Amazon has been beheading sellers’ worlds like the sword of wrath lately shearing sellers from its ranks that it suspects may be selling counterfeit goods from China. Instead of steel, the sword takes the form of banishment letters and it is tough to come back. I’m working a particularly difficult case right now involving suspected counterfeit. We’ve made a good case and I’m waiting impatiently (as is my client). One of the questions that come up naturally in a case like this was “how do I know if something is counterfeit?” My client was surprised/upset/angry – you name it – to get this notice after selling for only a few weeks. He thought he’d done his due diligence, but it wasn’t enough.
For those of you considering ordering brand name and/or licensed merchandise from a Chinese company through Alibaba, AliExpress, Taobao, Tmall or some other platform, you need to do your due diligence before buying the merchandise. Once it is selling at Amazon…it could be bad. Alibaba took down 90 million (yes, million) fake product listings ahead of its IPO last year. That should tell you something. Sure, they’re cracking down, but you can bet a lot of those bad operators are back in business again under another name.
Also, there’s a lot of talk about Chinese sites like AliExpress, but a huge number of these counterfeit goods are sold on eBay. More complaints come from eBay customers than any other platform. If you do a fair amount of eBay arbitrage, do your homework or you might be bringing counterfeit goods into your Amazon portfolio unintentionally.
One way to stay out of trouble is to not sell brand merchandise or luxury goods as those are the most frequent offenders. If it seems too good to be true, it probably is. That being said, I’ve seen some pretty crazy counterfeit things that you wouldn’t expect. In addition, there is a whole world of legitimate merchandise out there that should sell on Amazon perfectly fine without any problems. So how do you protect yourself from counterfeit goods?
Before working with any distributor/manufacturer – not just Chinese – you should check them out. In the U.S. it is easy to research a company online. Be sure to check particularly with Dun & Bradstreet and the Better Business Bureau. If you can’t find out much about a particular company, that’s a red flag.
- For a Chinese company, check their company registration with the local Industrial and Commercial Administration Bureau (I have a list in my FBA Library for you by Province with URLs)
- Request a scan/copy of their business license
- Confirm their legal address and their operating address (often two different locations)
- Read their payment and shipment terms
- Hire a service to create a report for you
- Ask for U.S. references
- Check the authenticity of branded products
If you don’t speak Chinese, it is tough to maneuver your way through their online sites which is why I have them listed separately from this blog. Most of you won’t be using them yourselves. You likely will not be able to understand what you are viewing when they get the business license – but getting one is an important indication of a likely honest company. If you call their legal address and operating address and don’t reach them, that’s a big red flag. Scammers never accept Letters of Credit as their payment terms. They prefer Western Union, PayPal, etc. Also, they deliver their samples by express mail like Fedex to avoid examinations by Chinese customs houses. I’m sure there are honest companies that will accept PayPal, Xoom, etc., but they should also be OK with a Letter of Credit.
What is confusing to a lot of sellers is that scammers also use fraudulent paperwork. If you get a certificate from a Chinese company saying that they have the right to produce a branded item, that doesn’t mean they have the authority to resell those items. You have to read carefully for fudge-y, vague and misleading language.
One of the quickest, easiest ways to check out a Chinese company is through a third-party service like China Checkup, JitVerify or GloBis. For a reasonable fee (around $130-$150) they will give you a report on the company you are interested in including their business license, company registration and more. If you need it, these companies (and others like them) can also conduct a site visit, interview employees, inspect inventory for quality and much more. These three have U.S. offices with English speaking employees who can translate the originals for you if you need more than the report. If you are manufacturing a private label product with significant investment, you will definitely want to hire a service like this to act as your agent. Even if you decide to fly to China yourself to meet with potential manufacturing partners, hiring an agent to go with you can be invaluable. They know what to ask and what to look for. They have agents on the ground.
Other countries offer similar services. Start with local consulates in your local state or country. Texas, for example, has 96 international consular offices. Considering that Texas has an economy and geography approximately the size of France, it is perhaps not so surprising. Google search “international consular” and your state to see who is local. Tell them you are a business looking to connect with a business in their country and ask for advice on a translator, an agent, etc. They are happy to help facilitate business and should have some good resources for you.
Recently I checked out a free eBook from Import Dojo called The Import Bible. The author, Manuel Becvar has been ordering products from Asia for more than 10 years for such companies as Wal-Mart, Sears, Home Depot, Amazon and a few other little companies you might have heard of. His job was to make sure these goods were of the highest quality. He knows a lot about avoiding counterfeit. His beginners guide and blog are the real deal and full of information. There’s good advice in there about how to find reputable partners, types of products to sell, how to negotiate and much more. This is a good place to start if you are serious about sourcing from China. He currently runs his own consumer electronics company.
