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How Amazon And The U.S. Government Are Fighting Chinese Counterfeit Goods


Every year, more than 11 million
containers arrive into the U.S. by sea. Another 13 million
come from road or rail. And another quarter billion
packages enter the U.S. by air travel. It turns out a growing number
of these shipments contain counterfeit or fake goods. Seizures of
counterfeit products at U.S. borders have increased 10-fold over
the past two decades. The total value of seized goods,
if they’d been real, reached nearly $1.4 billion dollars in 2018. Most are coming from mainland
China or Hong Kong. The Chinese counterfeiters pop
up so fast. The moment you take them
down, another one pops up. The rise of e-commerce has
fueled counterfeiting around the world. Amazon said it blocked more than
3 billion suspected fake listings from its marketplace in 2018. International e-commerce sellers must step
up and do more. The economic cost of
counterfeiting is mounting. The OECD says fake goods account for
more than 3 percent of all global trade. While some estimate the
sale of illicit products could result in more than 5.4 million net job losses
worldwide by 2022. U.S. businesses are going out
of business because of counterfeit goods. We visited one of the
busiest entry points in the U.S. to get a glimpse at the influx of
fake products and to find out what authorities are doing
to stop counterfeiting. Counterfeit goods are unauthorized copies
of products protected under intellectual property regulations. Louis Vuitton, Michael Kors, Gucci and
you see this has some writing on this in another language. Sellers try to trick consumers into
buying imitation goods by using logos, symbols and features
that identify certain brands. You’ve probably seen counterfeit products
before, like knockoff Louis Vuitton purses or
fake Rolex watches. Some are made using lower quality
materials so they’re less expensive to produce. Counterfeiters make money
by luring consumers to these well-known brands, trying to convince them
they’re getting a deal on the real thing. Selling counterfeit goods
is against the law in the U.S. Most Americans, I think, have
the misguided impression that if I buy a Rolex watch and I know it’s
a fake because I bought it for 20 bucks on the street, not for two
thousand bucks in the store, who gets hurt by that? The reverse
question is the more important one. Who’s benefiting from that? Overwhelmingly, it’s organized transnational
crime that is running counterfeiting networks. Counterfeits come in
all shapes and sizes. According to U.S. Customs
and Border Protection. The most popular counterfeit items
are apparel and accessories, watches and jewelry, footwear
and consumer electronics. We got the Nike sneakers. One of the first things you look
at is you can barely bend this. I’m actually having to use a lot of
strength just to get a little bit of bend out of this. Counterfeiters take advantage of Nike’s
name, brand recognition and multi-million dollar marketing campaigns to
sell fake versions of the signature sneakers. Do you see a
lot of counterfeit Nikes? Yes. We see a lot of
a lot of counterfeit Nikes. Consumer products and pharmaceuticals also make
up a big share of counterfeit goods. These are especially dangerous because
they pose health and safety risks. In 2018, Europol intercepted
13 million doses of counterfeit drugs ranging from opioids to heart
medications worth more than $180 million . The agency said it’s seen
a rise in counterfeit medicine in recent years. They’re not held to
the same standard, they can go under the radar, they don’t have
to worry about the FDA. Not only is it not going to
probably treat the ailment that you have, but it’s potentially going to give
you ther ailments because you just don’t know what’s in that product. With more consumers shopping online,
it’s becoming easier for fakes to beat out legitimate
products on marketplaces. E-commerce platforms like eBay, Amazon and
Alibaba have ushered in a golden age for counterfeiters. One of the great opportunities of
the digital economy is that someone in a small town in Delaware can
come up with a really neat product, and they can sell
it globally relatively seamlessly. But if it really catches on
and someone else can simply counterfeit or copy it, then your
competitive advantage is dramatically reduced. A.J. Khubani is the CEO of
Tel ebrands, a New Jersey-based company that pioneered the concept of
As Seen on TV. Billy Mays here for
the Jupiter Jack. Telebrands says it has sold billions
of dollars worth of products like the Pe diVac or
Lint Lizard through TV infomercials. The counterfeits pop up on Amazon within
30 to 60 days of us launching a TV commercial. So now when consumers go to
Amazon and search for our particular product, more people buy the counterfeit
because it’s a cheaper price than buy our original product. This is the original product. And this is the counterfeit. Side by side, you can
absolutely tell the difference. The counterfeits on Amazon have had
a devastating impact on our business. Khubani said he was so
frustrated he took his concerns all the way to President Donald Trump. I met with Trump in Bedminster,
New Jersey, at his golf club. We just pulled it shows up to
the table and started talking to him. And once he said counterfeits on Amazon,
that’s all we had to say. We had his attention. Khubani
said counterfeits on Amazon are threatening the business models of
companies like Tel ebrands. The firm invests in finding
developing and advertising new products. It expects to recover those investments
once the products are sold. That’s not happening thanks
to the fakes. Think about it. If we spend,
put all these resources time, energy, money, the design, make sure the consumer
wants to buy it, come up with a marketing campaign to launch
the product and do all that effort and find within 30 days the
