Over the years that I spent in China I can remember numerous occasions where I would be shopping for something on Taobao or another Chinese e-commerce site and have a Chinese friend look over my shoulder and ask if I’d like some help. This offer usually wasn’t negotiable, they were basically saying, “You’re a foreigner and don’t know how to shop online in China and it’s my responsibility to save you.” More often than not, they were correct.
Back then, online shopping in China was much different than in the United States. The Chinese platforms were full of scammers, counterfeiters and products where there was no way to tell if they really were what it said on the package. These sites were so notorious that when I would return to the U.S. I’d breathe a sigh of relief that I could again order products with confidence from proven American e-commerce platforms like Amazon.
Unfortunately, these days are no more. As Chinese e-commerce sites like Taobao cracked down on counterfeiters — removing 380 million items and 180,000 merchants — Amazon, eBay and Walmart opened their doors and invited them right in, degenerating their own marketplaces into cesspools of counterfeit, fake, potentially hazardous, and otherwise unregulated products. According to the U.S. Chamber of Commerce, China is the source of 86% of the world’s counterfeits. According to Marketplace Pulse, Chinese sellers now make up 25% of Amazon’s U.S. marketplace. There is a direct correlation here.
Legal impunity for everyone
In 2015, Amazon won a lawsuit that removed them from legal liability for what third party vendors sold on their site, and this decision perhaps not coincidentally coincided with a big push to get more Chinese vendors selling to people in the U.S. — including the creating of a special maritime agreement which allows Chinese merchants to ship full container loads of products straight to Amazon’s U.S. warehouses. That, combined with the USPS’s policy of providing Chinese merchants with subsidized shipping rates (enabling them to mail parcels to the U.S. cheaper than it costs to mail the same parcel domestically), means that U.S. markets were opened wide for the exact same “bad actors” who have long polluted China’s e-commerce ecosystem.
If engaging in cross-border e-commerce, copyright, trademark and consumer safety laws no longer apply, the offenders of the crimes are outside the legal jurisdiction of U.S. courts and Amazon and eBay cannot yet be held accountable.
On top of that, e-commerce sites like Amazon, eBay and Walmart lack effecting vetting system for new sellers, U.S. customs is unable to properly screen parcels coming in from abroad, and the American legal system is embarrassingly inept at protecting its citizens from foreign criminals shipping in illegal items. In this climate, counterfeit and dangerous products flow freely over U.S. borders and into the homes of U.S. citizens, and nobody with any power seems willing or able to do anything about it.
When shopping online in the U.S., the mantra of the day is clearly “buyer beware.”
Over the past six years Craig Crosby he has been leading a movement against the $1.7 trillion per year criminal counterfeiting enterprise via The Counterfeit Report, a consumer advocacy organization that has been featured on ABC, NBC, CBS, Al-Jazeera, Fox News TV, 20/20, as well as here on Forbes.com. He runs a team of researchers and engineers who not only find, identify, and confirm counterfeits from numerous sources, but also collects them as well — bagging and tagging them to the standards of law enforcement in the event that they are ever needed as evidence in the various lawsuits that he participates in.
Among other things, Crosby and his team has found the following items being sold to Americans via our big e-commerce sites: Gucci, Chanel, Prada perfumes that contain urine, bacteria, antifreeze, beryllium (a carcinogen), cadmium, and lead; “Apple” chargers that catch on fire; 1.8 million fake “official U.S. military” tourniquets that tend to break when used; smoke detectors that are nothing but plastic boxes with push button alarms; counterfeit Phillip halogen automobile headlights; and bee pollen laced with methamphetamine.
“That’s kind of neat,” he jested, “I’m going to go try bee pollen as a supplement to see if it makes me feel better and, wow, I feel great! I’m taking methamphetamine! What a great supplement!”
Changing his tone, Crosby then told me about an inquiry that he received from a school who sent 30 kids home with chargers for their iPads which subsequently caught some of their beds on fire.
Beyond that, Amazon has been hit with a class action lawsuit for facilitating the sale of solar eclipse glasses from China that didn’t work, a woman in the U.K. had her eyes glued close by counterfeit makeup she bought on eBay, and Mark Elliot of the U.S. Chamber of Commerce’s Global IP Center pointed out that, “From fake medicines to bad brakes and lead-laden toys, counterfeit goods pose a real danger to consumers and a costly threat to the business community,” in a landmark report entitled Measuring the Magnitude of Global Counterfeiting.
