturers place in Amazon, thereby tarnishing Amazon’s brand and causing irreparable reputational harm,” the ecommerce giant said in the suits.

Amazon representatives have not publicly commented on the case.

Both cases were filed in the Superior Court of the State of Washington in King County.

Most experts contend that it will be impossible to use the court system to eradicate the issue. Since third-party sellers account for half of its $75 billion in annual revenues, it will be hard to eliminate the matter. With that being said, at least Amazon is willing to take these bogus sellers to court.

Some believe, however, that this is a public relations stunt, including Mark Lopreiato, founder of Forearm Forklift. He told CNBC that Amazon should work with brands rather than filing lawsuits. He added that his firm would not benefit from the suits.

“Where do I benefit in this at all?” Lopreiato asked. “There are dozens and dozens still listed on Amazon that can easily beat my price because they never paid for the patent, nor the pictures I took with my camera to market the Forearm Forklift, nor did they have to pay for product liability or workers’ comp insurance policies.”

How Big is the Counterfeit Market on Amazon.com, Inc.?

It is unclear exactly as to how immense the counterfeit market is on Amazon. But, whether it’s fake reviews or fake goods, Amazon has a problem on the website. And it will be hard to rectify.

For instance, it was reported last month that one-quarter of the CDs listed on Amazon are bogus. Music pirates are flooding the website with counterfeit CDs that either cost as much as the real versions or are a little bit less. Because of this, the record studios are experiencing a massive decline in sales. What’s worse is that some of these CDs were even sold by Amazon itself.

Meanwhile, brands in other industries are reporting flat or falling sales numbers.

The matter entered the mainstream last year when Chinese counterfeit goods were profiled by CNBC.

Amazon has been trying to combat the problem by introducing brand gating. This is a fee that is charged to vendors that allows them to sell brand goods. They are required to submit three official invoices from the brands and pay an approval fee. This may actually work better than filing lawsuits.

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