California's Attorney General is suing Amazon for deceiving millions into subscribing to Amazon Prime and making it difficult to cancel - among other legal violations
July 6, 2023 - Los Angeles, CA – Amazon's highly anticipated Prime Days event on July 11th and 12th comes with a warning: "Buyer beware." Despite Amazon's hefty $139 Prime membership, consumers should be alarmed that it offers no protection against counterfeit, fraudulent, and dangerous product listings, fake reviews, and deceptive endorsements.
The Federal Trade Commission (FTC) has critically examined Amazon's practices and filed a lawsuit against the company for deceiving millions of consumers into subscribing to Amazon Prime and making it unnecessarily difficult to cancel. Additionally, the California Attorney General, Rob Bonta, has sued Amazon for engaging in antitrust violations, inflating prices, and engaging in unfair competition, which ultimately burdens consumers with higher costs.
Amazon enables third-party global sellers through its platform and acts as a direct seller, e.g., "ships from and sold by Amazon.com," to flood the market with a seemingly endless supply of counterfeit, fraudulent, pirated, and replica products, including books, medical devices, and over-the-counter drugs. Amazon rarely notifies consumers they purchased a counterfeit or fraudulent product. These dubious listings are often accompanied by fabricated reviews, leading unsuspecting consumers to spend their hard-earned money on subpar merchandise while Amazon profits from transaction fees.
What are the risks Amazon consumers face?
While Prime membership offers free two-day delivery on over 10 million items fulfilled by Amazon, this perk does not extend to third-party shippers. Some Prime members have reported delivery delays, while non-Prime members may receive their orders in a day or two due to product location, overstaffing and underutilization of Amazon workers.
Prime users will find that Amazon Prime movies are not always free. They may have to purchase or pay for rentals to avoid advertisements when opting for the "free with ads" movies.
The "Amazon's Choice" label, often seen as an endorsement, can be deceptive. These products may be fraudulent or counterfeit, and Amazon "does not manually curate them or subject them to unique safety testing or authenticity screenings," confirmed Amazon VP Dharmesh Mehta during congressional testimony.
Amazon seller evaluations (feedback) and product reviews have little value. Product reviews are no indication of authenticity or quality and may not even be related to the product searched. Amazon's review system is awash in fraud, paid endorsements, and direct manipulation by Amazon. Negative reviews are removed, while sellers hire businesses to create dummy accounts, purchase products, and write fictitious reviews and complaints.
Almost half of Amazon's top sellers are based in China (the source of 90% of the world's counterfeits). Amazon's unvetted listings may be endorsed with the "Prime," "Amazon's Choice," or "Fulfilled by Amazon" labels, misleading consumers into a misplaced belief of quality and authenticity. Sellers are gaming Amazon's algorithms to get their goods listed as high in search results as possible and even bribing Amazon employees in China to help boost their items' rank (WSJ).
The fact that 700,000 brand owners are combatting counterfeits on Amazon illustrates the magnitude of the counterfeit problem and the challenges faced by both brand owners and consumers.
The U.S. Government Accountability Office ("GAO") conducted undercover investigations of e-commerce counterfeit goods sales and reported that about 50% of the items it purchased from e-commerce websites, including Amazon, were counterfeit.
Customers may not receive products from the seller they order from, but commingled products from Amazon's closest fulfillment center. "Amazon virtually tracks different units that are identical, shipping the products closest to customers," says Amazon Consumer Trust VP Dharmesh Mehta. Sellers send their counterfeit products to Amazon's fulfillment warehouse to lend credibility and an implied endorsement by Amazon while obscuring the actual source (often China).
Amazon is not a safe shopping choice for consumers. Even if consumers wisely avoid Amazon, they are still at risk of injury or death from other shoppers' counterfeit and fraudulent product purchases or gifts. Amazon's quest for prompt delivery has truckers moving Amazon goods around the country with catastrophic consequences -- over 75 dead and scores injured by unsafe trucking. Truckers moving Amazon goods were more than twice as likely to receive unsafe driving scores compared with similar outfits.
Amazon's unchecked monopoly may be another massive corporate entity to feel a vague sense of guilt about giving money to, but shoppers have a choice.
Facebook: The Counterfeit Report
The Counterfeit Report® is the first and only website to promote counterfeit awareness and provide consumers a free and informative visual guide to detecting counterfeit products. The Counterfeit Report has over 13 million unique viewers, has appeared on ABC, NBC, CBS, 20/20, Al-Jazeera, and Fox News TV, presented with the FBI and LAPD, and distributes to over 1500 news outlets and law firms.
The Counterfeit Report was awarded the prestigious Global Anti-Counterfeiting Award in the Media category in June 2018 for outstanding achievement in combating counterfeiting and piracy. The top honor is co-sponsored by Managing Intellectual Property and the Global Anti-Counterfeiting Group ("GACG"), an international network of national and regional IP protection and enforcement organizations covering over 40 countries. The Counterfeit Report is also a TRaCE (Tax Recovery and Criminal Enforcement) Task Force Community Partner, working to combat the underground economy with the DOJ, FBI, IRS, HSI, and EDD.
The Counterfeit Report has removed over 450 million counterfeit products from e-commerce websites including, Amazon, eBay, Walmart, Best Buy, Alibaba, Newegg, and DHgate, at the request of the trademark owners.
The Counterfeit Report uses thousands of authentic and counterfeit product photos to show consumers the sophistication of counterfeiters and their ability to create visually deceptive counterfeit products and packaging. Manufacturers and brand owners gain central venue mass-audience exposure and can immediately list and update their counterfeit product information for enhanced brand protection and direct consumer education. Consumers can report seeing or purchasing counterfeit products and the source directly to the manufacturer and authorities on the website.