New Articles

Cutting Through Counterfeiting: Do Amazon’s Measures Go Far Enough?


Cutting Through Counterfeiting: Do Amazon’s Measures Go Far Enough?

When Amazon starts fighting counterfeiting, you know it’s time to pay attention.

While counterfeiting has long been a controversial – and often undiscussed (at least in public) – subject among brands, Amazon’s recent efforts to identify and stop counterfeiting on its platform are bringing it to the forefront.

Especially in the midst of COVID-19, Amazon has exploded in popularity as a go-to, one-stop-shop for many consumers looking to get the products they need quickly and safely. The rising popularity of Amazon has also made it even more of a prime target for counterfeiters, and the mega-retailer is facing notable scrutiny and multiple lawsuits over the struggle to stop them. For example:

-Nike recently made the decision to stop selling direct products through Amazon, citing “unlicensed and imposter sellers as a contributing factor,” according to The Verge.

-3M instigated multiple lawsuits against sellers for selling counterfeit 3M masks on Amazon.

-Five foreign Amazon markets were put on the White House’s annual “notorious markets” list in 2020.

Even prior to the explosion of e-commerce during the pandemic, Amazon was already attempting to contain rampant counterfeiting on the platform. The Verge reports that, in 2019, Amazon spent $500 million to fight fraud, abuse and counterfeit products; shut down 2.5 million suspected bad actor accounts; and removed 6 billion suspected bad listings.

And it’s not limited to Amazon: Counterfeits are a global problem, and e-commerce retailers are especially at risk. Inc. states that global sales of counterfeits are growing by 15% each year and are projected to reach $1.32 trillion in 2020; e-commerce makes up more than a quarter of this figure. E-commerce sites like eBay, Newegg and Walmart have also been accused of selling counterfeits, although they claim they have strict procedures to fight counterfeiting, according to The Atlantic.

Product fakes and knockoffs hurt brand reputation, top-line revenue and profitability for companies, ultimately leading to lasting and sometimes irreparable damage. Counterfeiting isn’t just a small-time business, either, with organized crime beginning to play a bigger role. As counterfeiters become more sophisticated, brands also need to become more sophisticated in their efforts to stop it.

Conquering Counterfeiting with Innovation

E-commerce platforms like Amazon are taking some steps in recognizing the problems and establishing anti-counterfeiting programs, but these efforts may not go far enough for brands. All too often, despite their efforts, most consumers are left to fend themselves as marketplaces declare “caveat emptor” – buyer beware.  Authentication solutions should not only be able to prove the legitimacy of the product to the consumer, but also provide opportunities for the consumer to engage directly with the brand in new ways.

To create an effective authentication strategy, manufacturers need:

Holistic solutions that can provide visibility across all their products.

Amazon’s smart labels offer a way for customers to verify that products sold on its platform are real – but what about the products manufacturers sell on other sites or in brick-and-mortar stores? Protecting just one part of the supply chain isn’t enough. Investing in a configurable solution allows your company to provide a safety net to all consumers, whether they buy your product on an e-commerce platform like Amazon or at a local retailer.

For manufacturers selling through multiple channels, using an overarching smart label system across all products provides a single, traceable solution for verification – and a common way to interact with customers regardless of the channel they choose. By assigning a unique smart label to each product in their inventory – not just those sold on a single retail site – brands are more likely to spot counterfeiters who steal and attempt to copy the same smart label onto a batch of faked goods.

Authentication solutions that tackle counterfeiting while also growing customer engagement and loyalty.

While some smart labels, like Amazon’s, only exist to prove the legitimacy of a product, brands can leverage custom smart labels to provide a wide array of information, resources and lines of communication for customers. These codes can link customers to important product information like nutritional facts and recipes, how-to guides, allergen information, drug information, support and FAQs, return processing, warranties, and product registrations. When a customer engages with the label, they’re not just getting the assurance that the product is legitimate – they’re building a stronger relationship with the brand with every scan of their mobile device.

One Tool Manufacturer’s Approach to Anti-counterfeiting

For one LocatorX customer, a maker of home remodeling tools, the urgency of the counterfeiting issue became all too real in the wake of the pandemic. With more people spending their time at home taking on remodeling projects, the company saw its sales spike in 2020 through home improvement retailers like Lowe’s, Home Depot and Ace Hardware. To keep up with demand, the company expanded sales to online retailers this year – including Amazon – and because of their brand’s popularity, immediately began to see knockoffs, copies and counterfeits of its products in the marketplace.

These fakes became a problem—they would be just close enough that the customer wouldn’t know it wasn’t the exact product until it was actually in their hand. Not only was the company’s brand reputation problem at risk, but the counterfeits opened up a safety issue–what if the fake tool literally doesn’t work?

