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 US GAO recently did an investigation (admittedly not specific to Amazon, but it included them) and 20 of 47 items they purchased were counterfeit!
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.
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