product dies a very fast death because the counterfeits is not much
incentive to be innovative and continue to come up
with new products. Te lebrands is one of many U.S. firms struggling to fend
off counterfeiters online. In January 2020. The Department of Homeland Security issued
a report saying the rise of e-commerce has intensified the
problem of counterfeit trafficking and puts U.S. companies
and entrepreneurs at risk. That puts them out of business. That’s that’s the cost. Bob Barchiesi testified in a
House Judiciary Committee hearing in 2019 about how e-commerce
presents new opportunities for counterfeiters. At the click of a mouse,
y ou could get product and you get it directly
shipped to your house. Booming e-commerce sales have led to
a surge in shipments of small packages. There were 161 million express
mail shipments in 2018 and 475 million packages shipped
through international mail. The International Chamber of
Commerce found counterfeiters use smaller shipments to try to
lower their risk of detection. Meanwhile, U.S. Customs and Border
Protection officials are being inundated by a growing number of
small shipments arriving into the country every day. A rule that allows packages valued
at under $800 to enter tax-free has exacerbated the problem. When we’re talking about early 2000s,
you’re looking at about between 3,000 and 5,000 seizures. Now, you fast forward to today. We’re almost pushing 40,000
seizures a year. Not only does it increase the
workload and that really gets the officers in the trenches and they really
have to spend a lot of time and finding that, but it’s
a multi-billion dollar industry. We’re just scraping the
tip of the iceberg. The U.S. imports more goods from China
than any other country in the world. At this warehouse in New
Jersey, about 90 percent of the products arrive from China. And it’s the job of U.S.
Customs and Border Protection officials to decide which ones are real
and which ones are fake. Boulder, Colorado-based Ni te Ize
is another company that has suffered from counterfeiting. And it’s fighting back. It said it removed 75,000
counterfeit listings from online marketplaces in 2019. I would say 99 percent of the
counterfeit products that we see are coming directly from China. The supply chain, the components, the
raw materials, all of the things that you need in order
to make counterfeits, you have those set up in China. In 2018, U.S. customs agents seized a shipment
of 300 counterfeit Nite Ize accessories like these that had been
sold through Amazon by sellers with names like “Snakey,” “Max Max
Max,” and “Very Lee Good.” We filed a lawsuit to try
to track down those counterfeiters. When Amazon heard about the breadth of
the issue, they took over the case. Amazon has subpoenaed other tech
and financial firms to try to get more information about
the fakers’ identities. But tracking down counterfeiters is
easier said than done. The sellers are really good at
hiding their identity, and so they they put up fake stores with
fake names and fake addresses. And so you’re really left
to find some breadcrumbs. The immense cost of counterfeiting cases
on top of brand damage and loss sales are too high for
some businesses to take on. But there’s nobody we can go
after for counterfeiting our products. Typically, if a company is located
the United States and they counterfeit our product, we
have legal recourse. But if they’re based in China, there’s
no way we can enforce our intellectual property rights
in China. China pledged to take steps to
lower the number of counterfeits produced in the country as part of
the phase one trade agreement with the U.S.. China has also pledged
firm action to confront pirated and counterfeit goods, which is a big problem
for many of the people in the room. The counterfeiting. We’ll make sure that this happens. And we have very,
very strong protection. Some still say China will only
take the issue seriously once businesses in the country experience
the costs of counterfeiting themselves. I think it gets solved
when you have Chinese companies and Chinese in innovation and
they start getting counterfeit. And that’s happening. Some businesses
say e-commerce platforms need to be held more accountable. Right now, e-commerce companies
aren’t usually liable for counterfeits sold by a third
party on their platforms. In Amazon’s case, more than half
of total merchandise sales come from third party sellers. How many more brick and mortar retailers
have to go out of business before someone goes after Amazon? How many patent holders and inventors
have to lose millions in royalties before the government
finally does something? In a statement to CNBC an
Amazon spokesperson said, “We are actively fighting bad actors in protecting our
store and we will continue to work with brands, government
officials and law enforcement.” The company launched Project Zero in
2019, which allows brands to remove counterfeits from
the marketplace. It said it invested more than
$400 million to fight fraud, counterfeit and other forms
of abuse in 2018. eBay told CNBC it invests millions
of dollars annually to fight counterfeits. Chinese e-commerce giant
Alibaba launched an anti-counterfeiting alliance in 2017
after widespread criticism about fake goods on its platforms. In January 2020, President Trump signed
an executive order that tries to prevent counterfeiting
on e-commerce websites. Meanwhile, legislation introduced in 2019
by a bipartisan group of senators aims to give U.S. Customs and Border Protection officers
wider authority to seize products that infringe certain
types of patents. Frankly, it’s more important that we
find ways to protect the creators who helped make American society
so rich and so robust. Consumers also play a role in
reducing the sale of counterfeits. Officials say tell-tale signs include
a misspellings on packaging, bad reviews and bargain prices. The bottom line is, if it looks
too good to be true, it is.

