
How counterfeits benefit Amazon - petethomas
http://www.latimes.com/business/technology/la-fi-tn-amazon-counterfeits-20180928-story.html
======
yholio
The problem is more complex than it seems. Amazon could easily stamp out all
fake products by giving the manufacturer the power to single source a given
brand. Unfortunately, that would also give that manufacturer full pricing
power across Amazon, and that's a very bad thing for Amazon. The manufacturer
could practice price discrimination in certain lower income markets while at
the same time, being sure that discounted inventory does not end up on Amazon.
No such limitation would exists for other sites, putting Amazon at a serious
competitive disadvantage.

So Amazon wants the distributors of a certain brand to compete with themselves
and push the prices down. But that opens the door for fakes on the site.

Nothing I said above should justify co-mingling inventory from different
producers when a risk exists that fakes will be introduced in this manner,
that's squarely Amazon's fault in their pursuit for faster delivery times.
That practice leaves consumers without any ability to avoid fakes, destroying
trust in the Amazon brand itself.

I think the solution is a system of financial bonds, where the seller would
pledge a significant sum to be accepted in the co-mingling bunch and benefit
from fast delivery etc. A single fake product traced back to it would result
in loosing the pledge.

~~~
yayana
I like your analysis, but I find the pledge problematic. Vendors work against
each other and would consider frauds like hiring people to buy a real product
and return a fake.

~~~
eslaught
I see your point, but isn't that a problem for any enforcement scheme? Unless
Amazon is going to invest the energy of their own employees into determining
what is fake and what isn't, the best you can do is rely on the signal you get
from customers when they return items (legitimately or not).

~~~
paulddraper
> invest the energy of their own employees into determining what is fake and
> what isn't

That is how most stores operate.

~~~
eslaught
Most stores don't sell products for third parties. And no third party sellers
means a drastically reduced inventory.

I don't like the fakes any more than the next person, but I think the problems
are genuinely more difficult than the various armchair experts on HN seem to
give credit for.

~~~
paulddraper
Most stores do sell products for third parties, marking up the a price and
passing it onto the customer.

That is in fact the entire business of most stores.

------
nobrains
The article talks about how counterfeits benefit Amazon, but its not the full
picture. There is a negative affect of counterfiets on Amazon as well, and
that is (1) reputation (customers not trusting Amazon anymore as a site that
has honest opinions) (2) competition (other online retailers growing in the
trusted-products-selling business) and (3) reliance on one country only (if
this continues, and Amazon makes short term profits because of it, they will
end of becoming a front end for china manufacturers only, risking their supply
line. With one rule, china can ban Chinese products to be sold via Amazon, and
Amazon can go broke). So it is in Amazon's interest to solve this problem, and
not focus on the short term gains, but I wonder why they are not making any
moves to solve this? That's the weird part.

~~~
fmajid
Yes, I've stopped buying from Amazon because of their stickerless commingled
inventory program and get all my electronics from B&H Photo, and more and more
other goods from Target.com. Amazon is getting to eBay levels of lawlessness.

~~~
ipqk
I, too, stopped buying there because I can never assume anything I buy there
is authentic. And I actually canceled my Prime subscription that I've had
since the Prime program started.

The only thing I really still buy from Amazon is Toilet Paper, which seems
unlikely to be counterfeited (so far).

~~~
gambiting
I keep hearing about these issues all the time, but I guess they are US-only?
I buy loads and loads of stuff off Amazon here in UK and I've never had a
single counterfeit item. I always buy items marked as "sold and shipped by
Amazon" and never had any issues. I guess on this side of the pond Amazon
doesn't comingle the inventory with 3rd party inventory?

~~~
bosie
Also uk based, I stopped buying clothing as it just doesn't seem reliable.
Ordered the same shirt with quantity 3 and got 3 (slightly) different shirts.
pair of Levis jeans also feels very different than the same pair bought at
House of Fraser. Don't know what is going on there.

~~~
fjsolwmv
A common practice is to sell the same branded product at a lower quality level
when sold through a different retailer. Either intentionally or because QA
rejects get sold cheap to wholesalers for use at discount stores. The modern
twist is that these rejects can now get commingled back into the QA-approved
inventory thanks to Amazon.

------
gcatalfamo
“Unfortunately, our website is currently unavailable in most European
countries. We are engaged on the issue and committed to looking at options
that support our full range of digital offerings to the EU market. We continue
to identify technical compliance solutions that will provide all readers with
our award-winning journalism.”

~~~
mbel
> We are engaged on the issue and committed to looking at options...

Full four months of engagement and commitment, that's pretty impressive.

