Homeland Security vows crackdown on e-commerce counterfeiting

Dive Brief:

The U.S. Department of Homeland Security's Office of Strategy, Policy, and Plans on Friday released a 54-page report to the president on "Combating Trafficking in Counterfeit and Pirated Goods," promising to strengthen scrutiny, enforcement and punishment to tackle what it calls a rising problem in e-commerce.
In a foreword, acting department secretary Chad Wolf wrote that, "illicit goods trafficked to American consumers by e-commerce platforms and online third-party marketplaces threaten public health and safety, as well as national security," and stifles innovation and competition.
The American Apparel & Footwear Association — which said it had weighed in as the report was compiled and last year called on the U.S. trade office to deem several Amazon websites as "notorious markets" for their proliferation of counterfeit goods — said in an emailed statement that it welcomed the actions outlined in the report.

Dive Insight:

The announcement of a federal crackdown on counterfeits comes as Amazon in particular struggles to contain the proliferation of fakes and unauthorized sales on its platform.

It's not that the e-commerce giant hasn't tried to stem the tide. In October, in response to AAFA's call to arms, Amazon said that in 2018 it prevented more than a million "suspected bad actors" from listing products and blocked more than 3 billion suspicious listings. The company also maintained that over 99.9% of its assortment "never have received a complaint about a suspected counterfeit from a customer or rights owner."

But, as the government's report notes, the problem is only worsening, and Amazon is feeling the pinch as big-name brands, including, most recently, Ikea and Nike, increasingly flee after establishing storefronts at the e-commerce giant. That will only continue as brands feel a loss of control and Amazon struggles to control counterfeits, according to commentary from brand security firm eEnforce emailed to Retail Dive.

Other marketplaces have faced similar criticism, notably luxury resale site The RealReal. That marketplace came under fire last year after a CNBC investigation unearthed faulty authentication processes and led The RealReal founder and CEO Julie Wainwright to walk back its earlier claims that fakes are never found for sale there. The previous year, Chanel took the company to court, alleging that the re-seller had sold fake iterations of its handbags.

The AAFA is hardly alone in its advocacy. The Homeland Security report cites commentary from several organizations and agencies, including the International Anti-Counterfeiting Coalition. That group includes "more than 200 corporations, including many of the world's best-known brands in the apparel, automotive, electronics, entertainment, luxury goods, pharmaceutical, personal care and software sectors," according to the report.

The government has also clearly embraced the notion that the problem goes beyond dulling the gloss of a luxury label, something that AAFA CEO Steve Lamar also pointed out in an emailed statement. "This is about more than just lost sales and damaged brand reputation," he said. "Counterfeit products that are unknowingly purchased — whether a winter coat for yourself or pajamas for your newborn — can put Americans in direct contact with materials that do not meet federal safety regulations, support unsafe working conditions, or enable illegitimate factories to ignore sustainable best practices. It is past time that we attacked this pervasive problem head-on."