Stephen Childs

100 Comments

  1. Wait, how Amazon is fighting Chinese counterfeits? Isn't that their entire Amazon Basics/Essentials brands?

  2. Why don't they start by making the products in the country? That why they know if it's original or not. This only happens when you outsource the manufacturing of the product to a country that does not respect the IP laws.

  3. These companies get stuff made cheaply in China and then have the audacity to cry about the Chinese counterfeiting their products.

  4. Amazon is wiping 🧻 brown poop 💩 on them and then selling them to America as a re-engineered product

  5. Welcome to corporate America. Big corporations don't like counterfeits because they don't like the competition to keep prices low because they're greedy, so they blame the counterfeits as the reason for product mark-ups. They want us to think if people stop buying counterfeits that original brand names won't be as expensive – but that's a lie. They're just trying to get rid of any competition so they can mark up their products at whatever ridiculous rate they want when there's no other options to purchase from.

  6. I recall a story about a guy who went to China to have his idea produced on the cheap and when everything was set and ready to go problems suddenly started popping up out of nowhere and production was delayed for like two months… During that time counterfeits started popping up and when he went after them he found out that the counterfeiters were basically the guys he paid for to do his stuff but instead sold it under a local brand. He paid for everything so someone else could reap the benefits…

    @05:15 With both the products and AND the packaging basically looking identical I'd say you're to blame yourself for outsourcing your crap for production to a country whose vocabulary does not know the meaning of counterfeit. If Serpentza ( the South Afrikan guy on his bike riding through China ) is to believe then stealing someones idea is apparently considered some form of honoring the creator – With a mentality like that, why would anyone be surprised about this counterfeit issue?

  7. More than half the items sold on Amazon are counterfeit/fake. That's why I went back to buying from brick and mortar stores.

  8. Tourists love coming to Canal Street in NYC to buy "super fakes" handbags made so good even the employees at the retail stores can't tell the difference.

  9. So a corporation ships a community's economy overseas, then has the community to pay for going after the lost profit? That's definitely a form of socialism, for the sick.

  10. It is the American consumers who want to buy cheap counterfeit goods. If there is a demand, then comes the sellers. What do you expect from American consumers. You think they are all billionaires and can offer all $hit?

  11. 1:1 aka exact copies are actually insane. They are made in the same factories, by the same workers, from the same materials as the originals, and being sold for 1/10 the price.

  12. Aspirational buyers a.k.a "Let me show off with a fake till I'm wealthy to buy a real one". Somehow good for the industry.

  13. It's funny they said organized crime is to blame when making fakes is perfectly legal in China. They do not acknowledge international patent laws. So if a company does have the resources to get to China and file a lawsuit they will lose. Small businesses have been suffering from the issue of everything being made in China for years. Big corporations didn't care before because the cheap labor costs were worth it. Even with all the online fakes the majority of their customer base knows the difference and will buy the real thing. The actual issue is labor is not as cheap as the middle class grows in China.

    They are trying to ship jobs to other countries in Asia, but the infrastructure isn't there yet. The same issue will happen in other countries in a few years anyway. It's a stupid bandaid solution. Bringing manufacturing back to the US and EU is the real answer. The virus is another reason why everything being made in one country is a horrible idea. But God forbid corporations pay workers a fair wage and remain well into the black but with a couple less billion in profit.