~~~
walshemj
Its a traditional publisher what do you expect, it took me years to get a
simple change made (redirecting the .org domain to .com for a site) when I
worked at Relex (reed elsiveer)

~~~
52-6F-62
Hey you’re not wrong, just maybe not clear enough.

It’s true that many traditional publications and houses are slower to adapt to
changes in the digital landscape ever since print as an output has been
sidelined. They like to find something that works and stick with it, even if
it’s not optimal.

It would likely explain LA Times’ delay.

It’s taken teams I’ve been on a year to procure a ten dollar a month VPS
because the request would continually get turned down by infra.

------
tracker1
First step... add a "vendor sticker" to each item as it comes from a vendor
into its' warehouse. At the very LEAST they could then filter out vendors
selling counterfeits. The costs would be minimal and actually lead to rooting
out counterfeits.

Amazon's responses on this are purely bullshit.

~~~
hrktb
That’s a good proposition I think.

In no way would adding an extra logistic step to every single package entering
amazon’s warehouse something of ”minimal” cost, but it might be worth it.

~~~
LeifCarrotson
Even if Amazon needs 10 billion stickers and it has to buy a sticker
manufacturer, the profitability is what matters.

How much does adding one the sticker cost relative to the average Amazon
product? 0.1%? How much does it cost relative to the cost of the
counterfeiting problem?

~~~
GordonS
I imagine the cost of actually placing the stickers on things would far
outweigh the cost of the stickers themselves.

~~~
fujiters
They could require the vendors attach the stickers to uniquely determine the
shipment. Upon receipt, just scan to ensure the barcodes match/aren't
duplicates. They already require vendors using Fullfillment by Amazon to have
their shipment contain a shipping summary. Adding per item barcodes wouldn't
be a huge change (and Amazon itself wouldn't bear the cost).

~~~
reaperducer
You're right. The items have to be scanned for inventory management anyway
when they arrive and are put in the bins at Amazon. Might as well just scan a
second bar code to note where it came from. Or do it as a combined QR code.
Lots of room for extra data in there.

------
ilamont
Kind of surprised the article (or the Amazon spokesperson) didn't mention
Transparency, which has been in development for some time:
[https://brandservices.amazon.com/transparency](https://brandservices.amazon.com/transparency)

The basic idea: Vendor places unique 2D barcode on each unit of a branded
product, only products with those barcodes get placed into Amazon warehouse
inventory, consumers can scan the barcode themselves to verify it's legit.

~~~
cdjk
Yes, and amazon gets to put a sticker on every item you sell (or at least the
SKUs you enroll in transparency) no matter what channel you sell it in. I
can’t imagine why vendors might not want to do that if they want to sell
anyplace other than Amazon.

~~~
londons_explore
It doesn't seem like a very good system. Counterfeiters will simply buy a real
batch of products, and then copy each T-code onto their counterfeits 1000
times, then resell both the real and the counterfeit.

~~~
ac29
It says Amazon scans the code before shipping - presumably it would be a red
flag if the scan says the product was already sold.

------
benatkin
> "Amazon, in court filings, denied mixing knockoff Fuse Chicken products with
> genuine ones. The company says it has a zero-tolerance policy when it comes
> to counterfeits and aggressively pursues legal action against bad actors."

A zero tolerance policy doesn't mean much if you don't give out enough first
strikes.

~~~
taneq
This actually seems to be a common effect of zero tolerance systems. If the
rules are too harsh, and there's a negative effect on the authority for
handing out bans, then the rules end up not being enforced unless absolutely
necessary.

------
ohazi
This sounds like it might be a good candidate for a class-action lawsuit,
assuming you could include anyone touched by all counterfeits on Amazon as
part of the class.

I don't really care about the ~$50-100 in suspect cables, microsd cards, and
batteries I've bought over the years, it just seems like something this broad
would probably be the only way to get Amazon to consider fixing their
inventory co-mingling issues.

~~~
Pinckney
Amazon TOS:

> Any dispute or claim relating in any way to your use of any Amazon Service,
> or to any products or services sold or distributed by Amazon or through
> Amazon.com will be resolved by binding arbitration, rather than in court

> We each agree that any dispute resolution proceedings will be conducted only
> on an individual basis and not in a class, consolidated or representative
> action. If for any reason a claim proceeds in court rather than in
> arbitration we each waive any right to a jury trial.

~~~
TeMPOraL
How is that even possible? Kind of defeats the point of having a justice
system...

