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Businesses China The Almighty Buck

Amazon's Chinese Counterfeit Problem Is Getting Worse (cnbc.com) 205

A report on CNBC, citing sellers, says that counterfeit problem on the platform has gotten worse after it made it easier for Chinese manufacturers to sell goods to U.S. consumers. The report gives an example of a seller Jamie Whaley who started a bedding business on Amazon that reached $700,000 in annual sales within three years. Her patented product called BedBand consists of a set of shock cords, clamps and locks designed to keep fitted bed sheets in place. Whaley found quite an audience, selling up to 200 units a day for $13.99 a set. BedBand climbed into the top 200 selling products in the home and kitchen category. That was 2013. By mid-2015, the business was in a tailspin. Revenue plummeted by half and Whaley was forced to lay off eight employees. Her sheet fastener had been copied by a legion of mostly Chinese knockoffs that undercut BedBand on price and jumped the seller ranks by obtaining scores of reviews that watchdog site Fakespot.com determined were inauthentic and "harmful for real consumers." The report adds:Spend any time surveying Amazon sellers and Whaley's narrative will start sounding like the norm. In Amazon's quest to be the low-cost provider of everything on the planet, the website has morphed into the world's largest flea market -- a chaotic, somewhat lawless, bazaar with unlimited inventory. Always a problem, the counterfeiting issue has exploded this year, sellers say, following Amazon's effort to openly court Chinese manufacturers, weaving them intimately into the company's expansive logistics operation. Merchants are perpetually unsure of who or what may kill their sales on any given day and how much time they'll have to spend hunting down fakers.
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Amazon's Chinese Counterfeit Problem Is Getting Worse

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  • by Wycliffe ( 116160 ) on Saturday July 09, 2016 @02:35PM (#52478887) Homepage

    I have family members that sell on amazon and ebay. They say they can get almost double on amazon on many items. The main reason is that people trust the sellers on amazon more than the sellers on ebay. In this case, it's the exact same seller but amazon have managed to create an environment where even used items fetch a premium. If they screw it up and people start realizing that the same hucksters are on amazon (and they are) then people will start shopping elsewhere.

    • by guruevi ( 827432 )

      The difference is that Amazon is on the customer/consumer side while eBay is for the seller side. Refunds are automatic with Amazon, minimal proof necessary. I've had several claims that packages got broken/lost during shipping with Amazon or are otherwise deficient; for the seller there is no recourse, at least I buy insurance so I get my money from USPS but otherwise I'd be out of product and money. EBay doesn't really care whether you buy fake crap that's broken, once the bidding is done you get whatever

  • by JustAnotherOldGuy ( 4145623 ) on Saturday July 09, 2016 @02:39PM (#52478907) Journal

    Counterfeits are a huge problem everywhere and it'll only get worse. The lure of money and the ease of capitalizing on someone else's idea make it a market that will never go away, even for niche products.

    For some things, however, there ought to be truly severe penalties, like for the people who counterfeited brake pads for the 747's, which turned out to be made of baked sawdust and black paint. They didn't make it into a real plane as far as I know, but the consequences if they had would be staggering.

    If you counterfeit a handbag, no one dies, but certain mechanical items, medications, and other "life-dependent "products should have serious penalties, decades in jail in my opinion. Counterfeit meds are problem all over the world, but especially in SE Asia where 50% or more are fake.

    • by amiga3D ( 567632 )

      Counterfeit Meds should be life in prison.

      • Counterfeit Meds should be life in prison.

        ... are far too forgiving. seller of counterfeit meds should be force fed the counterfeit product until dead, or same number of doses sold consumed, whichever occurs first.

        • seller of counterfeit meds should be force fed the counterfeit product until dead, or same number of doses sold consumed, whichever occurs first.

          I like this idea. I like it a lot.

        • Counterfeit Meds should be life in prison.

          ... are far too forgiving. seller of counterfeit meds should be force fed the counterfeit product until dead, or same number of doses sold consumed, whichever occurs first.

          This wouldn't help in most cases. In many cases counterfeit meds are "harmless" because they are inert sugar pills. Not harmless to the person who actually needs the medication but harmless to someone who doesn't who takes them. The other categories are watered down meds, substituting for a completely different cheaper medicine that looks similar, or actual generic knockoffs likely at a lower quality standard.
          You could argue that they are all fraud but there is a huge difference between selling something

    • Re: (Score:2, Interesting)

      Counterfeits are a huge problem everywhere and it'll only get worse.

