Hermès’s $849 Clic H Bracelet is one of those luxuries that’s out of reach for most shoppers. So how is it that Amazon shoppers could recently search for the Hermès piece by name and find a bracelet for just $33?

The version on Amazon has the same clasp with an Hermès “H” logo that flips up to open the bracelet, as well as its name etched on the inside. But Amazon’s version, sold by a third-party merchant, is fake. 

Amazon executives have publicly lamented the scourge of counterfeits, saying they have spent hundreds of millions and hired thousands of workers to police its massive market of third-party firms which use the e-commerce site to sell their goods. But Amazon’s system is failing to staunch the flow of dubious goods even with obvious examples of knockoffs.

Amazon relies on brands to let the company know about frauds, but even when the company has custody of counterfeit items, it doesn’t always take action. Scads of counterfeit products land in Amazon warehouses before they’re shipped to consumers. But Amazon very rarely inspects them for authenticity.

The Seattle-based e-commerce giant keeps a roughly 15% cut of the sales of third-party sellers regardless of whether the product is counterfeit. But those losing out are not just luxury brands — many of the counterfeit products include safety items, baby food and cosmetics, according to recent testimony to the Commerce Department, which is probing counterfeit sales online.

When Amazon stepped up efforts to curb its counterfeit problem two years ago, complaints from shoppers fell, one of the former Amazon executives said. But so did the rate at which the company expected its product selection to grow, the person said. So in early 2018, Amazon began aggressively adding merchants, regardless of whether they were authorized by brands to sell their products, the former executive said.

“Because they are allowing so much onto the site, they can’t handle the manual follow up these things require,” the former executive said. “It tells me, they just don’t want to find it. They want the selection.”

Amazon goes “well beyond our legal obligations” to snuff out fakes on the site, spokeswoman Cecilia Fan said. In addition to staff that investigates fraud claims, the company has developed algorithms to sift through the more than 5 billion changes to its worldwide catalogue each day, she said. For every case reported, the company blocked or removed over 100 proactively with its systems, she said.

That means that more than 99.9% of the time, customers land on pages that haven’t received a notice of potential counterfeit infringement, Fan said. Of course, that’s what the company has caught. But with 17.6 billion page views in October alone, according to web-analytics firm SimilarWeb, Amazon’s math suggests that shoppers landed on about 17.6 million pages that hawked suspect goods that month. Amazon doesn’t release traffic data.

Counterfeits are not just an Amazon problem. The Organization for Economic Cooperation and Development, a group of three dozen industrial countries, estimates that counterfeit goods account for 3.3% of global trade.

But the problem is acute for Amazon. By adding 2.5 million third-party sellers, the company has rapidly expanded its selection to more than 500 million items available, according to estimates by e-commerce research firm Marketplace Pulse. 

Allowing all those sellers has also opened a Pandora’s box, making it impossible for Amazon to police the site’s darkest corners to root out every scammer, said Juozas Kaziukenas, chief executive of Marketplace Pulse.

“It will fundamentally never solve the problem because these issues are caused by scale,” Kaziukenas said.

Many of the top luxury brands don’t sell products directly to Amazon, so the online retailer counts on third-party merchants to stock and sell the items. Amazon has built out a global network of warehouses and incentivized third-party sellers to let it handle shipping to guarantee speedy Prime delivery.

“Counterfeiting is a problem considered a necessary evil when you’re going to be selling at this volume,” said Chris McCabe, a former Amazon investigator who now consults for sellers on the site.

Brands have also sued Amazon. Daimler, the German automaker and parent company of Mercedes-Benz, accused Amazon of allowing the sale of fake Mercedes-Benz wheel caps in a November 2017 lawsuit. Amazon said the suit has been resolved, but declined to disclose details.

In 2017 Amazon launched a service called Brand Registry that allows brands to register logos and intellectual property with Amazon so it can spot and remove listings when counterfeits are flagged. More than 200,000 brands have joined the program, Fan said. Amazon also beefed up staffing to address the issue.

Fan said the company rooted out more than 1 million suspicious seller accounts last year before they started selling, and blocked more than 3 billion suspected bad listings.

Source: The Star