EDIT or let me rephrase that question: what's the original purpose of such
forced arbitration clauses existing? How do they contribute to the public
good?

~~~
smnrchrds
The idea is that arbitration reduces the burden on the justice system while
simultaneously giving people a faster and cheaper method for dispute
resolution. Unfortunately contract law seems to be written with the assumption
that the sides have equal power and their lawyers have negotiated the terms of
the contract. In today's world where contacts are simply forced upon
individuals by corporations, maybe we should revisit contract law.

~~~
ema
In which way is Amazon's TOS forced upon me? I could choose to not shop there,
couldn't I?

~~~
smnrchrds
Sometimes TOS is forced. Imagine living in an area with only a single ISP. You
can technically forego internet access, but for most people that is not a
realistic option.

But even in the case of Amazon, TOS is forced on you in the sense that you
have no way of negotiating it. It is not a meeting of the minds; they write it
and you sign it, often without even reading it. This is not the assumption
with which contract law was written.

------
clumsysmurf
Recently purchased a pair of Eneloop Pros that did not live up to
expectations. Looking at a top review from 'Onick', it seems even popular
items from well known companies are counterfeited. I bought my next Eneloops
from another flashlight ecommerce website — I won't by anything from Amazon
again. If i can't trust them $20 rechargeable batteries, I'm not trusting them
with anything at all.

~~~
inapis
Apart from books, kindles and maybe heavy electronics, almost everything
Amazon lists can be counterfeited. Clothing, accessories, shoes, chargers,
cables and headphone are prime candidates.

Right now the only way to get a genuine product is to buy only those items
which have exactly one seller, with a legit name, and are not under prime
shipping or fulfilled by Amazon.

~~~
mathgenius
There are plenty of reports of counterfeit books on amazon. I don't buy my
books from there anymore. If I wanted a cheap knock-off I can print it myself.

~~~
snaky
> counterfeit books

That's amazing. How it works, I wonder - some Chinese factory just print from
PDFs?

~~~
Buge
Here's an instance of counterfeit books:

[https://news.ycombinator.com/item?id=13924546](https://news.ycombinator.com/item?id=13924546)

------
gaius
There’s a dive torch popular amongst newbie divers, the LED Lenser Frogman. I
actually have one myself, they’re pretty neat, tho’ obv no substitute for my
Light Monkeys. It should retail for £35-40 but you see knock offs on Amazon
for <£7. Now this is potentially a piece of safety-critical equipment, and
it’s totally unacceptable for Amazon to not police it better.

But commingling the stock so even genuine buyers get the knockoffs is plumbing
new depths of sleaze.

~~~
xbkingx
Flashlights (including anything that has a battery and led bulb) and batteries
are almost in how brazenly they falsely advertise on Amazon.

I would have to say that well over half of torches on Amazon exaggerate their
claims by at LEAST 100%. You'll see the same exact 5-mode style with 20
different max output numbers. Most sellers get a counterfeit LED that's half
as bright as the real thing, then list the max straight from the CREE spec
sheets, ignoring that the numbers come from properly cooled, properly driven,
and much more efficient legit bulbs.

Battery sellers on Amazon generally tack on 30-80% capacity, but some go
bonkers. Go ahead and search for 18650 batteries for those flashlights.
Amazing! Panasonic and LG can't get past 3600mAh for theirs and charge ~$25
for a pair, but multiple sellers have 9000mAh+ options for ~$2/cell. And they
ALL have 4+ star reviews. It used to be that the garbage sellers would claim
around 3500mAh capacity so that there was some plausible deniability, but now
they're probably bordering on nuclear fission energy densities. They're
selling a 2 liter bottle of water and claiming there's 3 liters in it.

Oh, and any 'emergency' or safety related product is fair game. If it fails,
either they'll rationalize that it wasn't properly maintained prior to the
emergency or the buyer isn't around to complain about it.

Needless to say, I don't order anything I actually care about from Amazon. I
actually just looked through my 2018 purchases and it reads like the orders I
used to place through cheap Chinese sites 5 years ago. I guess I now treat
Amazon like a shipping option - $2 premium to get the same junk, but I don't
have to wait a month.

~~~
gaius
Yep, it's amazing how many pocket-sized 10,000+ lumen torches with hours of
burn time for ludicrously cheap prices there are listed there. A common trick
is they not only fit a knock-off LED unit, but running it at higher than rated
voltage of the genuine unit too. 10.5v or 12v units run at 14v.

As for 18650s I would never buy anything but Panasonic or similar, the risks
are just too great, but commingling robs you of the opportunity make an
educated decision - you might get genuine Panasonics sourced through Amazon's
own supply chain, or counterfeits from anywhere.

A lot of this stuff is obviously coming out of the same factories too...
reputable brand X will order Y units of their product, which will be made to
spec, then the factory will simply keep the production lines running
afterwards with much cheaper materials/components and dump that into the
supply chain too. Whether it's electronics or clothing or anything else. It's
inevitable at some point that someone will die of hypothermia in a fake North
Face jacket when the genuine version would have kept them warm.

