While I know that a lot of you have a love affair going on with Amazon Prime and their seemingly amazing two-day shipping, you should know that you’re not necessarily going to get what you think you’re ordering… and, based on our experience and what I’m reading in the media, even after receiving reports of counterfeit merchandise, Amazon will not necessarily work to guarantee the items they are shipping are authentic merchandise. They also will not intervene on the manufacturer’s behalf to ensure that the products they are selling are in compliance with intellectual property laws.
They enable the continued sale of counterfeit items to consumers through a Terms of Service that shifts liability for legal compliance to the company they identify as the “Seller”, but then they conceal the Seller’s true identity (registered business name, address, phone number). Concealing a Seller’s identity makes it near impossible for manufacturers to enforce their property rights when Amazon refuses.
If you purchase a bumGenius or a Flip item on Amazon’s website, you might get a real cloth diaper, or you might get a counterfeit diaper. Even though Cotton Babies is aware that those products are for sale on Amazon, we have no way to effectively intervene to stop the sales of these counterfeit items.
Here’s an example of how this plays out.
This Flip cover is fake. The pictures are ours. The product description is ours. The product diagram is ours. The packaging looks almost like ours. From a warehouse worker’s vantage point, it looks like a real Flip cover, so it goes with the other Flip covers. Can you tell that it’s fake?
The seller is identified as “Ayebel“. That Flip cover is stored (binned) with all other Sassy colored Flip diaper covers in an Amazon fulfillment center. It’s priced at $12.99. Regular retail price for a Flip cover is $14.95. You found a deal right? Wrong. That cover is made wrong, using the wrong manufacturing process and materials. It will fall apart. If a friend asks you where you bought that diaper cover, you’re never going to tell them that you bought that Flip cover from Ayebel. You probably aren’t even consciously buying from Ayebel. You just picked the cheapest price on Amazon for a Flip cover and hit the Buy Now button. They let Ayebel use our copyrighted product photography without verifying that they had permission, so the listing looks real. You’re going to tell your friends online that you got a great deal on that product from Amazon. Everyone flocks to Amazon to get a great deal on a Flip cover. Amazon wins the sale. Ayebel wins the sale. A few months later, you and your friend are posting online about how awful this diaper cover is and you’re convinced nobody should use Flip covers. You are advised to contact Cotton Babies for warranty coverage only to learn that you purchased fraudulent, badly made product and have no recourse other than to seek a refund through Amazon. Now go try to find Ayebel using your favorite search engine. Any luck?
A Seller can operate on Amazon under almost any name, as a business or an individual. There’s no way for us as a manufacturer to find out who Ayebel is or how to contact them. If we were successful in having them removed from the Amazon marketplace, they come easily back under a different name and list the same products again. It’s like a torturous, horrible, never-ending game of Whack-A-Mole.
If you’re a manufacturer who doesn’t mind stealing product designs and using another company’s brand name to make your quick buck, Amazon FBA is a dream come true.
It gets better. According to recent articles, if you tried to hold Amazon accountable for selling you fake merchandise, Amazon will actually deny that they ever sold you the merchandise, but what happens if you get an injury from a fake consumer product? Who is legally responsible? Will Amazon still deny they sold you the product?
“[…] Amazon countered that its fulfillment, payment processing and product listing services don’t mean that Amazon is offering a product for sale. Instead, the company argued, those are services the company provides to third-party retailers, which are the ones making the offer of sale.” – Geekwire
Ayebel sold you that cover, not Amazon. Who are they again? For your reading enjoyment, here’s a link to the actual court verdict.
Further, Amazon does nothing to ensure that consumers can choose to receive authentic product by being selective with the Seller identity . The sellers identities are public with the product listing… but (people?!!) Amazon keeps the real and counterfeit items TOGETHER in the SAME BIN in their fulfillment centers. So, now you know that Ayebel is selling counterfeit Fip diaper covers. You still want your Prime shipping, so you choose to buy from Cotton Babies on Amazon. Bad news. You might still get a fake Flip diaper cover because Ayebel’s merchandise is kept with our merchandise. Return that fake Flip cover… you might get another one, because the fakes are still kept with the real.
Is this sufficient ground for a lawsuit? You would believe it is but, while the laws surrounding this issue are generally clear, a company’s ability to do anything to enforce these laws when dealing with Amazon is minimal. Those claims could include patent infringement, trademark infringement, copyright infringement, passing off, failure to respond when they were notified, impact to revenue, damages, harm to consumers, harm to reputation, lost revenue, harm to suppliers, [etc].
Amazon MINIMIZED their liability to companies like Cotton Babies through a very broadly written terms of service. If something goes wrong, Amazon will only ever owe me the amount of money they believe they made in profit on sales after all costs are considered (no damages and Amazon doesn’t recognize the pass-through revenue collected by the infringing company or the corresponding loss of revenue to the counterfeited brand).
Amazon also MAXIMIZED their ability to invoke penalties on companies like Ayebel. Amazon can keep Ayebel’s entire revenue stream if they get accused of selling counterfeit or knockoff items.
Let me recap. Amazon is collecting ALL THE MONEY on all the sales from both sides of this arrangement – real and fake. The counterfeiter might not get paid ANYTHING if they are accused of infringement. According to Amazon’s terms of service, if there’s infringement, the real brand has no recourse with Amazon outside of what Amazon thinks they made in PROFIT on the sales of the counterfeit item.
It might be apparent to the people who can do math that Amazon might be winning in this deal.
