For the first time in Amazon's 20-plus year history, Amazon is suing merchants that are selling counterfeit items on its marketplace.
The Seattle-based company filed two lawsuits in the state of Washington Monday. One filing is against ToysNet, a company that reportedly develops a counterfeit item that is a reproduction of the Forearm Forklift, a fabric strap that allows wearers to more easily move heavy furniture and other items. Amazon says its fraud detection system flagged the ToysNet for selling fake items, but the the seller produced invoices to prove the items were not counterfeit. Amazon counters that these invoices were forged.
In another lawsuit against Joana Ferreira, Amazon partnered with Fitness Anywhere, the developers of TRX, a popular exercise fabric strap sold on Amazon. In the suit, Amazon writes that the seller Ferreira started selling copies of the TRX on Amazon.com, falsely claiming they were genuine TRX equipment.
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In recent months, Amazon's marketplace, which sells everything from toilet paper to Mickey Mouse t-shirts to exercise equipment, has come under fire for selling counterfeit items. CNBC reported earlier this year that counterfeit items sold by third party sellers—many of whom are China-based—are becoming increasingly problematic for the e-commerce giant. According to the report, Amazon has been "courting" more Chinese manufacturers lately, opening the marketplace up to more counterfeit items. Because of this, some sellers are losing trust in the marketplace and are even complaining of a loss in sales. Apple recently said that many of the so-called Apple-branded chargers for smartphones and laptops sold on Amazon are fake, for instance. Amazon is an authorized reseller of Apple products.
In August, Amazon started imposing steeper fees and requiring additional paperwork from suspicious sellers in response. The fees, which ranged from $1,000 to $1,500, were assessed to sellers who were dealing counterfeit items. The company, which says it invests tens of millions of dollars annually to combat sales of bogus items, also employs a team of software engineers, research scientists, program managers, and investigators to operate its anti-counterfeiting program.
Amazon isn't the only e-commerce site battling forgeries. Chinese e-commerce giant Alibaba has also struggled with fake items. Specifically, Alibaba’s flagship e-commerce marketplace Taobao, has been known for selling counterfeit goods. Alibaba has openly committed $160 million in anti-counterfeiting efforts.
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The timing of these suits also ties in with the holiday season, which is usually the highest revenue generating period for Amazon. The company likely wants to make sure its customers know anything they buy from the e-commerce company is genuine and not counterfeit. It also wants to assure sellers that they are not at risk of losing sales to competitors that are selling fakes. According to a CNBC report, Forearm Forklift saw annual revenue plunge 30% since 2008 due to a loss in sales because of the fakes sold on Amazon.
Amazon declined to comment on the filings for Fortune.