October 2018police showed up at a nondescript industrial warehouse in New York’s Brooklyn Navy Yard to investigate reported fakes.
Federal agents are looking for knock-off military equipment as part of an investigation into a dealer called California Surplus, which has been awarded a $20 million contract to provide specialty uniforms to the U.S. military. Thousands of boxes of the stuff have been recovered from warehouses around New Jersey, according to court documents.
It turns out that California Surplus was selling counterfeit goods made in China that were designed to look like equipment from Crye Precision, one of the top U.S. military equipment suppliers. Crye’s Brooklyn headquarters is right around the block.
California Surplus owner Ramin Kohanbash and co-conspirator Bernard Klein pleaded guilty in 2019 to trafficking in counterfeit goods and were sentenced to prison.
Counterfeit products have become a big problem for Crye, causing millions of dollars in losses each year, said Jonathan Antone, the company’s general counsel. Crye lost valuable sales opportunities to overseas factories that printed its patented camouflage pattern, called MultiCam, on ponchos, pants, shirts and hats without Crye’s permission and sold them on Amazon and sold on other markets.
On August 7, 2024, Crye Precision gave CNBC a tour of its warehouse in Brooklyn, New York, where it tested suspected fakes for authenticity.
Amazon Marketplace was launched in 2000 to allow businesses to peddle goods on the company’s website. It brings together millions of sellers and currently accounts for more than half of Amazon’s total retail sales. While the marketplace has helped Amazon generate record revenue, it has also been found to have counterfeit, unsafe and even expired merchandise.
By 2016, The seller is on Amazon’s growing counterfeit problem and spoke to CNBC about the company’s situation Efforts to publicly curry favor with Chinese manufacturers. Sales by Chinese sellers on the website More than doubled in 2015 .
Jason Goldberg, chief commercial strategist at advertising agency Publicis, said that with the outbreak of the epidemic, online shopping has surged, and counterfeit goods have become more frequent on Amazon and across the Internet. Goldberg said that unlike physical stores, which may offer as many as 150,000 products, online marketplaces such as Amazon can sell hundreds of millions of items. Such a wide range of choices may be harder for platforms to regulate.
“There’s more room on the digital shelf for potentially counterfeit products,” he added.
‘Disrupt and Destroy’ Counterfeiters
Amazon launches tool Just like Project Zero and Brand registration Let brands report and remove suspected fakes themselves. In 2020, it Establish internal department called the Counterfeit Crime Unit, works with brands and law enforcement agencies to combat fraudsters.
The team currently numbers 35 people and is made up of data analysts, investigators and former federal prosecutors, many of whom have worked at the Justice Department and FBI. Amazon recently invited CNBC to visit its second headquarters in Arlington, Virginia, to learn more about how the CCU investigates counterfeit goods on the company’s marketplace.
CCU head Kebharu Smith said the unit was formed at the request of Amazon founder and Jeff Bezos, who serves as chief executive until 2021 official.
“The counterfeit industry has a combined sales of approximately $500 billion, so we know it will take a coordinated effort from brands, law enforcement and collaboration with stakeholders to go after these bad actors at scale,” Smith said. “We’re not just focused on Amazon. Sellers in the store who we identify as bad actors are also focused on disrupting the network’s supply chain.”
Amazon says it will work with law enforcement around the world to seize products in 2023 7 million counterfeit items and conducted more than 50 raids, spent $1.2 billion and hired 15,000 employees to achieve this goal.
Prior to the launch of the CCU, Amazon’s anti-counterfeiting efforts were primarily driven by its Customer Trust team, which oversees the company’s response to numerous abuse and fraud issues, such as fake reviews and Bad actors who want to circumvent their policies .
Through the CCU, Amazon works with companies such as Prada, Hanesbrands and Yeti to take counterfeiters to court. March it File a lawsuit Crye joins the lawsuit against six companies and 16 individuals who allegedly participated in a scheme to sell knockoff versions of the device maker’s MultiCam products on Amazon’s marketplace. The items include camping, hunting and travel bags and backpacks bearing counterfeit Crye camouflage patterns.
An example of a backpack previously sold on Amazon, bearing a counterfeit version of Crye Precision’s MultiCam pattern.