      RTFA. Other than the headline, it is not about counterfeits. It is just about over priced products being out competed by lower priced products, and the people that are unable to compete are complaining about it.

      • by Anonymous Psychopath ( 18031 ) on Saturday July 09, 2016 @03:37PM (#52479229) Homepage

        TFA states her product is patented, in which case it really is about counterfeiting.

        • by ShanghaiBill ( 739463 ) on Saturday July 09, 2016 @04:01PM (#52479395)

          TFA states her product is patented, in which case it really is about counterfeiting.

          She has a patent on a specific aspect of her product, not on the basic concept of an elastic sheet tightener (which have been available for many decades). TFA does NOT claim that her patent is being infringed, nor are her competitors using her brand name. This is just good old-fashioned competition, and she doesn't like it.

          • Including all the fake reviews? Hey, I like Chinese people, too--married to one, in fact--but you're barking up the wrong tree here.

            • Re: (Score:3, Insightful)

              by Anonymous Coward

              If there are only 5 or 10 reviews of a product on Amazon, and they're all "5 star" with the review followed by "I received this product at a discount in return for giving an honest review"... don't trust any of them.

        • TFA states her product is patented, in which case it really is about counterfeiting.

          The fact that an elastic band holding an elastic band can be patentable is insane on the face of it. Yeah I know, it is about counterfeiting. However I find it really difficult to get worked up about this case since this is exactly the kind of product you expect to find on a low cost Chinese flea market in the first place.

        • It's probably a design patent, since it's specific to the use of shock cords. A utility patent would be much broader, but it seems she filed a year or two after she started selling. At least, a few years ago the first sale sets a bar date where you have one year to file. (IANAL)

      • by JustAnotherOldGuy ( 4145623 ) on Saturday July 09, 2016 @03:53PM (#52479317) Journal

        RTFA. Other than the headline, it is not about counterfeits.

        Maybe YOU should RTFA....this is all about counterfeit products. It's about knockoffs and cheap copies of patented products that are produced illegally, undercutting the original product in pricing. The actual article mentions counterfeiting over a dozen times. How the hell is this not about counterfeiting??

        "Her sheet fastener had been copied by a legion of mostly Chinese knockoffs..."

        "Initially, knockoffs were using her patented shock cord functionality and ripping off her design, she said."

        "In May, CNBC.com reported on a Facebook group, now consisting of over 600 people, whose members have seen their designs for t-shirts, coffee mugs and iPhone cases show up on Amazon at a fraction of the price of the originals."

        "To unsuspecting consumers, fake products can appear legitimate..."

        "...meaning that a counterfeit jacket could be sent to an Amazon facility by one merchant and actually sold by another"

        ...etc etc etc... This is about counterfeiting, despite your lack of reading comprehension.

        • The article does mention some brands such as Birkenstock and Canada Goose that most likely have trademarks. They are probably seeing counterfeits take sales. But the other 600 members of the FB group might not have patents or trademarks, in which case they have no leg to stand on. It's a free, and now global, market.

      • by Ichijo ( 607641 )

        RTFA. Other than the headline, it is not about counterfeits.

        RTFA yourself:

        Birkenstock has seen dozens of stores at a time hawking its Arizona Sandal for $79.99, a full $20 below the retail price. The names of the online storefronts change all the time... On a single day in mid-June, CNBC sent notes to seven sellers on the list, asking how they're able to price the product so cheaply. Every response was the same: "It is a secret."

        Those are obviously counterfeits.

        • Birkenstock has seen dozens of stores at a time hawking its Arizona Sandal for $79.99, a full $20 below the retail price. The names of the online storefronts change all the time... On a single day in mid-June, CNBC sent notes to seven sellers on the list, asking how they're able to price the product so cheaply. Every response was the same: "It is a secret."

          Those are obviously counterfeits.

          Or, given that the gross profit margin on those sandals must be quite high when sold in the USA, they could be grey

        • Every response was the same: "It is a secret."

          To be more precise, it's an "ancient Chinese secret".

    • About 20 years ago(*) we were told that globalism would result in a higher standard of living for the US.

      People pointed out that salaries would stagnate, but economists told us that this was expected and would be more than compensated by the lowered cost of goods.

      So effectively you would have the same salary, but the things you need would cost much less and overall everyone would come out ahead.

      And here we have an honest, everyday, working person who invented something and made a lot of money who is complai

      • by sjames ( 1099 ) on Saturday July 09, 2016 @03:56PM (#52479349) Homepage Journal

        Of course that prediction completely failed to note that housing and healthcare wouldn't go down any leaving most of us less well off than before.

