Amazon on Thursday filed a lawsuit against two influencers and nearly a dozen retailers for allegedly marketing and selling counterfeit goods, such as the Gucci belt pictured above.
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. That resulted in a lawsuit the company filed on Thursday.
Amazon accused Kelly Fitzpatrick and Sabrina Kelly-Krejci of using Instagram, Facebook and TikTok accounts and their personal websites to advertise counterfeit products sold on Amazon. The lawsuit, which was filed in the U.S. District Court for the Western District of Washington, also names 11 people and companies based in the U.S. and China who allegedly listed the counterfeit products on Amazon.
Fitzpatrick and Kelly-Krejci did not immediately respond to a request for comment.
Amazon’s marketplace, which was launched in 2000, now accounts for more than half of the company’s total sales. While it continues to be an important component of Amazon’s business, the market has also faced a number of issues related to the sale of counterfeit, unsafe, and expired goods. Counterfeit products can be especially damaging to credible brands selling on Amazon as they can ruin the business and force companies that are already surviving on low margins to lower their prices further in order to compete.
The company has prosecuted counterfeiters in court, launched various programs to search for and detect sales of counterfeit goods, and in June set up the Counterfeit Crime Division, composed of former federal attorneys, investigators, and data analysts, to break down the website for fraudulent activity.
How the scheme worked
This complaint alleges that the defendants developed an elaborate system to fool Amazon’s counterfeit detection systems. Early last November, sellers and influencers fueled purchases of purses, bags, belts and wallets that were mistakenly branded as Gucci and Dior luxuries.
Fitzpatrick was previously a member of the Amazon Associates program, which allows members to advertise and link to Amazon products for a percentage of sales. Amazon removed Fitzpatrick from the program after it was discovered it was promoting counterfeits, the company said.
Fitzpatrick and Kelly-Krejci continued to promote the Amazon listings on their social media accounts and websites through photos and videos, and instructed consumers to purchase them through a “hidden link”. The “hidden link” refers to an Amazon listing held by a seller under the program for a non-infringing generic item.
This is what an influencer Instagram post looked like:
The influencers would post photos of the generic non-infringing product and the counterfeit product side by side on their Instagram stories.
And that’s what an Amazon listing would show:
The influencers would link to an Amazon list for a generic product that appeared harmless to the company’s counterfeit detection tools.
After ordering, sellers would ship the counterfeit product instead of the generic item, says Amazon. On their website, titled “Stylee and Grace,” Fitzpatrick described how they disguised counterfeit products as non-infringing products in order to bypass Amazon’s counterfeit-proof tools.
“As Fitzpatrick explains to her followers, a ‘hidden link’ means that you are ordering a specific product that doesn’t look like the designer scam to hide the item from removal [by Amazon] and orders are being canceled, “reads the complaint, quoted from a post on Fitzpatrick’s website.
Amazon confirmed that the products were counterfeit by purchasing a number of products and then closing the accounts in question.
An example of one of Fitzpatrick’s Instagram posts allegedly promoting a fake Dior bag.
Until Wednesday evening, Fitzpatrick and Kelly-Krejci were still sharing “hidden links” to Amazon products via newly created Instagram accounts, despite previously instructing their followers to buy fakes on other ecommerce sites, including Etsy and DH Gate, a Chinese wholesale market.
Dharmesh Mehta, vice president of customer trust and partner support at Amazon, said in an interview that he noticed the case because of the audacity of the alleged counterfeiters on social media platforms.
“Any piece of data that you would look at on Amazon or that we had might have looked good,” Mehta said. “But the smoking gun here was sometimes in sight on a number of social media sites.”
Mehta said the case shows the need for collaboration between online platforms that could simplify and speed up the fraud detection process.
“We have certainly made efforts on the social media websites where we report abuse that we believe is occurring on their websites,” Mehta said. “I think this will require further investment from these parties as well as I would expect that any of these critical social media websites would not want a range of criminal offenses to be committed, organized or promoted through their platforms.”
Amazon declined to answer questions about how the influencers connected with the third-party providers. Cristina Posa, associate general counsel and director of the counterfeit crimes division at Amazon, said the investigation was still ongoing.
The company is demanding unspecified damages and injunctions from Fitzpatrick and Kelly-Krejci against the influencers and sellers that would prevent them from selling or promoting products sold on Amazon.
Counterfeits aren’t just a problem in the Amazon market. CNBC previously reported that dupe and designer lookalike videos are thriving on TikTok as teens wear items similar to Gucci or Lululemon but may not want to pay full price for those products.