Without engaging a very bold law firm (on contingency), willing to take on a behemoth like Amazon and the literal black hole of a Chinese counterfeiter, there’s no way for a company to collect the full TRIPLE DAMAGES that United States intellectual property law might gives that company the right to collect.
After reading an article about Birkenstock choosing to abandon it’s relationship with Amazon entirely, it’s clear that we aren’t alone in the issues we’ve been having with Amazon – nor are we alone in experiencing an ongoing lack of adequate response from Amazon about this issue.
I found it VERY interesting that Amazon would only resolve Birkenstock’s complaint about counterfeit items **if Birkenstock was willing to sign over their entire product catalog to Amazon**. Then, and only then, would Amazon take steps to remove the counterfeit sellers from their marketplace. Signing over an entire product catalog to Amazon would give Amazon exclusive rights to retail Birkenstock. Should I do that with bumGenius and Flip?
Just for a minute, let’s think about the long term economic implications of their offer to only intervene if manufacturers give Amazon exclusive retail rights. How does that affect consumers? How does that affect businesses? How does that affect communities? It’s not too hard to imagine a future where your local stores are forced to close their doors as more manufacturers move to give Amazon exclusive retail rights in an effort to “protect” their intellectual property. Alternatively, manufacturers could move their catalogs off of Amazon’s website, and then, transparently to consumers, the counterfeit item wins the sale and eventually wins the economic battle. The manufacturer loses all negotiating power. The retailer selling authentic merchandise closes their doors. Amazon wins all the money and everyone else has to fold their cards and quit playing. That’s the ultimate end game for a retail marketplace. Amazon has nailed it. Target is struggling. Walmart might be staging a come back at this point. Kmart is practically gone. Independents are still disappearing faster than they are appearing. Amazon is actually winning.
Consumers want all the things, delivered to their home, conveniently, at any price, and faster than they could get to a store to buy it locally. And now that Amazon has eliminated their lower price claim, they actually think that you will buy this level of convenience quite literally AT ANY PRICE. Maybe their boardroom has forgotten that the middle class is shrinking and more people are living in poverty in our country than ever before. Consumers who are struggling to pay their bills will look for and find the least expensive price, even if it means waiting a few more days for their product to arrive or driving down the road to buy at Walmart. An argument has been made in the media for contextual pricing because you’ll pay more for a Coke at a baseball game on a hot day than you will on a cold day. You’ll pay even more for a cold Coke when there’s only one source and only a few Cokes. But, the internet isn’t a hot baseball game with one place to buy a cold Coke. And Amazon lives on the internet.
Getting back to the point. Amazon’s current system is feeding the success of the counterfeit items in defiance of our country’s own laws that are designed to ensure fair competition and product safety… to their almost exclusive financial benefit, while the courts look the other way.
I manufacture, wholesale, and retail some pretty amazing brands of cloth diapers… I’m a relatively small company and don’t matter that much to anyone at Amazon in the bigger scheme of things. But your child matters. Safety matters.
Play this scenario out across toys… clothing items… carseats… and strollers… and anything else your baby uses. Fake merchandise sells for a lower price for a reason… and it’s not because it’s safer.
And I want to be clear… before someone starts going off on me about where I have my products manufactured, this isn’t a case of my manufacturer making product and selling it out their back door. We buy materials from the same sources and have done so for years. Except for our inserts, all authentic Cotton Babies cloth diapers are made in Denver, Colorado and are extremely easy to identify if the consumer is familiar with our product lines. The knockoffs aren’t made with our proprietary materials. They are constructed improperly. The fabric is lightweight. The tabs aren’t even made of a stretchy material. The snap holes are drilled too large, and the snaps will pull through the fabric. The snaps aren’t even the right color. The prints are “off”. And whoever made the diaper can’t spell. This is a case of a manufacturer buying an authentic product from us, ripping it off (all the way down to the unique tracking label on the diaper they bought), and the “made in USA” brand label, and then selling it through Amazon’s marketplace as if it was real merchandise. With the counterfeit diapers, the tracking numbers will return a result from our product tracking database because they bought one diaper with a number on it that works…. and then used that number repeatedly for the fake diapers.
It’s not often that I go to my blog to increase consumer awareness of issues like this. We try to deal with people and businesses directly. This situation has been no different. I’ve tried to walk in the front door by using Amazon’s systems to report this problem. We’ve gotten no response. I’ve tried to walk in the side door by contacting a company they own, Quidsi, to report this issue and request their intervention. They are good people, and, while they’ve responded, we’ve gotten nowhere with Amazon even with their support. I’ve tried to walk in the back door by emailing Jeff Bezos directly on several different occasions. Again, no response. I’ve tried over and over again. No response.
So here we are. Consumers are only hearing about this information as manufacturers decide to start exposing the problem and then only if the media decides to talk about it.
How can you help? Support your local small businesses. Be wise and do your research. Most importantly, only shop for products with retailers that are listed as “authorized retailers” on a brand’s website. Call or email your local news providers and tell them about the Birkenstock story. Those news providers might not care about Cotton Babies and our cloth diaper brands, but everyone recognizes the Birkenstock brand.
And please, if you’re buying our cloth diaper brands, shop at an authorized independent retailer. It’s worth waiting a day or two for your products to arrive to know the you’re receiving authentic merchandise that has a warranty.
A full list of authorized retailers for bumGenius, Flip, Econobum, Milkdaze and Elemum can be found here: http://www.bumgenius.com/retailers
Last, please amplify this issue directly to your friends and family. One very effective way to do that would be sharing this post right now by clicking the social sharing buttons below.