When working with an unfamiliar company, do not rely on online reviews or local references they give. It is a common practice in China to pay someone to be a reference. If possible get a U.S. customer that you can speak with. One counterfeiter had over 100 positive reviews on AliExpress and a nearly 5-star rating – the catch was none of them were for this particular product. They were all for other things. Did he fake his ratings? Maybe. He’s no longer selling DVDs on AliExpress, I notice.
I ran some simple Google searches with the company name + counterfeit and +scam and +authentic…you get the idea. Nothing specific came up. My client told me later that he’d noticed that the URL for the company had changed since he bought from them. BIG RED FLAG! Of course, he couldn’t have known that last Fall.
The piece of advice you read everywhere is to use reputable suppliers except…how do you know who is a reputable supplier? It is not as if the scammers are going to say “buy from us, we’re crooks!” One of the biggest wholesale directories on the internet is GetThatWholesale.com. A couple of things I like about them is they list company details like addresses and phone numbers, and they have a huge wholesale tradeshow database. This is useful because most scammers don’t pay for exhibit space at tradeshows. They tend to be fly-by-night. Also, if you go to a show, you will be given detailed information about each wholesaler so you can check out the ones you want to do business with ahead of time – or at least before you hand over your money. GetThatWholesale has a “Source with Confidence” program for companies that have been verified as a safer buying source (look for the green checkmarks).
As part of your due diligence, watch out for wholesalers who charge a fee just to work with them or fake drop-shippers who actually turnaround and order from a real drop-shipper every time you place an order. The best way to root out someone like that is to ask questions, learn more about their warehouse and operations. If you can’t find a warehouse, for example, that’s a real problem. If you don’t like the answers, move on.
Another way to check up on suppliers and to find reputable partners is to ask your peers. Skip McGrath* wrote an eBook called Top Ninety-Nine Wholesale Sources that is only $4.99. He also has a program called Buy Wholesale for eBay & Amazon – The Wholesale Buying System for $47 (it includes the book as well). I trust Skip because he’s been doing this a long time first on eBay and now on Amazon. These are sources he has checked out and not some random list off the internet. That means a lot to me. There are also some buyer communities that focus on wholesale and share reviews, experiences, etc., like SaleHoo. GetThatWholesale.com also has an internet radio show. I’m sure that there are groups on facebook, etc., as well, once you start looking (feel free to post them in the comments below).
Never send a product to Amazon without reviewing a sample first. If you are uncertain about a product being counterfeit, don’t order it. It is not worth it to lose your account. Also, research the name of the product in Google “Brand name + counterfeit” and you may get lists from the company itself as to who is a known counterfeiter and how to tell real from fake. Several brands provide very clear videos and pictures of how to tell their legitimate product from a fake.
You can send inventory directly to Amazon, but you should plan on occasional spot-checks – especially if you get any complaints about quality. You can always send yourself a unit from Amazon for 50 cents.
The Counterfeit Report is a good place to start your review as they keep track of counterfeits and how to tell them apart from legitimate products. They also tell you what you should be spending for legitimate products so that if you see a deal that is too good to be true…be concerned.
This blogger had a very thorough examination of fake Frozen dolls – right down to their naked girl parts. OK, that part was a little creepy. The hair is hysterical.
Some fakes are pretty easy to tell. Some are hard. There are some very high quality DVD covers out there but the product inside is inferior. You need to open the DVD, examine the disc and play it before selling it to the masses. With toys it can be pretty obvious with knock-offs if you are familiar with the genuine product to begin with.
By the time Amazon is telling you that you have counterfeit products, you are already in big trouble. You are guilty until you can prove yourself innocent. I suggest a “two strikes and you’re out!” policy. If one customer complains about counterfeit or quality, take it seriously. Have the product returned and take a good look at it and make sure this is the product you sent in (there are dishonest buyers as well as sellers). If a second customer complains, shut it all down immediately and start preparing your defense. Close/suspend your listings and decide what you want to do. If you are confident that your product is legit, then pull your invoices together and get ready to defend them. If you’ve been diligent up front, this should be easy to do. If you are not sure and want to avoid trouble before it gets on Amazon’s radar, remove your inventory and demand a refund from the manufacturer/supplier (don’t hold your breath on this – dishonest players don’t refund).
