April 7, 2020
How Amazon And The U.S. Government Are Fighting Chinese Counterfeit Goods

How Amazon And The U.S. Government Are Fighting Chinese Counterfeit Goods


Every year, more than 11 million
containers arrive into the U.S. by sea. Another 13 million
come from road or rail. And another quarter billion
packages enter the U.S. by air travel. It turns out a growing number
of these shipments contain counterfeit or fake goods. Seizures of
counterfeit products at U.S. borders have increased 10-fold over
the past two decades. The total value of seized goods,
if they’d been real, reached nearly $1.4 billion dollars in 2018. Most are coming from mainland
China or Hong Kong. The Chinese counterfeiters pop
up so fast. The moment you take them
down, another one pops up. The rise of e-commerce has
fueled counterfeiting around the world. Amazon said it blocked more than
3 billion suspected fake listings from its marketplace in 2018. International e-commerce sellers must step
up and do more. The economic cost of
counterfeiting is mounting. The OECD says fake goods account for
more than 3 percent of all global trade. While some estimate the
sale of illicit products could result in more than 5.4 million net job losses
worldwide by 2022. U.S. businesses are going out
of business because of counterfeit goods. We visited one of the
busiest entry points in the U.S. to get a glimpse at the influx of
fake products and to find out what authorities are doing
to stop counterfeiting. Counterfeit goods are unauthorized copies
of products protected under intellectual property regulations. Louis Vuitton, Michael Kors, Gucci and
you see this has some writing on this in another language. Sellers try to trick consumers into
buying imitation goods by using logos, symbols and features
that identify certain brands. You’ve probably seen counterfeit products
before, like knockoff Louis Vuitton purses or
fake Rolex watches. Some are made using lower quality
materials so they’re less expensive to produce. Counterfeiters make money
by luring consumers to these well-known brands, trying to convince them
they’re getting a deal on the real thing. Selling counterfeit goods
is against the law in the U.S. Most Americans, I think, have
the misguided impression that if I buy a Rolex watch and I know it’s
a fake because I bought it for 20 bucks on the street, not for two
thousand bucks in the store, who gets hurt by that? The reverse
question is the more important one. Who’s benefiting from that? Overwhelmingly, it’s organized transnational
crime that is running counterfeiting networks. Counterfeits come in
all shapes and sizes. According to U.S. Customs
and Border Protection. The most popular counterfeit items
are apparel and accessories, watches and jewelry, footwear
and consumer electronics. We got the Nike sneakers. One of the first things you look
at is you can barely bend this. I’m actually having to use a lot of
strength just to get a little bit of bend out of this. Counterfeiters take advantage of Nike’s
name, brand recognition and multi-million dollar marketing campaigns to
sell fake versions of the signature sneakers. Do you see a
lot of counterfeit Nikes? Yes. We see a lot of
a lot of counterfeit Nikes. Consumer products and pharmaceuticals also make
up a big share of counterfeit goods. These are especially dangerous because
they pose health and safety risks. In 2018, Europol intercepted
13 million doses of counterfeit drugs ranging from opioids to heart
medications worth more than $180 million . The agency said it’s seen
a rise in counterfeit medicine in recent years. They’re not held to
the same standard, they can go under the radar, they don’t have
to worry about the FDA. Not only is it not going to
probably treat the ailment that you have, but it’s potentially going to give
you ther ailments because you just don’t know what’s in that product. With more consumers shopping online,
it’s becoming easier for fakes to beat out legitimate
products on marketplaces. E-commerce platforms like eBay, Amazon and
Alibaba have ushered in a golden age for counterfeiters. One of the great opportunities of
the digital economy is that someone in a small town in Delaware can
come up with a really neat product, and they can sell
it globally relatively seamlessly. But if it really catches on
and someone else can simply counterfeit or copy it, then your
competitive advantage is dramatically reduced. A.J. Khubani is the CEO of
Tel ebrands, a New Jersey-based company that pioneered the concept of
As Seen on TV. Billy Mays here for
the Jupiter Jack. Telebrands says it has sold billions
of dollars worth of products like the Pe diVac or
Lint Lizard through TV infomercials. The counterfeits pop up on Amazon within
30 to 60 days of us launching a TV commercial. So now when consumers go to
Amazon and search for our particular product, more people buy the counterfeit
because it’s a cheaper price than buy our original product. This is the original product. And this is the counterfeit. Side by side, you can
absolutely tell the difference. The counterfeits on Amazon have had
a devastating impact on our business. Khubani said he was so
frustrated he took his concerns all the way to President Donald Trump. I met with Trump in Bedminster,
New Jersey, at his golf club. We just pulled it shows up to
the table and started talking to him. And once he said counterfeits on Amazon,
that’s all we had to say. We had his attention. Khubani
said counterfeits on Amazon are threatening the business models of
companies like Tel ebrands. The firm invests in finding
developing and advertising new products. It expects to recover those investments
once the products are sold. That’s not happening thanks
to the fakes. Think about it. If we spend,
put all these resources time, energy, money, the design, make sure the consumer
wants to buy it, come up with a marketing campaign to launch
the product and do all that effort and find within 30 days the
product dies a very fast death because the counterfeits is not much
incentive to be innovative and continue to come up
with new products. Te lebrands is one of many U.S. firms struggling to fend
off counterfeiters online. In January 2020. The Department of Homeland Security issued
a report saying the rise of e-commerce has intensified the
problem of counterfeit trafficking and puts U.S. companies
and entrepreneurs at risk. That puts them out of business. That’s that’s the cost. Bob Barchiesi testified in a
House Judiciary Committee hearing in 2019 about how e-commerce
presents new opportunities for counterfeiters. At the click of a mouse,