~~~
londons_explore
Not all fakes are worse.

Some fake products add features, especially the best features from the
competitors product that the 'genuine' products couldn't include for licensing
reasons.

~~~
gaius
Do you have an example?

If you are trying to buy product X and what you get is a fake made with
inferior materials, what use are extra features that you didn’t even expect to
have?

~~~
xbkingx
I think we middle-aged/older geeks like to harked back to a time when you
could drill a hole in the corner of a Double Density floppy disk and it would
work fine as a High Density floppy. Subverting the dominant paradigm and
sticking it to Big Floppy 1.44MB at a time!

But seriously, the reason these Amazotrash sellers get away with it is in part
due to consumers not actually needing top of the line stuff. So, if you
thought you needed 1000 lumen, but in reality you only needed 500 lm, and then
get tricked into buying a torch advertising "5000 lm", but it does the job and
has extra modes, plus a bike mount, you kinda come out ahead. It also coexists
with that old marketing trick used in movie theater concession sizes to get
people to spend more than they intended. (Which is the best deal: S: $5,
M:$10, L: $12? Most people would opt for medium, but large is only $2 more (at
nearly zero cost to the theater).

From that perspective, most of the counterfeits are better because you could
either afford more of them or afford counterfeits of higher priced versions.
Looking to buy a legit 16GB flash drive for $15, but find a seller with what
you think is a legit 32GB version for $15? If it's not broken and actually has
32GB, but is slightly slower than the brand one that was faster than you
really needed anyways, seems like a win for you.

------
rectang
> _The spread of cheaper knockoffs can also put pressure on authentic sellers
> and brands to lower their prices, helping Amazon win more customers._

Ugh, how cynical.

"Your reputation is my opportunity."

~~~
snaky
That's complicated. In the world full of ODM and OEM manufacturing, some of
the 'cheaper knockoffs' are actually _exactly_ the same product, just with no
brand label, or with the different one.

~~~
toss1
Which is often, especially in China, the same product made by the factory as
extra production runs, but sold out the back door at night.

Straight up theft on not only IP, but all the management admin costs to manage
production, and the marketing efforts to build the brand.

From every single account of people I've encountered who have worked in/with
China, this and every other sort of ripoff is absolutely expected and par for
the course unless you take serious countermeasures (e.g., make all critical
components in another economy, ship over to China only the goods that just
need final process and assembly). It's just how they do business.

And obviously, now, they have significant hordes scanning Amazon for products
selling well, which they'll promptly counterfeit. And Amazon's happy to help
them undercut you.

------
philipswood
How do you use private key digital signatures on physical products? A signed
QR code on the packaging? With a online verification that the key hasn't been
reused.

Sort of like old software activation codes?

~~~
inapis
Doesn’t matter. I ordered a pair of sennheiser headphones which came in the
original box with all the fancy authentication stickers and it passed the
verification process on sennheisers website. Six months later they were sent
in for warranty replacement and the headphones I received from Sennheiser had
a ground breaking difference in sound quality. I realised then that the ones
Amazon shipped were counterfeits.

~~~
snaky
It works when done right. a) verification code that is big enough under the
scratchpad b) verification process on the vendor site shows how many times
this code had been checked before.

------
kevinthew
I would say roughly 50 percent of things I have bought are counterfeit (books,
all electronics, CLOTHING, you name it!) It is, frankly, going to end Amazon
as a company eventually but they do not seem to give a shit.

~~~
ac29
Curious: how do you know so many items are counterfeit? 50% is a pretty high
number. I order from Amazon once a month or so, and I can't think of more than
one thing I suspect of being counterfeit over the past year or two, and even
that I couldn't be sure.

------
chrischen
So I tried to sell a Microsoft Xbox One on Amazon once, and it required me to
verify that I am an authorized reseller. Why don't they just do this for every
merchant selling any brand?

~~~
chrisseaton
> it required me to verify that I am an authorized reseller. Why don't they
> just do this for every merchant selling any brand?

As a customer why would I care if Microsoft have authorised you to resell Xbox
One's or not?

~~~
chrischen
Most likely because Microsoft begged Amazon to block the unauthorized re-sale.

------
habosa
It seems like if you're a small brand, like Fuse Chicken, you should be able
to become the exclusive supplier of your own product on Amazon. For anyone
else you sell your product to, include a "this may not end up on Amazon"
clause and then you're sure everything on Amazon came direct from you.

