The world’s greatest governments and industries are raising their hands to fight intellectual property theft and the sale of counterfeit goods.
But rather than shrugging off a problem that has no solution, US retail giant Amazon is wielding its own crime-fighting force to take the fight to purveyors of cheap knockoffs.
Amazon’s Counterfeit Crime Headquarters (CCU) said Wednesday morning that Chinese law enforcement officials had raided three operations in Guangdong and Jiangxi provinces and seized more than 240,000 counterfeit items. This week, we raised that limit even further.
Photos of high-end sporting goods, auto gear and other items taken by Chinese authorities after their raids look nothing like those seized by DEA agents in underground drug raids.
The seizure prevented counterfeit goods from reaching Amazon customers or being sold elsewhere in the supply chain, the company said in a statement. These counterfeit seizures, based on information from Amazon, follow similar actions by UK law enforcement, as well as efforts in California and New Jersey.
CCU alerts and cooperates with local law enforcement when it becomes aware of counterfeit activity involving Amazon vendors.
“Our efforts to identify and dismantle counterfeit organizations are going well,” said Kebal Smith, deputy general counsel and director of the Amazon Counterfeit Crime Unit. “We are grateful that law enforcement agencies have acted on our referrals and pursued these cases thoroughly. Counterfeit supply disrupts his chain and stems illicit revenue.”
According to Amazon, the seizure by China’s Public Security Bureau (PSB) “included more than 130,000 counterfeit car accessories and counterfeit brand labels that infringe on the intellectual property of many brands, including BMW, Porsche and General Motors.” Nearly 80,000 counterfeit luxury goods, over 30,000 counterfeit clothing items and counterfeit brand labels that infringed on the intellectual property of Hugo Boss, Puma, Under Armor, and more.”
Amazon also said it cooperated with China’s local PSB in an operation involving malicious individuals who illegally purchased government-issued personal IDs and business licenses in an attempt to register fraudulent Amazon seller accounts. As a result, 84 people were detained. Last year, Amazon said malicious individuals thwarted more than 2.5 million of her attempts to create new sales accounts around the world, preventing it from selling a single product.
Amazon fights counterfeit goods around the world, recently joining lawsuits with well-known brands such as Cartier, GE Appliances, WWE, Salvatore Ferragamo and FELCO. Through partnerships with brands, his CCU at Amazon is constantly finding new ways for counterfeiters to deceive customers and evade the law, the company said. The CCU uses that intelligence to enable law enforcement to track down bad actors.
In 2021, the CCU has sued or commissioned investigations of over 600 criminals in the US, UK, EU and China.
The CCU program launched in 2020 and remains the retail industry’s only known private enforcement tool. Mr. Smith is the sole attorney and general director of the program and has extensive experience as a state and federal prosecutor.
After a busy day traveling, Smith took time to respond to questions from Sourcing Journal via email, but declined to comment on how the seizure ranked compared to Amazon’s other interceptions.
SJ: What is the process of working with the authorities, especially the Chinese PSB? Are they generally cooperative with foreign business interests, or do they require some indulgence to take action?
Smith: Amazon shares information about confirmed malicious individuals with law enforcement. Thank you to all the great people in law enforcement around the world. We need more resources to track down and act on these criminals.
Our common goal is to disrupt these criminal networks by disrupting counterfeiting operations, stopping illegal revenues, and keeping counterfeit goods out of entire supply chains.
SJ: What year did the CCU program start? How has it grown? Also, how much staffing and training is involved?
Smith: Amazon’s Counterfeit Crime Unit (CCU) was launched in 2020 and is made up of machine learning scientists, software developers, expert investigators, and more. This is part of a broader effort to protect his 12,000+ stores around the world. In 2021, we have invested over $900 million in people, technology, tools and programs to keep our stores safe from fraud.
SJ: Is the CCU exclusive to Amazon, or do other retailers have similar units?
We are proud of the work that went into building the CCU team of former federal prosecutors, investigators, investigators and data scientists. This is a group of subject matter experts dedicated to stopping counterfeiters. No other retailer has as comprehensive a unit as CCU.
SJ: What would you say to people who might say cheap knockoffs are a victimless crime?
Smith: Intellectual property theft is not a victimless crime. Manufacturers, brands, retailers, their employees, and consumers are all adversely affected by counterfeiting. Counterfeiters rob brand owners of the value of their intellectual property and unfairly compete with honest entrepreneurs.
Counterfeiting is also a precondition for far more nefarious activities, such as drug trafficking, child exploitation, and terrorism. Counterfeiting is illegal in most countries, but for too long counterfeiters have not been held accountable for their crimes.
SJ: How have these raids and foreclosures affected the integrity of global markets so far?
Smith: Amazon strictly prohibits the sale of counterfeit products in our store. We know that trust is hard to earn and easy to lose. That’s why we focus on creating trustworthy shopping experiences every day. Prevent counterfeit goods from entering the supply chain and reaching shoppers.