The company is now fighting the fakes successfully with anti-counterfeiting smart labels, which will be affixed to all of its products moving forward. Customers can simply scan these labels with their smartphones to verify the product’s legitimacy on the spot. Beyond protecting customers against counterfeits, the smart labels also provide access to how-to videos to help customers make the most of their new products, enabling the company to build customer trust and earn loyalty over the long term.

Tracking Legitimacy and Success

It’s clear that counterfeiting is a global e-commerce problem, and one that will only continue to grow in the wake of the pandemic. Companies like Amazon are taking steps to address this growing threat, but a custom authentication solution offers distinct advantages to manufacturers.

The capabilities of today’s smart labels enable brands to avoid operational headaches and even potential lawsuits by keeping counterfeiters at bay, while also offering opportunities to engage with customers in ways that might have not been possible otherwise. It costs mere cents to place unique, traceable smart labels on each product – an investment that will pay off in dividends down the road.

As more consumers turn to online shopping for safety and convenience, brands need to be vigilant about ensuring product legitimacy, no matter where they sell their products. Organizations that make moves now to protect products across both brick and mortar and e-commerce can stay ahead of would-be criminals and unlock new ways to build a loyal customer base.


Steve Maul is the Chief Revenue Officer for LocatorX. LocatorX technology enables brands and consumers to access an item’s current location and audit trail from its origin, protecting against theft, counterfeiting, and product diversion while increasing consumer engagement with manufacturers.

Anti-Counterfeit Efforts Finally Go Global

Washington, DC – It’s no longer just the US and the European Union that are concerned with the festering issue of counterfeit products, say Michael Czinkota and Ilkka Ronkainen of Georgetown University.

“Globally, companies reportedly lose a total of $657 billion every year because of product counterfeiting and other infringement on intellectual property,” they say. “Today’s key problems are with high-visibility and strong brand name consumer goods.”

Intellectual property enforcement “ensures that new ideas can blossom into economic opportunity,” they’ve written in a recently published paper addressing the topic of counterfeit goods.

“Intellectual Property Rights (IPRs) have become a core issue in the global economic debate. No longer confined to cheap knockoffs of luxury goods, IP theft is placing industry and the public at risk of highly adverse economic, safety, and health consequences,” they added.

Earlier, the only concern was whether a company’s product was being counterfeited; now, the raw materials and components purchased for production may be counterfeited.  In general, countries with lower per capita incomes, higher levels of corruption in government, and lower levels of involvement in international trade tend to have more intellectual property violations.

Ronkainen teaches marketing and international business at Georgetown University, while Czinkota researches international business and policy issues at the school.

According to the writers, China, long seen as the focal production point of global counterfeiting operations, has taken significant steps to counter what has plagued the country’s e-commerce market particularly hard.

Alibaba “spends more than $16 million yearly fighting counterfeit goods,” they say. Another example is “Hong Kong’s commitment to the protection” of intellectual property.

“With the goal of enhancing consumer confidence in Hong Kong, and to strengthen the city’s reputation as a ‘Shopping Paradise’ for genuine products, the Intellectual Property Department has launched the ‘No Fakes Pledge’ scheme,” Czinkota and Ronkainen said.

The issuing bodies of the scheme are the Hong Kong & Kowloon Electrical Appliances Merchants’ Association Limited and the Hong Kong Coalition for Intellectual Property Rights of the Federation of Hong Kong Industries.

“The international marketer must act to enforce intellectual property rights.  No industry or country is immune from infringement, nor can they address the threat alone. There is also need for better education regarding the risks IPR violations pose and how to defend against them,” they said.

For example, the pharmaceutical industry lobbied to make sure that provisions for patent protection in the NAFTA agreement were meticulously spelled out.

Pharmaceutical Research and Manufacturers (PhRMA) addressed the issue of international IP protection by responding to the Special 301 Report issued by the US Trade Representative in May 2012.

The PhRMA statement cited the need for IP protections in spurring innovation, research and development, as well as the need for fair international market conditions to ensure that patients have access to medications.

One research firm estimated the global market for counterfeit pharmaceuticals to generate revenues between $75 billion and $200 billion a year.

The Pharmaceutical Security Institute (PSI), a trade association created to address illegal pharmaceutical incidents, collects data on the number of counterfeiting, illegal diversion, and theft incidents. These incidents increased seventy-eight percent from 2005 to 2009.

Pfizer reports that between 2004 and 2010 it seized more than 62 million doses of counterfeit medicines worldwide.  More than 200 million counterfeit Eli Lilly medicines have been seized in 800 raids around the world.

“A number of other governments are drafting similar policies, which have served as a catalyst for enhancing protection in both the public and private sectors in those nations,” said Czinkota and Ronkainen.

Efforts to protect intellectual property, and modernize the patent and trademark system are crucial, they added.

“The power of creativity and innovation applied to the solving of practical problems is not the exclusive province of any country or people. A victory over fakes and counterfeits will protect the quality and reliability of products and services, and lets customers be more informed and secure in their usage decisions.”