Beware of Counterfeits on Prime Day
Jul 15, 2019
In 2017, Brush Hero creators Kevin Williams and Glenn Archer appeared on Shark Tank to pitch their idea. What came next was a shock. Days after appearing on the show, their product started receiving numerous negative reviews on Amazon. To their dismay, counterfeit sellers were marketing knock-off versions of their product, resulting in tricked consumers leaving negative reviews on their authentic product’s page. Sadly, this story of the dangers of counterfeit goods is all too common.
Monday July 15 and Tuesday July 16 are Amazon Prime Day, a two-day event of sales for members of Amazon Prime. 2018 was the biggest Prime Day in Amazon history, with more than 100 million products purchased through more than 17 million transactions. In total, $4.19 billion of goods were sold on Prime Day last year, up from $2.41 billion in 2017. While sales are likely to continue to grow this year, the threat of counterfeit products infiltrating consumers’ carts is likely to grow too.
Just as Amazon sales have grown each year, so to have counterfeits. In 2007, U.S. Customs and Border Protection recorded 13,657 seizures of counterfeit goods. In 2017, that number had reached 34,143. But the problem isn’t just a U.S. problem. According to the Organization for Economic Cooperation and Development (OECD), trade in fake goods is now 3.3% of world trade, up from 2.5% last year.
This is particularly an issue for e-commerce websites such as Amazon and eBay. A 2018 study by the US Government Accountability Office found that about 40% of a sample of goods from various e-commerce marketplaces were fake. While Amazon Prime Day may draw focus to Amazon, it also correlates with an uptick in visits to competitor sites like eBay and Alibaba, as consumers shop around for the best deals. This increases the avenues for consumers to be exposed to counterfeit products.
Earlier this year, President Trump brought attention to the issue by signing an executive order to address what he called the “Wild West” of online trafficking in counterfeit goods. The order is aimed at stopping the sale of counterfeit goods on third-party marketplaces such as Amazon and eBay.
Counterfeit goods present a threat to both consumers and companies. For consumers, the threat is mostly a physical one. Counterfeits are usually made of lower quality materials and can thus be dangerous to consumers. For example, Apple has taken numerous sellers on Amazon to court over counterfeit phone chargers and headphones that caught fire.
For companies, the threat posed by counterfeit goods is more of an economic one. Inferior counterfeit products that are passed off to consumers as being authentic have the ability to tarnish the relationship between company and consumer. This could lead to a loss of future sales, all due to a customer’s dissatisfaction from buying a counterfeit good they believed was real. Take Michigan-based SISU brand mouth guards for example. This family business generates most of their sales from Amazon, but has seen their prices undercut and sales decline due to counterfeit versions sold on the platform.
In recent years, Amazon has faced lawsuits from numerous brands that have argued that Amazon is profiting on the sale of counterfeit versions of their products. In response to this and growing criticism from consumers, Amazon has launched Project Zero to address counterfeiting on its site. The self-service tool utilizes machine learning to scan five billion daily listings to detect suspected counterfeit goods. Brands participating in Project Zero can now remove flagged listings without having to first contact Amazon.
Despite Amazon’s best efforts, counterfeit goods will likely still exist on their website. It is simply too easy for criminal organizations to create new accounts and find new ways to list their items online. The last line of defense remain the consumer to make educated decisions about what they are buying.
PRA’s Top 3 Tips to Avoid Counterfeits Online
1) Know who is selling the product. If a product is shipped and sold by Amazon, it should be legitimate. If it is sold by a third-party seller, research the seller.
2) Look out for fake reviews. A number of five star reviews, combined with poor grammar and similar photos can be a warning that the reviews aren’t legitimate.
3) Unrealistic deals are probably too good to be true. Counterfeit goods often deceive consumers because they are cheaper than the authentic product. But the reason they’re cheaper is the quality isn’t as high, and they haven’t been tested and certified.