Counterfeit products online: E-commerce players must be held accountable for fake items

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Published: February 11, 2020 4:30:27 AM

In the US, e-commerce’s share in total retail sales stood at just 11% in the third quarter of 2019, implying that fake products also reach consumers through offline sales or informal online channels.

To be sure, e-commerce platforms must be made more accountable; they need to make it difficult for vendors of counterfeit products to use their platforms.To be sure, e-commerce platforms must be made more accountable; they need to make it difficult for vendors of counterfeit products to use their platforms.

The value of fake/counterfeit products traded globally was estimated to be $509 billion in 2016—3.3% of global trade. The US, which is the worst-hit nation, is mulling over regulation of the e-commerce space to stop the flow of fake/counterfeit products into its market—its Department of Homeland Security (DHS) has recommended holding e-commerce platforms like Amazon and Alibaba liable for sale of such products under the principle of “contributory negligence”. The logic seems hard to refute since the DHS reports, that of 51 products purchased online, 20 were found to be fake. However, this course of action will be missing the wood for the tress since it will do little to curb the sale of fakes. In the US, e-commerce’s share in total retail sales stood at just 11% in the third quarter of 2019, implying that fake products also reach consumers through offline sales or informal online channels.

To be sure, e-commerce platforms must be made more accountable; they need to make it difficult for vendors of counterfeit products to use their platforms.

For instance, they could make it mandatory for the provenance of the good being sold to be disclosed by the vendor, and flag products emerging from unlicensed manufacturers. However, governments must also go after the counterfeit value-chain, and the policy environment that fosters this. Also, poor governance, lax IPR enforcement, and the exploitation of free trade zones (FTZs)/manufacturing-promotion zones that have light-touch regulation need fixing. Going after an Amazon or an Alibaba may grab headlines and make a government look good, but it will do very little to shut down the manufacturers of counterfeits in China etc.

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