  14. one of those problems that's considered a minor issue, but whose impact could be far more consequential than the perceived immediate cost in dollar amount.

  15. I invented the transmission shown in the thumbnail (at left). I'm reluctant to spend the big bucks to develop & market it into a product until this counterfeiting problem is seriously addressed in our trade policies that should demand intellectual property protection & hardcore enforcement by any trading partners. American innovation and creativity are at stake!

  16. Amazon should be liable for counterfeit goods. They need to take control of their platform and stop making it so easy for chinese sellers with fake names and bank accounts start selling on their platform. Instead of is proactively petitioning Chinese sellers to sell on the platform, they are even hosting classes and events in china to teach people to sell on Amazon.

  17. What good does China do in the world? All I hear about them is they steal, cheat, and oppress at every turn. It is good Trump finally did something about them!

  18. Yes because of the stupid big brands sell it so expensive you should be thankful to Chinese for cheaper versions of the big name brands items I think they should not banned counterfeit goods if they do then ask the stupid big brands to make there real products cheaper for everyone for example Rolex Watch new $8000 but Chinese make exactly replica they can sell it for $200-$300 thats fair reasonable prices specially those stupid luxury name brands that sell in high price they should all sell it LOWER PRICE IF U DONT WANT CHINESE PEOPLE TO MAKE COUNTERFEIT GOODS BECAUSE HIGHER PRICE ONLY SOME PEOPLE CAN AFFORD THATS WHY CHINESE PEOPLE CLEVER because the regular people can’t afford it so if u don’t want counterfeit goods so ask those big real luxury brands to sell there real products CHEAP USE COMMON SENSE for example real Rolex watch cost $8000 make it for $500-$1000 the real Rolex watches so those big real brands need to step up and lower prices that are more affordable even the luxury brands like Gucci

  19. Amazon sells millions of counterfeit goods… how are they fighting the problem? They ARE the problem…

  20. This is a violation of the 4th amendment. No one’s mail should be searched. Because you did not consent to a search and your property is being searched. It’s truly shameful.

  21. well make your products in America and maybe the chinese wouldn't be able to copy your product.

  22. #1 problem……. your still making it in China

    #2 your not making America great because you want Chinese labor because it’s cheaper.

    #3………… pay Americans to make America good again.

  23. This is way we need to brake away from China and work with other countries. China has too steal hack just to get bye financially.

  24. Chinese companies already DO experience massive counterfeiting in China as well. Alibaba's founding and existence was BASED ON counterfeiting and directing buyers directly to manufacturers…not sellers…manufacturers of fake goods!

  25. 3:24 …or they're legit drugs, and instead of getting them in the US which cost 10x more sold by pharmaceutical companies exploiting the united states terrible health care industry, they get them overseas in countires which have Basic Universal health care and more regulated health care systems designed to safe guard the consumer.

  26. There are a lot of consumers in the US that willingly buy counterfeit because they want the status but don't want to spend the money on the real deal.

  27. It's really difficult to find out who is selling these things on Amazon? I take from that they're also not paying taxes on their sales? So Amazon doesn't pay taxes, these big counterfeit importers don't pay taxes… How can ANY company in the US compete with that?

  28. Wtf is wrong with China??? U-Wig ripped me off and when I got my items in the mail it was counterfeit!!! The address linked by to NJ, but the website is from China…smh.

  29. This is what you get corporate america. Keep manufacturing in china, and this will never end. And for a bonus, you get corona virus.
    Greedy companies don't think china will cheat?????

  30. lots of counterfeit companies end up buying out the original companies lol eg Segway vs Ninebot

  31. One thing we should all do is stop using mouse clicks for everything we need. Buy stuff from local stores and go online only if you want/need things that are not available in local retail. This way local businesses also stay open. We blame brands for lowering quality but we buy online to get a better price. If the quality has to be high, there has to be sales and not at heavily discounted prices. I see negative reviews claiming fake products on Amazon all the time and yet people keep buying them. We really need to think about our habits and how people take advantage to benefit themselves.

    Just like drugs, if you keep encouraging people around you to take drugs because it’s ‘cool’ or it ‘gives you superpowers’ then no matter how much law enforcement struggles to keep drugs at bay, there will be someone or the other supplying them. There is too much easy money involved in all this. It’s easy to corrupt officials and continue the business. And the more people involved in the corruption, the more the desire to expand the business to make for profits that are lost in bribery.

