The Amazon Transparency Program Is a Counterfeiter's Worst Nightmare | Hacker News Reader

The Amazon Transparency Program Is a Counterfeiter's Worst Nightmare

forbes.com

44 pointsdeegles67 comments

So create a system that encourages abuse, profit from that abuse at the expense of brands, and then charge those companies to use your proprietary tracking system if they want to eliminate it? This is straight out of a racketeering playbook, "It would be a shame if someone counterfeited your products and ruined your brand..."

This is Amazon's problem and they should be responsible and accountable for this.

This article is low quality and reads like it's straight out of Amazon's PR team, with no actual analysis.

>This article is low quality and reads like it's straight out of Amazon's PR team, with no actual analysis.

http://paulgraham.com/submarine.html

I don't think I fully understand your perspective. Aside from simply offering a marketplace on which people may sell various products, what has Amazon done to encourage abuse?

I don't necessarily know their validity one way or the other, but the points that tend to be made are:

- In today's world, Amazon isn't just a marketplace, it is THE marketplace. For many brands, not selling on Amazon isn't a realistic option.

- Amazon's marketplace makes it very easy to counterfeit due to co-mingling, the difficulty of holding foreign sellers accountable, and the prevalence of fake reviews.

- Amazon has done little if anything to combat counterfeiting.

>Amazon has done little if anything to combat counterfeiting.

This article is entirely about Amazon doing something to combat counterfeiting...

Amazon has benefited tremendously from counterfeiting, and has done little to combat it until recently, mostly because the pressure to act has increased and the benefits of stalling have decreased.

Yes, finally. And they’re putting the cost on the manufacturers, even though it’s a problem they created. In effect, manufacturers are now paying for commingling and Amazon is reaping the benefits.

What a hilarious notion that Amazon "created" the problem of counterfeiting. Counterfeiting has been an issue for centuries, long long before Amazon existed.

Amazon didn’t create the problem of counterfeiting, but they did create the problems on Amazon. If I purchase something on Amazon and it is counterfeit, I can’t blame or avoid the counterfeiter because Amazon has commingled inventory. Even if I buy from a trusted seller or even Amazon itself, I might get a counterfeit item. My only choice in that case is to not buy from Amazon at all.

If I buy anywhere else that allows third party sellers, I might get a counterfeit item, but I’ll know to avoid that seller in the future. And I can develop a meaningful relationship of trust with sellers; seller reviews about counterfeits will have meaning; and I can shop with a lot more confidence.

I think the point is that by creating a system that makes counterfeiting easy and doing nothing to stop it when they knew it was taking place (or now demanding payment to stop it), Amazon is somewhat responsible.

Putting the cost on manufacturers and potentially breaking legitimate resellers just feels straight out of the Walmart strongarm playbook. It feels like it should be against some FTC regulation somewhere that a transferrer of a good has the responsibility to not allow this to happen. The only historical equivalent I can think of is the movements of crude oil through pipelines where if you sell one type of oil and get a different oil on the buyers end the pipeline owner doesn't get to wash their hands of the affair and say 'its just oil, buyer beware.'

Amazon should be subsidizing 100% of this program if they can't take care of their own mess.

> what has Amazon done to encourage abuse?

Co-mingling of products at the warehouse. When you buy from Amazon, you don't actually know which "seller" is supplying the goods. They all were comingled at the Warehouse.

Even "Sold by Amazon" and "Fufilled by Amazon" products are comingled. Leading to: https://twitter.com/billpollock/status/1183094406573748225

Amazon, instead of fixing the comingling problem, has decided to charge the legitimate companies (ex: No Starch Press) for anti-counterfeiting defenses. Amazon is destroying No Starch Press's reputation by shipping shoddy low-quality counterfeit books, but its No Starch Press who has to pay the price to fix the problem.

Yes, as a heavy user of Amazon and (I think) a pretty savvy consumer of their site, commingling of different seller's offerings under one ASIN number causes big issues for me.

Almost as bad is Amazon allowing resellers to combine "similar" products into the same listing. While this makes sense for functionally equivalent products such as color differences, it's now used all the time for products that are substantially different. For example, mixing the ratings of a Micro-USB wall charger with a USB-C Power Delivery-capable wall charger is not only useless but misleading. They look different, work differently and use completely different parts internally.

I really wish Amazon would stop this.

