Amazon and counterfeiting: How widespread is the problem for dietary supplements?

August 30, 2019

With so much third-party reseller activity over dietary supplements happening on Amazon.com, it’s almost expected that some of that activity will be at the hands of bad actors, such as those selling counterfeit products.

Online dietary supplement sales are quickly outpacing supplement sales in other retail channels. In February, e-commerce and analytics firm Slice Intelligence reported that online vitamin and dietary supplement sales are growing 12% faster than the average e-commerce category. Unsurprisingly, Amazon.com accounts for a vast percentage of those online sales: up to 77% of all online supplement sales, Slice estimates. With so much third-party reseller activity over dietary supplements happening on Amazon.com, it’s almost expected that some of that activity will be at the hands of bad actors, such as those selling counterfeit products.

And indeed, counterfeiting is happening. In July, Wired magazine was the first to report that Amazon had warned customers via e-mail that they might have purchased counterfeit products passed off as Procter & Gamble’s Align probiotic supplement. (According to an attorney I spoke to for this piece-CJ Rosenbaum, a founding partner of law firm Rosenbaum Famularo PC, which also runs the website AmazonSellersLawyer.com-Amazon does not often warn customers about counterfeit products.) Another supplement counterfeit case was reported this year when Nutramax Laboratories issued a warning that consumers purchasing its Avmacol supplement from a reseller on Amazon had likely been sold counterfeit product.

But just how often are counterfeit dietary supplements being sold on Amazon?

Surprisingly, not as often as one might think, according to Rosenbaum. Whatever the reason may be, he says, “We don’t see anywhere near as much counterfeiting-or the accusation of counterfeiting-in supplements as we do in other areas.” Compare this, he says, to other hot categories like electronics, or even beauty products. Rosenbaum should know. His company is dedicated to helping companies fight counterfeiting-particularly, counterfeiting on Amazon. “We help third-party sellers all over the world deal with the bumps in the road of doing business on Amazon. We also help a lot of small-to-medium-size brands protect themselves and protect their brands against counterfeit sales," he says.

It's good news that supplement counterfeiting isn’t rampant. The bad news? When supplement counterfeiting does happen, there can be dangerous consequences for human health. “If you buy a counterfeit lightning cable…you know, who cares? No one is getting hurt from a counterfeit lightning cable. But if you’re taking a counterfeit Garcinia cambogia supplement, for example, someone could get really sick. So I think the problem [of dietary supplement counterfeiting] is relatively small, but when it craps out, the damages are big,” says Rosenbaum. Those damages, of course, also include the sales lost by a legitimate company to a counterfeit-not to mention degradation of the company’s good name and consumers’ brand loyalty.

In some respects, a behemoth like Amazon will never be able to control the behaviors of all that use its platform. It’s the same problem that another giant platform, Facebook, faces, because bad actors will always be part of the landscape. But these platforms could be doing a better job. Like Facebook, Amazon has used the defense that it is simply providing a marketplace where third parties and customers can do business and that it is not responsible for the behaviors of those parties, including counterfeiting. (For a deeper understanding of Amazon’s history and defense, I encourage you to read the series of articles that the author Louise Matsakis has written for Wired.) It also should be pointed out that Amazon itself also participates in reselling-in fact, this represents a good chunk of Amazon’s business-and can itself fall prey to selling counterfeit products, Rosenbaum says. (He says that in these cases, Amazon often does not issue warnings to consumers. “I tend to trust a third-party seller myself more than Amazon based on what I’ve learned,” he says. “Some I can share with you, some I can’t.”)

What could Amazon be doing better? Plenty, according to Rosenbaum. To start, he says, Amazon could attempt to do a cursory inspection of products to ensure they are authentic before they are passed on to consumers. Wouldn’t the resources to do that be prohibitive, I asked him, considering the sheer volume of product Amazon.com sells? No, he says, because 80% of the counterfeits on the market are very apparent and detectable because those counterfeiters do such a poor job. (Think: misspellings on the label or other obvious callouts.) “The vast majority of counterfeits you see in two seconds,” he says. “So by just having some review system in place, Amazon would protect legitimate sellers who are not sending in counterfeit products, and protect consumers.”

Unfortunately, he says, a review process like this is “nonexistent” at Amazon. “It would cost Amazon some time and some money, and Amazon likes to pass the buck on to everybody else and onto the sellers rather than take responsibility itself, which I guess is good business but it doesn’t really protect the consumers,” he says. (In the past, Amazon has tried to establish initiatives such as Project Zero to enable brands to take action themselves on counterfeit listings, but according to Rosenbaum, those programs “haven’t really taken off.”)

Short of any changes made on Amazon’s end, what can responsible sellers and customers do to protect themselves? Be aware, Rosenbaum says, and inspect the product you are buying more closely. And take some comfort in knowing that, at least when it comes to dietary supplements, the problem with Amazon is-one hopes-not as vast as one might imagine.

 

Jennifer Grebow
Editor-in-Chief