Last week, the Department of Justice announced charges against a 38-year-old Miami resident accused of running a widescale operation to peddle counterfeit goods on online marketplaces.
Onur Aksoy ran at least 19 companies in New Jersey and Florida, along with 15 storefronts on Amazon’s third-party marketplace that sold tens of thousands of fraudulent Cisco devices from China and Hong Kong. Aksoy duped unsuspecting customers into believing the products were legitimate, and the operation amassed over $100 million in revenue.
According to the DOJ release, “the fraudulent and counterfeit products sold by the Pro Network Entities suffered from numerous performance, functionality, and safety problems. Often, they would simply fail or otherwise malfunction, causing significant damage to their users’ networks and operations. Customers of Aksoy’s fraudulent and counterfeit devices included hospitals, schools, government agencies, and the military.”
We know that large-scale criminal networks are setting up anonymous accounts on leading third-party marketplaces and selling dangerous, fraudulent, and stolen products. It’s why we need our laws to evolve to address the growing problem of Chinese counterfeits marketed on Amazon as legitimate products, along with stolen goods, which are similarly marketed and sold on Amazon’s marketplace.
Retailers are lobbying Congress to pass the INFORM Consumers Act which would require online marketplaces to verify their high-volume, third-party sellers to help curb the sale of stolen and counterfeit products. The legislation is currently part of the broader China Competition bill—more commonly known as USICA. Negotiations on a final package are still underway, and this case is the latest example of why INFORM should be included to address the flood of counterfeits coming from China.
But it’s also time for Amazon, one of the most data-driven companies on the planet, to answer some real questions about their involvement in these schemes:
- How long did Amazon know these accounts were selling knockoffs? How many times did the same criminal put up a new “storefront” after having one taken down?
- Were these counterfeit products housed in Amazon warehouses? Transported on Amazon trucks? What role did Amazon play in their fulfillment?
- Did Amazon allow these products to be sold to hospitals and government agencies after they had already removed at least one of the “storefronts”?
- Did any of these fraudulent companies pay Amazon to have their counterfeit products appear higher in search results than legitimate products?
- How much money did Amazon make on the sale of these counterfeit products through their marketplace?
- Is Amazon forfeiting these profits to DOJ? Are they fully refunding customers? Or are they keeping their cut of this illegal scheme?
This is a remarkable case, but its only ONE case. It has been well established that Amazon’s marketplace is rife with stolen and counterfeit consumer products.
This is also not a victimless crime.
As noted in the DOJ release, these faulty products were sold to hospitals, schools, governments, and the military. And in too many other cases involving consumers, these knockoffs also prove dangerous.
As retailers push Congress to act to help curb this illicit trade, it’s time for Amazon to start answering tougher questions.