Send emails to your customers asking them why they think it is counterfeit and make sure you get their copies back to examine for yourself. Of course you are going to refund their money and pay for the return shipping. Because this issue is so serious, I would call your customer if you can’t reach them by email. Be friendly, helpful and curious.
One client had received several complaints about a particular product not being new. He was bewildered by this because he was buying from an authorized distributor. He found out just in time that the manufacturer had suspended that distributor for packing up returns and selling them as new. He was reinstated.
Another client lost her privileges because she had several counterfeit complaints one right after the other in a short time period. She didn’t respond quickly enough and was banned. We are still working on her case.
One way to reduce counterfeiting and to shut down the bad guys is to report them. If you’ve detected counterfeit goods from either your own supplier or on the Amazon website, you should report it to someone. If you’ve ordered goods from Amazon and they are counterfeit – tell them immediately in your seller feedback and even report a policy violation. Amazon will act swiftly. If you’ve ordered goods from a third-party seller that are counterfeit, you may feel a bit of a dilemma. On the one hand, they are a seller like you and may have made an honest mistake. If you report them to Amazon, they will be shut down and could lose their ability to sell. How do you handle this? You may wish to approach the seller first (through Amazon’s email system) and see how they respond to you. If they spring into action to refund you, de-list the item, etc., then the problem is solved and they live to sell another day having learned something. If they seem unresponsive, then Amazon will get their attention. Of course, you may not want to deal with the hassle and just report them.
Knowing how quick Amazon is to suspend and ban sellers, I am willing to move a little slower and give another seller a chance first, but I firmly believe I should act. Counterfeiting isn’t just about shoddy products, it is theft and sometimes real people get hurt in the process.
If you are out and about and spot some fake goods, you can use the uFaker app to report it and earn rewards from grateful manufacturers. If you run into a dishonest supplier and want to report them, you have several places to do it in addition to telling Amazon (who keeps a list I’m pretty sure): STOPfakes.gov, The Counterfeit report listed above, the International Anti-Counterfeiting Coalition and more. In addition, there are private sector anti-piracy and anti-counterfeit resources that are committed to reducing counterfeits where you can report.
There are potential bad actors everywhere. For those of us who mostly buy retail arbitrage from reputable stores, we can generally rely on Target and Wal-mart to do our fact-checking for us. When you start buying from companies online that you don’t know as well, you need to watch out for yourself.
A final thought on counterfeit: as a consumer and a seller, I’m glad that Amazon takes this seriously. They are cracking heads and stamping out problems loudly and quickly to discourage counterfeit on their platform. eBay, Alibaba and AliExpress have a long way to go before their platform is as credible as Amazon’s. As sellers, we benefit from Amazon’s incredible reputation for customer service and legitimate products.
We also bear responsibility to get it right. Amazon doesn’t care that we are small, inexperienced and still learning. They don’t care that our carriers or drop-shippers have let us down. I’ve suggested this before but it bears repeating – read ALL of Amazon’s relevant policies (some are category-specific) and review them from time to time. The link is right there on the Help page in SellerCentral. Also, if you are new to selling on Amazon, using Amazon’s FBA program will save you a lot of Order Defect and performance problems. It is worth finding FBA-ready products and not fulfilling yourself until you are more experienced (unless you are a company with its own fulfillment operation already, naturally). I have clients who were banned after selling for two months for fulfillment issues because they had an eBay approach in an Amazon world. I don’t mean anything critical of eBay by this. Amazon is much more exacting when it comes to fulfillment and eBay sellers can make the mistake sometimes of not realizing that and adjusting.
If an Amazonian is reading this post, I’d like to request that there be some way that suspended/banned sellers could make their cases to a human being. Many of my clients are confused by the form letters they get from Amazon and don’t know how to answer them properly. They are shocked and upset that they bought counterfeit and stop immediately. Based on the form letters they receive back, they are convinced that no one is reading the plan of actions they are creating. A few minutes on the phone with a live person in Seller Performance could go a long way on both sides in determining the truth of a situation and helping a seller feel like they were given a chance to explain properly. Most sellers who are suspended or banned have made a mistake they deeply regret and want to fix. They are not trying to break the rules or get away with anything. A rehabilitated seller is much more likely to follow all the rules – they understand the stakes.
If you have been recently suspended or banned for selling on Amazon, it may not be over yet. It is harder to recover from being banned but not impossible. Check out my reinstatement services if you want to know more.