As I’ve previously covered, Mark Lopreiato’s Forearm Forklift moving straps are still being knocked-off on Amazon en masse. The fully trademarked and patented originals meet all U.S. safety standards — they are three inches wide and lockstitched with industrial grade nylbond — and stand no chance of tearing within the bounds of their intended use. However, many of the Chinese counterfeits are cheaply made, tend to be up to an inch thinner, and are sewn together with cotton — and have been reported to tear apart during use:
These straps are designed to carry heavy furniture. If they break while carting, say, a dresser or washing machine up or down a flight of stairs they could lead to significant injury or even death.
“Asian counterfeiters create all these risks because they know that if an American gets hurt when their fake breaks, it’s likely the user will sue me since the Chinese manufacturer put my product’s brand name, logo, and in-action pictures on their package,” Lopreiato exclaimed. “Plus, they know that when the user ultimately finds out it’s Asian, [they] won’t have to pay because they’re out of legal reach, in a country that’s across the largest ocean in the world away from the U.S.A.”
But the magnum opus of Amazon’s safety oversights perhaps came last Christmas, when the Fox family in Tennessee learned about the dangers of e-commerce counterfeits the hard way. Megan Fox bought a FITBURO F1 hoverboard with an “original Samsung advanced battery” for her 14-year-old son as a Christmas gift, completely unaware that the Amazon seller that she made the purchase from was an unvetted Chinese “sham seller” who was unloading the hazardous product onto unsuspecting Americans. A few days after her son opened the hoverboard under the tree it ignited into flames, burning their million-dollar home to the ground and killing their pets.
Three months before this hoverboard was purchased on Amazon, the U.S. Consumer Product Safety Commission issued a mass recall of this product type due to the fact that they were starting fires all around the country.
The land of laws that no longer work
This isn’t supposed to be happening in America, a land packed full of laws specifically constructed to prevent safety lapses like those mentioned above. However, these laws are starkly ill-prepared for the internet age. As put best by the judge in the landmark Milo and Gabby lawsuit which removed Amazon from liability for what is sold on their platform:
“There is no doubt that we now live in a time where the law lags behind technology. This case illustrates that point.”
Amazon didn’t respond to requests for comment on this story, but eBay did, stating that, “Counterfeits are not welcome on eBay. We’re committed to combatting the sale of counterfeit goods and have consistently been an Internet industry leader in working to stop the online sale of counterfeit goods,” as well as pointing out that they participate in the VeRO anti-counterfeit program.
Of the 26 million counterfeits that Craig Crosby and his team uncovered on e-commerce sites selling to U.S. customers, 62% were found on eBay. Crosby also took eBay to court over their counterfeit refund policy, bringing in 2,500 items as evidence and winning refunds on all but three.
However, you don’t need to be an expert on counterfeits to find such items on eBay — even a layman can discover them in a matter of moments (there is no such thing as a 64 gig SDHC card, especially one produced by Samsung no less).
When I talked to Matthew Snow — whose apparel design company was pushed to the verge of bankruptcy by counterfeiters on Amazon — about how Americans now need to protect themselves on their domestic e-commerce sites much like the Chinese do, he merely scoffed:
“The thing is, Americans basically decided a long time ago that we aren’t okay with living that way. If we were okay with it we wouldn’t have so many consumer protection and product safety laws. We developed those because we want to be able to engage in commerce with pretty high confidence that we aren’t being defrauded and that what we’re buying complies with product safety laws.”
“I don’t think Americans should have to change,” Snow continued. “I think those who violate our laws shouldn’t be allowed to engage in commerce here. Not only is it terrible for the consumers, but it’s terrible for our businesses. We can’t expect our businesses to survive if we’re required to comply with U.S. laws and our competitors are not.”
What more needs to happen before American e-commerce sites are required to refrain from being free-flowing conduits for the trafficking of counterfeit and other illegal products? How many lawsuits will it take to ensure that the goods for sale on Amazon, eBay, Walmart and Aliexpress comply with U.S. law?
“Many things you take for granted because America is so good at having rules and regulations and standards and tests, but that’s all gone out the window because … some guy over in China says ‘I’m just going to knock it off, I don’t really care what’s in it,’ puts it together with pot metal, throws a couple of screws in it, and then sends it to some stupid American that is going to kill himself with it. Really, it’s a tragedy,” Craig Crosby lamented.
*Update 12/09/17: The paragraph about Crosby taking eBay to court was reworded for improved clarity.