Amazon.com, Inc. (NASDAQ:AMZN) has a problem: fake. As the online retail giant combats fake reviews and counterfeit items, Amazon now has to handle a new issue: counterfeit CDs. A new study suggests that one-quarter of the CDs sold on the website are fake. This is a massive problem for both Amazon and those who are still relying on CDs for their favorite tunes.
1 in 4 Amazon.com, Inc. CDs are Counterfeit
Amazon and the music industry have another headache to try to remedy: piracy.
The next time you buy a J.S. Bach, Miles Davis or Backstreet Boys CD, you may have to worry if it’s fake. Music pirates are flooding the website with bogus CDs that cost just as much of the real versions. The problem is that it can be hard to determine what is fake and what is real.
A new study by the Recording Industry Association of America (RIAA) found that 25 percent of the CDs sold on the Amazon marketplace are counterfeit. The trade group discovered this as it started a probe in August to find out how big this problem is.
As part of its research, the RIAA ordered 194 CDs based on top search results for each album type. The organization found that 44 of the CDs were counterfeit. This means that 1 in 4 CDs sold on Amazon are fake. And, what’s worse, Amazon actually fulfilled the 18 counterfeit CDs rather than other vendors.
Researchers traced the counterfeit goods back to a CD manufacturing plant in China. They noted that the artwork, inserts and packaging “are carefully copied in fine detail.” The average person would be unaware that the CDs they bought were genuine or counterfeited.
The RIAA did note that Russian counterfeiters tend to pay attention to these fine details as well. However, the interior of the CDs are considered to be “sloppy.”
What does Amazon think of this? It has “zero tolerance for the sale of counterfeits.”
“Amazon [is] working closely with labels and distributors to identify offenders, and remove fraudulent items from our catalog. We are also taking action and aggressively pursuing bad actor,” a spokesperson told the Wall Street Journal.
The music industry is being battered by this. Ostensibly, direct-to-consumer CDs sales were flat and Amazon account sales have tumbled 17 percent because of the counterfeit CDs.
Fake is a Four-Letter Word for Amazon.com, Inc.
The word fake has become a tremendous challenge for Amazon. Everything from fake reviews to fake products, Amazon can’t seem to be able to contain the spread of fraud, forgery and counterfeit.
Just recently it was reported that Amazon filed lawsuits against three more sellers over fake reviews. Over the past few years, Amazon has been trying to rein in websites that offer to sell fake reviews. It attempted to achieve this through the means of the legal system. Unfortunately, it can’t stop all of them.
In July, it was concluded that Amazon’s Chinese counterfeit problem was only getting worse. It has apparently exploded this year. Last week, an article went viral that highlighted how counterfeit goods put one’s business “on the brink of collapse.”
Despite the severity of the trend for the last couple of years, Amazon has only recently started to tackle the matter head first. One way it’s doing this is charging its vendors a so-called brand gating.
This fee means that if you’re a third-party vendor then you will be required to submit three official invoices from the brand owner. You’ll also need to pay an “approval fee” as part of the new policy.
It’s unknown at this point if the new measure is succeeding. But it’s a step in the right direction.