Amazon sues influencers for allegedly marketing counterfeits

Two influencers have reportedly partnered with nearly a dozen third-party sellers to advertise, promote and facilitate the sale of counterfeit luxury goods on Amazon, according to a complaint filed Thursday by the company.

Amazon accused Kelly Fitzpatrick and Sabrina Kelly-Krejci of using Instagram, Facebook and TikTok accounts, as well as their personal websites, to promote counterfeit products sold on Amazon. The lawsuit, which was filed in U.S. District Court for the Western District of Washington, also names 11 people and companies based in the United States and China who allegedly listed the counterfeit products on Amazon.

Fitzpatrick and Kelly-Krejci declined to comment on the lawsuit.

Amazon’s marketplace, launched in 2000, now accounts for more than half of the company’s overall sales. While it remains a vital part of Amazon’s business, the market has also faced a number of issues related to the sale of counterfeit, unsafe and expired products. Fake products can be particularly harmful to credible brands that sell on Amazon, as they siphon off business and can force companies that already survive on low margins to lower their prices further to compete.

The company has taken counterfeiters to court, rolled out various programs to find and detect sales of counterfeit products, and in June launched the Counterfeit Crimes Unit, made up of former federal prosecutors, investigators and analysts from data, to operate the site for fraudulent activities.

This complaint alleges that the defendants orchestrated a sophisticated system to deceive Amazon’s counterfeit detection systems. From last November, sellers and influencers fueled purchases of counterfeit handbags, bags, belts and wallets, which were falsely labeled as luxury goods like Gucci and Dior, the suit claims.

Fitzpatrick was previously a member of the Amazon Associates program, which allows members to advertise and link to Amazon products in exchange for a percentage of sales. Amazon pulled Fitzpatrick from the program after discovering it was advertising counterfeits, the company says.

Fitzpatrick and Kelly-Krejci continued to promote Amazon listings on their social media accounts and websites via photos and videos, then asked consumers to purchase them using a “hidden link.” The “hidden link” referred to an Amazon listing, maintained by a seller under the program, for a generic, non-infringing item.

Here’s what an Instagram influencer post looked like:

And here’s what an Amazon listing would show:

After placing the order, sellers would ship the counterfeit product instead of the generic item, Amazon says. On his website, called “Stylee and Grace,” Fitzpatrick described how they disguised counterfeits as non-counterfeit products in an attempt to circumvent Amazon’s anti-counterfeiting tools, the lawsuit said.

“As Fitzpatrick explains to his followers, a ‘hidden link’ means’ you order a certain product that looks nothing like the creator’s dupe in order to hide the article from the socket. [by Amazon] and orders being canceled, ”according to the complaint, which cites an article on Fitzpatrick’s website.

Amazon confirmed the products were counterfeit by purchasing a series of them and then shutting down the offending accounts.

As of Wednesday night, Fitzpatrick and Kelly-Krejci were still sharing “hidden links” to Amazon products through newly created Instagram accounts, although they have already asked their followers to buy fakes on other e-commerce sites, including Etsy and DH Gate, a Chinese wholesaler. market.

Dharmesh Mehta, Amazon’s vice president responsible for customer trust and partner support, said in an interview that the case stood out due to the alleged courage of counterfeiters on social media platforms.

“Every piece of data that you would look at Amazon, or that we had, could have looked correct,” Mehta said. “But the smoking gun here was sometimes in plain sight on a bunch of social media sites.”

Mehta said the case illustrates the need for collaboration between online platforms, which could simplify and speed up the process of catching fraudsters.

“Certainly with social media sites we have made efforts to detect the abuse that we believe is occurring on their sites, we are reporting that to them,” Mehta said. “I think this will require continued investment from these parties as well, as I would expect one of these critical social media sites not to want a crime set to be perpetrated, organized or reported. through their platforms. “

Amazon declined to answer questions about how influencers connected with third-party sellers. Cristina Posa, associate general counsel and director of Amazon’s Counterfeit Crimes Unit, said the investigation is still ongoing.

The company is seeking unspecified damages from Fitzpatrick and Kelly-Krejci, as well as an injunction against influencers and sellers that would prevent them from selling or promoting products sold on Amazon.

Counterfeits aren’t just a problem in the Amazon marketplace. CNBC previously reported that designer dupe and look-alike videos are blooming on TikTok, as teens appear to wear items that look like Gucci or Lululemon, but may not want to pay full price for those items.