      • About 20 years ago(*) we were told that globalism would result in a higher standard of living for the US.

        And overall that's been true, but there's no denying that it's been at the expense of lots and lots manufacturing jobs and the good salaries or hourly pay rates that went with them. We got cheap consumer gadgets and the price was lost jobs and wages.

        It may have been a short-term gain, but long-term it's been harmful to the middle class (and probably even more so to the poorest Americans).

    • If you counterfeit a handbag, no one dies, but certain mechanical items, medications, and other "life-dependent "products should have serious penalties,

      If an incident of counterfeiting becomes high profile enough to be an embarrassment to China, the authorities will hold a mock-trial and in short order you will be taken out and shot. Is that serious enough for you?

      • If an incident of counterfeiting becomes high profile enough to be an embarrassment to China, the authorities will hold a mock-trial and in short order you will be taken out and shot. Is that serious enough for you?

        1) No, and
        2) What's your point?

      • BTW, I like the pipedot project; is it still under active development?

        • Bugs are still getting fixed, and a few stories still get posted, but it's very short on volunteer editors with time to spend, and that has kept readership low as well. It's one of those peculiarities of the market, that the best doesn't always do as well as the junk.

          It's unfortunate that Soylent opened at the same time, got most of the attention and audience up-front, because it's basically all the worst parts of /. like HuffPo on slashcode.

          • I tried to contact you at 'evilviper@pipedot.org' but the email bounced back. Is there an address I can contact you at regarding pipedot?

  • by Pollux ( 102520 ) <speter@tedata[ ]t.eg ['.ne' in gap]> on Saturday July 09, 2016 @03:01PM (#52479021) Journal

    Sue Amazon. Well, get a patent on your product first, then sell it on Amazon, -then- sue Amazon for selling items that infringe on your patent. Wouldn't be the first time. [forbes.com]

    A related anecdote...Back in 2014, I received a solicited free iPad case to try that was a Griffin case knockoff. Looked exactly the same, just missing the logo, and $40 cheaper. I was interested, but curious why it was the exact same case w/o the cost. Long story short, the guy went right to Griffin's suppliers in China and paid them to make the exact same case for his company. His mistake was that he setup an office in the United States, and Griffin sued him into oblivion.

    • Copyright vs Patents (Score:5, Interesting)

      by Steve1952 ( 651150 ) on Saturday July 09, 2016 @03:59PM (#52479373)

      It is a bit ironic that if you assert that someone has violated your copyright (e.g. used one of your images or some of your text), then under the DMCA (Digital Millenium Copyright Act), you can contact Amazon and they are obligated to take the listing down right away.

      But if you assert that someone has violated your patent, the process is much harder. So young man, remember that (cue disco ball): it's more fun to play with the DMCA!

      • The trade-off of the DMCA is that it holds the 3rd party blameless of the copyright infringement if they quickly obey the take-down request. Meanwhile, the 3rd party offering patent-infringing stuff gets no safe-harbor and can face big financial penalties, including retroactive before they were ever informed of the issue.

  • by Nova Express ( 100383 ) <lawrenceperson&gmail,com> on Saturday July 09, 2016 @03:13PM (#52479089) Homepage Journal

    ...10% Polyester [battleswarmblog.com].

    Middlemen used to drive up the cost, but they would also provide a quality control filter that's now missing as you can buy things directly from China and India through Amazon and eBay.

    Caveat Emptor

  • by 0100010001010011 ( 652467 ) on Saturday July 09, 2016 @03:24PM (#52479169)

    If you don't even manufacture in China it's hard for them to get your IP. I bet she went for the cheapest person that could injection mold her idea and didn't think about what would happen once they had the designs.

    I highly doubt that they would import a product made at some local shop to reverse engineer it and start making clones.

    It's one of the most frustrating things about watching a kickstarter fail because they decided to go to China. When I'm developing a new tool or idea I have a much better response time with a local shop. I can swing by after going to the bank, just tell them in my own English words exactly what I want done and they'll likely be able to do it. How many kickstarters have a "Sorry about the Delay, prototype .... was delayed because apparently there's a New Year in china". What takes a Week locally usually takes 4-6 months with Chinese transit time.

    She chose to make it as cheap as possible and got her initial $700k for one year as a result. She could have either charged more or cut revenue to manufacture locally and had a business that lasted 5-10+ years.

    • If you don't even manufacture in China it's hard for them to get your IP.