~~~
vageli
> It seems like if you're a small brand, like Fuse Chicken, you should be able
> to become the exclusive supplier of your own product on Amazon. For anyone
> else you sell your product to, include a "this may not end up on Amazon"
> clause and then you're sure everything on Amazon came direct from you.

I'm pretty sure a clause like that would be an infringement of rights grants
by the First Sale doctrine [0] and would be void (in the US at least).

[0]: [https://en.m.wikipedia.org/wiki/First-
sale_doctrine](https://en.m.wikipedia.org/wiki/First-sale_doctrine)

~~~
Spooky23
First sale doctrine doesn’t prohibit two parties from contracting with each
other. There’s no reason why you cannot have an official Fuse Chicken SKU or
even exclusive to Amazon barcode or model number. Other sellers are able to
sell your product, but not with that SKU.

~~~
fencepost
Edit: I misremembered, the product was the Ripple Rug (ripplerug.com) and the
problem was arbitrage where people were selling it on eBay for higher than
retail, then drop-shipping via Amazon. Returns when it showed up in an Amazon
box were paid for by the manufacturer, not the drop-ship seller. Links in the
News section of their site, look for stories in 2016-2017.

(original post) I can't recall the name of the product or find it with some
quick searches, but I recall stories of one product that did precisely that
after their product started being counterfeited heavily and undercut on Amazon
- they have a cheaper version that's available on Amazon and a higher quality
version available only directly from them.

I believe it was basically a stiff synthetic material blanket with a bunch of
large holes and attachment points such that those points could be attached
together in a bunch of different ways to make a wide variety of configurations
for cats to play in.

------
neonate
[https://outline.com/z99T8C](https://outline.com/z99T8C)

~~~
ajarmoniuk
Thank you.

Los Angeles Times shows this:

> Unfortunately, our website is currently unavailable in most European
> countries. We are engaged on the issue and committed to looking at options
> that support our full range of digital offerings to the EU market. We
> continue to identify technical compliance solutions that will provide all
> readers with our award-winning journalism.

------
singularity2001
the worst thing is that Amazon censors/bans critical comments. I once wrote
"oh no not another Amazon counterfeit". guess what my comment was rejected.

~~~
snaky
"Censored Amazon Review of Sandisk Ultra 32GB Micro SDHC Card" 10 days old
thread
[https://news.ycombinator.com/item?id=18017676](https://news.ycombinator.com/item?id=18017676)

------
daddylonglegs
Does anyone have experience of using Bitmark, either as a customer or as
manufacturer? It seems to be a public ledger for individual units of a product
for handling warranty and returns. Andrew Huang, who is involved, describes
the system and some of the scams they are trying to mitigate:
[https://www.bunniestudios.com/blog/?p=4981](https://www.bunniestudios.com/blog/?p=4981)

I'm curious about people's experience in practice. I would think this unlikely
to help but Huang is smart and has lot of relevant experience. Bitmark's
javascript laden and (to me) slightly off putting site is at:
[https://bitmark.com/](https://bitmark.com/)

------
chaosbutters314
Counterfeits are the reason anyone at my company(fortune 500 company) is no
longer allowed to buy supplies from.

I guess because they couldn't trust supplies, they said no longer and we have
to go closer to the supplies for tracking

------
hsivonen
Especially outside yhe largest countries, it's often hard to find replacement
parts for computers that are a older than the current generation.

What's the counterfeit situation with chips that can be installed in computers
post factory? Cloning a GPU or a PCI card that requires vendor-specific
drivers would actually require copying the chip instead of substituting with
another one in the same product category for the genuine driver to work. Can
we still expect PCI cards to be genuine if the genuine driver works? What
about RAM, which doesn't require vendor-specific drivers?

~~~
Spooky23
I met with the representative from a major OEM a few years ago on a realtes
topic. His position was that any new part that began manufacturing in Chinese
partner factories was in competitor factories within hours and unauthorized or
counterfeit parts were available in 30 days.

If you have a use case where genuine article is important, there are companies
that you can use to inspect and certify the parts or systems immediately after
import.

------
tim333
>The company says it has a zero-tolerance policy when it comes to counterfeits

I find that a bit hard to believe. Try searching for earpods and finding a
real one amongst all the fakes.

------
DrNuke
The only way still worth the hassle for westerner users is purchasing items as
sold and shipped by Amazon from reputed brands only, while on offer with heavy
discount... at the very least, you will get original but lower quality
products made for lower income markets at their intended price.

------
philjohn
And if you return too many items Amazon just suspend your account. There
really is very little downside.

------
NKCSS
This problem has been going around for a few years now, good to see it pop up
in more mainstream media.

