Aside from a couple high profile cases of sellers getting in trouble for inventory they never sent in being associated with them, it's a great benefit to consumers.
The major logistical advantages outweigh the very low possibility of abuse. If you asked the average consumer if they would like to receive their item 2 days faster, but risk a 1 in 1000 chance that they get a bogus item they will need to exchange with Amazon at no cost, I think the former would win by a mile.
The chances of getting a counterfeit item in some product categories is basically 100%. Go ahead, try to buy a real pair of Apple iPhone corded headphones on Amazon. That assignment is quite literally impossible.
Here, buy from Amazon direct and you'll get a real one.
The US GAO recently did an investigation (admittedly not specific to Amazon, but it included them) and 20 of 47 items they purchased were counterfeit!
2) It’s not a risk that exists at competitors like Walmart and Target
3) For some categories like baby food, even a low risk of counterfeit product is unacceptable