    This is why we have more use and throw products that never last long. Ultimately it’s bad for us and for the environment. Sorry! I got carried away and did not mean to start a moral lecture!

  32. Duh, Overpriced goods creates market for counterfeit brands to lure bargain hunters. And what is shocking is that counterfeit products are getting better and better.

  33. Then stop manufacturing in China. It's obvious it's coming out of the same manufacturing facility.

  34. The counterfeit products’ selling price is cheap only because of material price? Are you serious?

  35. Business that's in China going out of business because of Chinese counterfeit. Being the jobs back and no more problem it's not that hard to figure out.

  36. When you said that you had the attention of Trump after saying counterfeit in Amazon, probably you had his attention when you said Amazon

  37. counterfeit products are coming from the same factories that the real ones are made lol

  38. Some possible future counterfeits:
    Ford : Afford
    Gucci : Gotcha
    Microsoft : Macrohard
    Audi : Howdy
    L'Oreal : LOLreal
    Colgate : Watergate
    Nokia : MockYa

  39. A 12 minute video and they didn't once mention counterfeit Pokemon games. Clearly they don't have their priorities in check.

  40. Some businesses should think about why China can counterfeit their products so easily and absolutely devastate their sales. The answer is simple: you are charging way more than what your products actually worth.

  41. Amazon does nothing but profit off this. They sell fakes. But when American companies makes their product in China – don't be surprised if they get copied.

  42. You make it Amazon problem, just stop buying anything from Amazon if the merchandise is not validated adequately. Clearly Amazon is showing little interest in its customer base… so why should you show an interest and give Amazon your money.

  43. Let coronavirus take care of the Chinese people, you’ll see the slow down of counterfeit.

  44. Booohooo millionaires loosing moneyy 🙄 if it does the same job and it's cheaper , you are probably charging too much for something that cost you even less to make

  45. Fake or not here in kenya some kids are poor they cant afford shoes to go school with

  46. thank god there are fake goods so that the top 1% could earn less and more people have jobs to work for the fake goods.

  47. The worst counterfeit is CCP, counterfeiting communism and repackaging it as Communism with Chinese Characteristics.

  48. I laugh at all of those who are too lazy to research, and also fools that only buy brand names. This only affects stupid lazy people aka the average. The average are the slave class of today because they just do what they are told or sold. If you are the sheep you will just be fed. If you are a shark you are hungary and find the prey….they are finding the average buyers as prey. Drugs, and apparel, easily things you could find better sources or ways to better your life without them.

  49. Sell it at affordable price, PROBLEM SOLVE………………Branding keep Markup the price and earn good money. The problem is the buyer it self, why choose counterfeit where you know is fake with slightly lower price. because the original is too overprice. if there is no counterfeit buyer then there will no demand.

  50. Lol. Most of the stores on Amazon that sells fakes are not in China. They are merely outsourcing their products from China. That is the whole idea of e-commerce. Any one who wants to sell fake goods can contact a Chinese manufacturer who would bother to take small orders, and these small Chinese manufactures don’t really care or have the resources to investigate whether the party who place the order is legit or not. The real counterfeiters are the ones who order these fakes from China and turn around sell them on Amazon and eBay. And these people are located throughout the world and on every continent. When a consumer buys an item on Amazon, that order gets sent to the Chinese manufacturer directly and the goods are mailed out from the manufacturer directly to the consumer. The counterfeiter gets the profits without even setting foot in China and without doing any of the dirty work. That is how it works.

  51. Eventually, with companies moving factories from China to another country, they will duplicate/counterfeit Chinese IP products. Then maybe they'll get the Message. I mean even some Chinese businessmen are moving their factories out of country (with their IP's) . HA!! 😉 (Sorry, but that gets my dander uo)

  52. Don’t buy fakes if you can’t afford the real thing, same some money and reward yourself when you can.

  53. So…is this the justification for companies to overprice their products resulting into anti-consumer practices? Waaaaaaaiittt….hehehe :3

  54. Imitation is the sincerest form of flattery. These companies need to stop complaining they develop their products in China and don’t expect the people who make them for pennies to want to make more money by selling direct to consumer. Pay better or partner with them if you want to change it.

  55. I'll be more discerning where I order stuff online going forward. That gentleman who was featured the most, would've looked better had he unbuttoned his suit jacket because he was seated.

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