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Apparel industry group urges USTR to list Amazon sites as ‘notorious' markets for counterfeits

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Major clothing and footwear brands are complaining about how Amazon (AMZN) handles counterfeits and intellectual property infringement through an industry group letter to the government, highlighting the e-commerce giant’s challenges to address brands’ biggest concerns while luring them to sell on its platforms.

The American Apparel & Footwear Association (AAFA) recommended five Amazon sites be added to the U.S. government’s annual Notorious Markets list in a letter to the U.S. Trade Representative (USTR) on Monday. The list identifies foreign e-commerce sites and companies that facilitate the sale of counterfeit goods. AAFA represents more than 1,000 brands including major clothing brands like Adidas and Gap (GPS), as well as traditional retailers like Macy’s (M) and Target (TGT).

In an emailed statement to Yahoo Finance, Amazon says it strictly prohibits the sale of counterfeit products. “We invest heavily in prevention and take proactive steps to drive counterfeits in our stores to zero,” a company spokesperson said. “Amazon is committed to eliminating counterfeits from its store and is committed to working with AAFA and its members to protect their intellectual property.”

This is not AAFA’s first-time effort to try to draw regulators’ attention to the counterfeits issues on Amazon. Last year, AAFA included three Amazon overseas sites (amazon.co.uk, amazon.ca, and amazon.de) in its recommendation, but they were not included in the final list.

The prominent trade group said it has had regular dialogue with Amazon to address these issues since last year and some brands have achieved positive results, but its members continue to report that Amazon does little to vet sellers on its platform.

“Anyone can become a seller with too much ease, and it is often misleading and difficult to interpret who the seller is. Members emphasize that from a consumer standpoint, it is hard to decipher from whom the purchase is being made,” the letter said. “Amazon needs to go further, by demonstrating the commitment to the resources and leadership necessary to make their brand protection programs scalable, transparent, and most importantly, effective.”

This year, AAFA added two other major Amazon foreign sites to its list, amazon.fr (France) and amazon.in (India). In the letter, it also points out that the issues largely exist in its domestic marketplace Amazon.com.

Slow to combat counterfeits

Amazon, on the other hand, has said it has a zero-tolerance policy for counterfeits. The company said it invested $400 million to build programs to ensure product authenticity and safety in 2018. Brands can join its brand protection programs, including Brand Registry. But some participants expressed frustration through AAFA that Amazon is slow to take action against counterfeits.

“Amazon invests a lot of time speaking at conferences and socializing with brand owners. Outside of this, any efforts to connect with brands are minimal,” AAFA wrote, quoting one of its members.

FILE - In this Feb. 14, 2019 file photo, people stand in the lobby for Amazon offices in New York. Amazon is providing a tool that will allow brands to remove listings from its site themselves that they consider to be for counterfeit goods. The online giant is also launching a product serialization service, which allows brands to put unique codes on their products during the manufacturing process. The codes are then scanned by Amazon to confirm authenticity once purchased. (AP Photo/Mark Lennihan, File)
In this Feb. 14, 2019 file photo, people stand in the lobby for Amazon offices in New York. (AP Photo/Mark Lennihan, File)

On Amazon, all the listings are essentially owned by Amazon, not the seller. So if a brand identifies a counterfeit, they can only take it down by reporting it to Amazon and waiting for the company to take action. A previous investigation by Yahoo Finance found that Amazon is taking a reactive approach to these concerns and relies heavily on algorithms to flag issues, which leaves it vulnerable to bad actors, who can game the system.

Amazon said it has an industry-leading safety and compliance program. “When we receive these reports, we move quickly to protect customers, remove unsafe products from our store, and investigate,” the company said in a blog post.

Lazada, a popular Southeast Asia shopping site owned by Alibaba (BABA), and Tencent’s popular messaging app Wechat, are also among AAFA’s recommended list. Last year, Alibaba’s marketplace Taobao was on USTR’s final list. Being added to the list doesn’t immediately impact a company or marketplace’s operation, as USTR says the goal is to motivate appropriate action by the private sector and governments to reduce piracy and counterfeiting.

The story has been updated with a statement from Amazon.

Share your thoughts on Amazon with Krystal Hu via krystalh@yahoofinance.com or follow her on Twitter.

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