      Depends on what it is. For a lot of things, all they have to do is order a couple and take measurements.
    • Manufacture? IP? Injection mould? Designs? ... Have you seen the product?

      It's a set of elastic shoelaces with those clips from a name badge on the end of them. And I mean really those clips even have eyelets that don't fit the elastic shoelaces because they're designed for flat bands. I could make one right now at my desk at home from stuff I have laying around. There's no challenging industrial espionage or underhanded duplicating of corporate IP here (and I use those two letters very loosely here)

      But inte

    • Re: (Score:3, Informative)

      by thegarbz ( 1787294 )

      She chose to make it as cheap as possible and got her initial $700k for one year as a result. She could have either charged more or cut revenue to manufacture locally and had a business that lasted 5-10+ years.

      Hate to double reply but I missed this one. You do realise that this was a 100% made in the USA product right, so literally none of your post applies here.

      • > You do realise that this was a 100% made in the USA product right,

        100% Assembled in the USA. Look at the box.

        • > You do realise that this was a 100% made in the USA product right,

          100% Assembled in the USA. Look at the box.

          Look at the product. It is made using off the shelf parts you can buy pretty much anywhere. There is no "manufacturing" there is only assembly, and a full zero of the components in that box are in any way proprietary in nature, represent some magic form of IP, or would require a person to seek out a Chinese company to manufacture for them.

          Hell I could assemble one right now from stuff I find in my desk. I could start and manufacture a production line by raiding the stationary cupboards at work (which includ

  • if you dont whant you stuff to have a china clone you have to file your patent with the Chinese government thats how there systems works but as most people do not take this step you get a china clone.
  • This article is mostly bogus; counterfeits are a real problem, but this article isn't actually about counterfeits. The seller is upset with their much cheaper competition that isn't even violating their patents, or Amazons rules.

    Also, I find it funny when articles like this imply patent violations but never include the patent number. Patents are very explicit and it can be very misleading to imply a product is violating a patent when in fact they aren't. Even violating a single clause in a patent doesn't me

  • by smooth wombat ( 796938 ) on Saturday July 09, 2016 @03:48PM (#52479287) Journal

    I will go out of my way not to buy a product made in China. About the only thing I can't buy are sunglasses and winter gloves, and that includes those overpriced Marmot gloves. Even companies such as North Face have their products made in China then charge outrageous prices because, you know, they're specially made for the adventurer in you.

    Stop buying Chinese-made products and their industries will dry up. Stop having products made in China and they don't have the exact specs of your product. It's really a very simple solution but like everything else it makes too much sense so will never be done.

    • Stop having products made in China and they don't have the exact specs of your product. It's really a very simple solution but like everything else it makes too much sense so will never be done.

      You mean like in this case where it was a USA made product, here locally in the USA without any Chinese involvement at all? The problem is things like this are basic. They are not nearly as clever or complicated as people like to think and barely worthy of the word Patented at all.

      As for the "exact specs". If you can't reverse engineer this product from this picture [onlinebedstores.com] then there's no helping you. And I purposely chose the lowest resolution product image I could find. Most of the pictures of the product are a

    • by AmiMoJo ( 196126 )

      I prefer Chinese products because they are honest. You get what you pay for, unlike many western brands where you pay for the brand name.

    • Please, please, tell me where I can buy a computer not made in china...

  • As cheap manufacturing countries start directly competing against their customers, the cost of using those countries for manufacturing will increase tremendously. At some point, knowing that you are likely to be competing against your own product (but cheaper and possibly built with slightly substandard parts) will make it more cost effective to build your product locally. It's kind of surprising that the governments of these countries aren't bending over backwards to try and prevent these counterfeiting/

  • Bracers for sheets are not an invention, and certainly not patentable - unless the stuff kept your grand-dads pants up since before the first world war is worth a patent?

    • by ledow ( 319597 )

      It is an invention.

      But it's certainly not their invention.

      I've seen straps that hold fitted sheets to beds for the last 20-something years at least. Hell, I've own a fitted sheet that came with them.

      It's certainly not novel. And I think their "copies" have nothing to do with their downturn. You've been able to buy these things for decades. More likely is that people are camping on their trademark website and getting into the "related items" for their products and then consumers are realising "Hey, look,

  • by Kwyj1b0 ( 2757125 ) on Saturday July 09, 2016 @05:01PM (#52479711)

    This article is mixing three issues, all of which should concern any online retailer.

