Amazon are for the first time admitting that they have potential liabilities due to third party merchants selling counterfeit, pirated, or stolen goods on their marketplaces.
Amazon report their quarterly results to investors with quarterly and earnings reports, you can read their latest Q4 2018 earnings report here. However, they also file a much more comprehensive report known as a 10k to the U.S. Securities and Exchange Commission (SEC) and you can read their latest 10k issued on the 1st of February 2019 here. The main difference is that the earnings report is a glossy summary and the 10K includes a lot more information as required by the SEC and now includes the counterfeit, pirated, or stolen goods warning.
In Amazon’s latest 10K the Risk Factors contains an expanded set of liabilities from merchant activities which for the first time includes the phrase counterfeit, pirated, or stolen goods.
Previous Amazon 10K merchant risk statement
“…We also may be unable to prevent sellers on our sites or through other seller sites from selling unlawful goods, selling goods in an unlawful manner, or violating the proprietary rights of others…”
New Amazon 10K merchant counterfeit, pirated, or stolen goods risk statement
“…We also may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies…”
This is an open admission by Amazon that whilst they do their utmost to prevent the sale of counterfeit, pirated, or stolen goods it is a growing problem and one that they’ve now been obliged to highlight to the SEC. Amazon in public have a zero tolerance to counterfeit, pirated, or stolen goods but over half of all products sold on the site are now sold by third parties. It’s not a particularly new issue, we’ve heard of instances in the past that stock sent into FBA was commingled with stock from other sellers and they were blamed for knock off products they didn’t supply.
As any market grows, criminals will undoubtedly attempt to shift counterfeit, pirated, or stolen goods and marketplaces are no exception. What matters is how the marketplace polices their merchants and this is one problem that has grown to the extent on Amazon that they’re now obligated to highlight in their 10K.
One Response
eBay – what about you? Same problems, but no sign of any attempt to do anything about it. Although, I suppose I ought to be careful about what I wish for. Your normal response to anything like this, is to give the honest trader a kicking, either financially or by creating more hoops to leap through.