y ou could get product and you get it directly
shipped to your house. Booming e-commerce sales have led to
a surge in shipments of small packages. There were 161 million express
mail shipments in 2018 and 475 million packages shipped
through international mail. The International Chamber of
Commerce found counterfeiters use smaller shipments to try to
lower their risk of detection. Meanwhile, U.S. Customs and Border
Protection officials are being inundated by a growing number of
small shipments arriving into the country every day. A rule that allows packages valued
at under $800 to enter tax-free has exacerbated the problem. When we’re talking about early 2000s,
you’re looking at about between 3,000 and 5,000 seizures. Now, you fast forward to today. We’re almost pushing 40,000
seizures a year. Not only does it increase the
workload and that really gets the officers in the trenches and they really
have to spend a lot of time and finding that, but it’s
a multi-billion dollar industry. We’re just scraping the
tip of the iceberg. The U.S. imports more goods from China
than any other country in the world. At this warehouse in New
Jersey, about 90 percent of the products arrive from China. And it’s the job of U.S.
Customs and Border Protection officials to decide which ones are real
and which ones are fake. Boulder, Colorado-based Ni te Ize
is another company that has suffered from counterfeiting. And it’s fighting back. It said it removed 75,000
counterfeit listings from online marketplaces in 2019. I would say 99 percent of the
counterfeit products that we see are coming directly from China. The supply chain, the components, the
raw materials, all of the things that you need in order
to make counterfeits, you have those set up in China. In 2018, U.S. customs agents seized a shipment
of 300 counterfeit Nite Ize accessories like these that had been
sold through Amazon by sellers with names like “Snakey,” “Max Max
Max,” and “Very Lee Good.” We filed a lawsuit to try
to track down those counterfeiters. When Amazon heard about the breadth of
the issue, they took over the case. Amazon has subpoenaed other tech
and financial firms to try to get more information about
the fakers’ identities. But tracking down counterfeiters is
easier said than done. The sellers are really good at
hiding their identity, and so they they put up fake stores with
fake names and fake addresses. And so you’re really left
to find some breadcrumbs. The immense cost of counterfeiting cases
on top of brand damage and loss sales are too high for
some businesses to take on. But there’s nobody we can go
after for counterfeiting our products. Typically, if a company is located
the United States and they counterfeit our product, we
have legal recourse. But if they’re based in China, there’s
no way we can enforce our intellectual property rights
in China. China pledged to take steps to
lower the number of counterfeits produced in the country as part of
the phase one trade agreement with the U.S.. China has also pledged
firm action to confront pirated and counterfeit goods, which is a big problem
for many of the people in the room. The counterfeiting. We’ll make sure that this happens. And we have very,
very strong protection. Some still say China will only
take the issue seriously once businesses in the country experience
the costs of counterfeiting themselves. I think it gets solved
when you have Chinese companies and Chinese in innovation and
they start getting counterfeit. And that’s happening. Some businesses
say e-commerce platforms need to be held more accountable. Right now, e-commerce companies
aren’t usually liable for counterfeits sold by a third
party on their platforms. In Amazon’s case, more than half
of total merchandise sales come from third party sellers. How many more brick and mortar retailers
have to go out of business before someone goes after Amazon? How many patent holders and inventors
have to lose millions in royalties before the government
finally does something? In a statement to CNBC an
Amazon spokesperson said, “We are actively fighting bad actors in protecting our
store and we will continue to work with brands, government
officials and law enforcement.” The company launched Project Zero in
2019, which allows brands to remove counterfeits from
the marketplace. It said it invested more than
$400 million to fight fraud, counterfeit and other forms
of abuse in 2018. eBay told CNBC it invests millions
of dollars annually to fight counterfeits. Chinese e-commerce giant
Alibaba launched an anti-counterfeiting alliance in 2017
after widespread criticism about fake goods on its platforms. In January 2020, President Trump signed
an executive order that tries to prevent counterfeiting
on e-commerce websites. Meanwhile, legislation introduced in 2019
by a bipartisan group of senators aims to give U.S. Customs and Border Protection officers
wider authority to seize products that infringe certain
types of patents. Frankly, it’s more important that we
find ways to protect the creators who helped make American society
so rich and so robust. Consumers also play a role in
reducing the sale of counterfeits. Officials say tell-tale signs include
a misspellings on packaging, bad reviews and bargain prices. The bottom line is, if it looks
too good to be true, it is.

15 thoughts on “How Amazon And The U.S. Government Are Fighting Chinese Counterfeit Goods

  1. 5:30 I don't think counterfeits is the reason why those products behind him do very poorly. Reminds me of the stuff you see from those 3am late night TV ads, or that one store in the mall you always walk pass, but never go in.

  2. If the ᴄʜinkš are so smαrt, why do they need to steαl every other countries IP's? The answer is of course thєy don't have the intєllectual capacity to crєate anything worthwhile on thєir own.

  3. When it comes to certain products, people dont care if it is an original or knockoff, they only care if they like it. Why could anybody buy an iphone for $500 when you can get a knockoff for $150? If the knockoff has a good name, people will buy it.

  4. You know what You the Government Officials must Have the Agency Who Jobs to identify the Counterfeit Suppliers and must put them out of Business…….. Why is that hard to do when you have all kinds of programs in Government Agencies…… Looking at China Hospital Construction from the Beginning to Finishing up in 14 days okay…….. The COMMUNIST country make it Possible…… So can the US and other countries……..

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