Amazon
The CCU also passes tips on suspected bad actors to government agencies. In August 2023, federal agents from the Department of Homeland Security and Defense Department, acting on information from Crye and Amazon, raided facilities in Texas and California. According to court documents, agents seized “multiple trailer loads” of counterfeit MultiCam products worth an estimated $8 million.
For many brands, the process of identifying fakes begins with test-purchasing the product online.
“To the untrained eye it might look like a MultiCam, like our MultiCam, but to us it didn’t look right,” Antone said. “So we’ll just order some test purchases and analyze them and can usually tell almost immediately that this is easily counterfeited.”
Crye showed CNBC examples of counterfeit MultiCam products allegedly sold on Amazon by retailer L&Q Tactical, one of the defendants in the lawsuit. These products include tactical vests, backpacks and board carriers, which Crye determined to be counterfeit due to color inconsistencies with its MultiCam graphics. The listings show that L&Q included the keyword “MultiCam” in some Amazon product listings, even though they were not related to Crye. TK L&Q Reviews.
“They’re also trying to bid for military contracts with these counterfeit products,” Ernesto Rodriguez, Crye’s MultiCam brand manager, said in an interview. “Luckily for us, they’ve done a good job of trying to break our mold.”
Crye Precision’s Ernesto Rodriguez shows off a real MultiCam backpack (left) and what he calls a “really bad knock-off” (right) on August 7, 2024 in Brooklyn, New York.
Fake backpack, Apple charger
When users list counterfeit products on Amazon or elsewhere on the web, they can both damage a brand’s reputation and create potential dangers for consumers. Rodriguez said that in Crye’s case, counterfeit products could end up putting the lives of soldiers or police officers at risk. Crye tested the L&Q items using night vision goggles and found that they failed to properly hide soldiers on the battlefield.
“When viewed under night vision, it emits a pure white light,” Rodriguez said. “So if a soldier is wearing or carrying this bag, it can be seen from miles away.”
The possibility of counterfeits on Amazon has caused friction with some brands. Over the years, brands include Birkenstock shoes, Nike and IKEA Everyone is no longer selling directly on Amazon, citing fakes and the Wild West nature of the market.
apple 2016 Sue Amazon Seller It sells counterfeit chargers bearing its logo, which the company says “pose significant risks of overheating, fire and electric shock.” Rachel Greer is now a Seller Advisor and worked at Amazon in the Fraud and Product Safety department from approximately 2007 to 2015.
“Of course (the charger) can be plugged in,” Greer said in an interview. “But it’s going to hit you hard because there’s no insulation.”
apple products Now a restricted category on Amazonmeaning resellers must obtain approval from the brand to sell these products on the website. Amazon did not comment on the UK incident. Smith said the company has identified bad actors using fictitious IDs to create accounts and sell in restricted or “gated” categories.
“We have identified programs such as degating programs where bad actors will submit false invoices as a way to bypass our proactive tools,” Smith said.
While there are fewer fakes on Amazon, “knockoffs,” or cheap imitations of popular products, are becoming more common, Goldberg said. According to surveys, about one-third of U.S. adults have knowingly purchased products that were defrauded. 2023 Morning Consult Research. Buying counterfeit goods is no longer as taboo as it once was, Goldberg said.
“Today, more and more consumers are saying, ‘Oh, yeah, I’m financially responsible and frugal. I would never buy that really expensive bag with the Coach logo on it, but I do like this. A sense of beauty.
Temu, Shein and TikTok Shop have emerged as U.S. shopping destinations in recent years, luring American shoppers with low prices on clothing, electronics, homewares and other products. Most items are unbranded and shipped directly from China.
Amazon has taken notice. The company is launching its own dedicated storefront for low-price fashion and lifestyle items, which will allow Chinese sellers to ship directly to U.S. consumers, CNBC previously reported. According to reports, in order to remain competitive, the company has set a cap on sellers’ product prices, such as a ceiling of $20 for sofas and $9 for bedding. information.
Goldberg said the rise of online marketplaces has made it harder for companies to have “perfect brand safety.”
“I would honestly describe this as the new reality in retail,” he added. “Consumers discover items on TikTok rather than on our store shelves and make purchases across all of these platforms. The world has become more complex and confusing, and perfection is a further goal than ever before.”
watch video Get the behind-the-scenes look at how Amazon is fighting counterfeits.
