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According to The Counterfeit Report, the sale of counterfeit and fake products on sites such as Amazon.com Inc. (NASDAQ: AMZN) and eBay Inc. (NASDAQ: EBAY) have a terrible toll on the world’s economy and do a great damage to many companies that use the sites to sell goods and services.

According to one of its reports:

Counterfeiting is a $1.7 trillion global criminal enterprise; the criminals avoid taxes, destroy an estimated 750,000 US jobs, and cost US businesses over $250 Billion annually. Illegal counterfeiting activity is profitable, difficult to track and widely unpunished. While consumer awareness is only part of the global solution, counterfeited products are now very deceptive, and consumers often unknowingly purchase hazardous or deadly counterfeit products. It’s the manufacturers and consumers who ultimately get hurt.

Of course, if the reports are accurate, the loss is larger than the sum total of the revenue of America’s 10 largest public companies.

The most recent target of The Counterfeit Reports is Amazon:

Amazon allows multiple sellers to list against “permanent catalog page” images making identification of counterfeit products difficult. The Amazon “A-to-Z Guarantee” covered the counterfeit purchases with an overall prompt and consumer confidence building response. A counterfeit item was received from an Amazon Direct purchase, so caution is still advised.

And the advice for consumers:

Amazon Direct:                 BE ATTENTIVE
Amazon Fulfillment:       AVOID Trademarked Items
Amazon Marketplace:     AVOID Trademarked Items

As for eBay, The Counterfeit Report offered advice as well:

The Counterfeit Report received over 2,000 counterfeit products from eBay sellers and identified over 1 million counterfeit items listed or sold to eBay consumers. Many were fake items –items that never existed in the manufacturer’s product line — but had the manufacturer’s trademark.  The Counterfeit Report continued with multiple purchases from dozens of the same sellers after notifying eBay of the criminal activity, yet the sellers remained.  Hundreds of eBay “Money Back Guarantee” claims initiated by The Counterfeit Report proved to be a difficult gauntlet of obstructions, illegal directions and arbitrary decisions. Inexplicably, eBay initiates a refund claim by requiring the buyer to return the counterfeit item to the seller, where it could be easily recycled and resold. Counterfeit purchasers are not told they have purchased a fake and are entitled to an eBay “Money Back Guarantee” refund.

Our Recommendation: AVOID Trademarked Items

The odd part of the situation is that if the problem is this serious, why isn’t it taken on more publicly by Amazon and eBay?

We received the following response from eBay, which do not directly address facts in the article

Ryan Moore,Senior Manager, Global Corporate Affairs & Communications at eBay Marketplaces

I wanted to circle back regarding eBay’s efforts to curtail counterfeits, as well as eBay’s position on the Counterfeit Report. As mentioned, we’re more than happy to provide further information to you about our holistic anti-counterfeit efforts. Please let me know if you’d like to take us up on that offer.

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Mr. Crosby, who is neither law enforcement nor a rights owner, professes to operate a website to promote counterfeit awareness. But in reality, he is only looking out for his own business interests and his own bottom line. Instead of working collaboratively with eBay to combat counterfeits — as we invited him to do — Mr. Crosby chose to operate outside eBay’s policies and file demonstrably meritless claims and litigation against the company. Recently, Mr. Crosby filed suit against eBay seeking alleged damages, which resulted in an arbitrator ruling in eBay’s favor and awarding fees incurred defending against what the arbitrator ruled were ‘frivolous claims.’

Counterfeits are not welcome on eBay. We’re committed to combatting the sale of counterfeit goods and have consistently been an Internet industry leader in working to stop the online sale of counterfeit goods. We utilize a combination of sophisticated detection tools, enforcement and strong relationships with brand owners, retailers and law enforcement agencies to combat bad activity and present our customers with a safe, trusted shopping experience. In addition, for merchants in particular, eBay proactively partners with retailers and manufacturers to combat the sale of stolen or counterfeit goods.

eBay’s extensive anti-counterfeit measures include theVerified Rights Owner Program (VeRO). Launched in 1998, VeRO allows brand owners to quickly and easily report possible counterfeits or other infringing goods. eBay promptly investigates each VeRO notification and we take appropriate action on reported listings. More than 40,000 rights owners, ranging from Global 500 companies to industry trade associations to small businesses, participate in the VeRO program.

In the rare case a buyer believes that he or she has purchased a counterfeit item, eBay’s Money Back Guarantee applies to virtually all transactions and will cover them accordingly.