    The first is counterfeit or fake goods - a customer buys a product, but instead gets an item that doesn't match what they ordered. This is clearly fraud, and makes it difficult to trust online purchases. This doesn't seemed to have happened here. Most customers must have known they were buying the product from someone else, not the "original".

    The second is that the signal to noise ratio drops very low because a lot of vendors flood the marketplace (perhaps automatically) with products that are supposed to grab the top spot (due to low price, for example). The product might not even exist - say I print a t-shirt when someone makes an order, but I can digitally generate a million t-shirt slogans and create a million different t-shirts to show up on search. This isn't fraud - I know exactly what I'm getting, but the marketplace experience as a whole is terrible.

    The third is gaming the review system. I tend to read the content of the reviews carefully (I don't trust the rating system as much) to gain information, rather than checking the ratings. In this case, it seems as if the "inferior" product had a lot of fake reviews. If true buyers were returning the product in large numbers, however, Amazon might even pull the product.

    I do agree that it isn't the merchant's job to track down fraud/fakers (which this particular example is not); Amazon should be careful that they don't become the next ebay or craigslist.

  • I was recently looking for a cheap oscilloscope kit and eventually came across a comment on Amazon that led to this website. http://www.jyetech.com/Products/LcdScope/e138.php [jyetech.com]

    I guess this would be one way to try and combat the counterfeiters; call them out.
    • Since the PCB layout is stolen, surely there is a copyright violation here. Can't they register the copyright and then DMCA away the counterfeits?
  • by Areyoukiddingme ( 1289470 ) on Saturday July 09, 2016 @07:56PM (#52480597)

    Amazon, and unfortunately NewEgg, are both cutting their own throat in this regard. They forget that one of the services a store provides is selection. In both directions. Variety of available wares and culling of worthless duplicates. Amazon and NewEgg are absolutely buried under thousands of copies of the exact same product using literally the exact same photograph but somehow with unique listings that differ by one or two or zero cents. All of which have bullshit tags and bullshit categories.

    This is not valuable to me. This is absolutely stupid for me, as a customer. It wastes my time, totally pollutes search results, and annoys the shit out of me. Enough that I will choose another store, even a brick and mortar store, just because the signal to noise ratio has become so horrendous I literally can't find what I'm looking for.

    NewEgg are you listening? I know Amazon is not. But NewEgg, I expected better. NewEgg had useful, reliable, helpful category- and specification-based search for more than a decade, long before Amazon's half-assed attempt. Now it's been overrun by asshole third-worlders hawking $2 useless plastic shit I don't want, don't need, and REALLY don't want to see when I'm searching for a goddamned video card. A vinyl sticker designed for a Macbook cover is not a video card! Curate your collections! It matters!

    </rant>

    • Seriously.

      Go on Amazon or newegg and search for your model cellphone + "battery."

      Now go enjoy the cesspool of "OEM batteries" with blurry, photocopied labels on them. I challenge you to find a real oem battery for say... a Nexus 5 or an HTC One missed in with all that crap. A battery that doesn't have an initial capacity less than 80% of what the label says and isn't worse in life than the one you were replacing after a month or two.

      Amazon + Newegg are now broken, IMO.

      • Oh, it's easy to find the OEM battery for those phones. Just do a price sort high to low. The $50-100 per piece batteries are the real OEMs, for the most part. Then you have the recognizable third party batteries (wasabi and the like) for $8-15, and then the mystery meat versions which are maybe $2 cheaper. If you're suckered in by the third party battery at 6.97 vs a recognizable vendor/brand at 8.00, you probably get what you deserve.

        • I went safe and bought a $35 oem battery (vs the 6.97 obvious fakes). It arrived with a blurry photocopy-looking label and degraded quickly as described.

          Sam

  • Little secret guys, you want something made, someone in China wants to make it for you. They'll do it for cheap and if it's a hunk of technology, they'll do it with the same parts they made the original from. But why stop with knockoff routers and my little pony love dolls? Anything you can imagine and get on to paper, some dude in China will make for you, using only the finest tears from the finest ruined hopes and dreams of tiny little Chinese children. Does that guy in China care that your specification
  • Something's not quite right here. I've been using this sort of product since 2010, when I purchased a set at Walmart for under $10. I know for a fact that it was earlier than May 2010, because I distinctly remember a conversation I had with a co-worker about them; I left that job in May 2010, and the co-worker passed away shortly thereafter.
    While patent-infringing cheap merchandise may be a problem on Amazon, the particular item highlighted in this article seems to be a little misleading.

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