The big difference between Amazon and other marketplaces is that Amazon have done their best to not make it look or act like a marketplace. Like, if you look at a listing on eBay there's a prominent seller information pane telling you which user you're buying from, their feedback history, etc. On Amazon there's just a single unobtrusive "sold by" line which blends into the rest of the page. Not only that, if you or someone else comes back to the same listing a few hours later the product could be coming from a completely different seller - Amazon decides who they want to direct your purchase to based on secret algorithmic factors.

Co-mingling inventory.

Amazon isn't a marketplace. It's warehouse where the real goods are mixed in with the fake goods and you can't buy directly from a specific seller.

The fix is to stop co-mingling and allow users to buy directly from a seller. That would be a true marketplace platform. Sellers shouldn't need to pay Amazon for an add-on anti-counterfeiting service to fix a problem they created.

It's strange how you attack specifically Amazon for this, while every e-commerce platform that allows 3rd party sellers has this problem. Amazon is the only one doing something about it; they should be applauded.

let's not go into whataboutism. Amazon is the biggest player so of course it has to be scrutinized the most.

It's not whataboutism to state that Amazon is the only one actually trying to fix things.

the point is things == the problem they specifically caused

Amazon caused the problem by mixing inventory. You are a legit seller who sells product A and there is another seller who sells a counterfeit product A. Even if a customer buys from you it can receive a counterfeit product.

I think this happened to me a long time ago on Amazon (2015). I ordered a bicycle tail light. When I got the package it was some cheap bad non brand name product. I'm not sure what Amazon did on the back end, but they refunded me. I just looked at my order history, it appears to be one of the items Amazon sells from multiple vendors, like what you describe.

I'm having a hard time grokking how Amazon is somehow culpable for the fraud of "another seller" claiming that their wares are "product A" (by self-describing it by the same SKU).

If this happened on eBay (user buys/wins auction of "product A" as sold by "another seller", but described the product sold by "a legit seller"), who is culpable? I'm sure the reputation of the "another seller" should take a hit -- the only question is should the marketplace's reputation?

Perhaps if the "fulfilled my Amazon" is used, that might make more sense, but I think they just add the "distributor" role to their transaction role.

Because it isn't transparent to the purchaser that the stock comes from an illegitimate seller.

So as a hypothetical example: Rolex makes Subarmariner watches and sells them on Amazon, and KnockOffWatchCo makes counterfeit Submariners and sells them as genuine ones on Amazon. I order a Submariner watch from Rolex through Amazon. However when Amazon sends it to me it grabs a watch from a bucket that contains intermixed submariners supplied by Rolex and counterfeit submariners supplied by KnockOffWatchCo, even though I purchased it from the legitimate seller.

This is because Amazon treats items with the same SKU regardless of the origin of those items.

This leads to two problems: the first is legitimate sellers being blamed for selling counterfeit goods. The other is the damage to brand perception. "Oh wow my Rolex watch sure keeps terrible time, I guess they've gone down hill".

So in the case of eBay if the seller sold me a fake product and I could identify that it is fake I could dispute that I received the advertised goods.

With Amazon I could do that too, but I would not buy through that seller again even though they weren't actually the ones who provided the item.

Does that make more sense?

I was under the impression that suppliers could choose not to allow SKU mixing but many do not because mixing leads to lower delivery times.

Is that not true?

I hope they rush this. They are already a retailer I systematically avoid, dispite being a prime member, when authenticity matters. When I have time I ocassionally gamble, but have been less and less successful getting authentic items as time passes. Even if you dislike amazon (i am personally, torn), getting this right benefits everyone selling things online if it proves practical to implement.

How practical is it really? Having to print and track individually serialized barcodes for every product you sell, sounds like it can be anything from a nearly 0 cost step to a complete logistical nightmare depending on the manufacturing process.

How badly are you being counterfeited and how much do you want to avoid lost sales?

Enough to sue Amazon for facilitating and profiting off the sale of products infringing on my IP, but not enough to pay Amazon to police their own platform. Policing Amazon's platform is Amazon's job and is a cost Amazon should bear. I don't have to pay Walmart for them to not sell products infringing on my IP, they do that on their own and when they fail, they are liable for my damages.

Example, my Dad published an e-book he sells through Amazon, and I'll be damned if there aren't other Amazon sellers offering my Dad's book for sale...its ridiculous.

I think most people are simply ignorant of the sheer volume of transactions of counterfeit goods on Amazon and similar platforms. The platforms benefit from each transaction regardless, so the platforms often evolve to encourage volume, nothing else.

In order to not be trivially defeatable, it sounds quite hard. You can't, for example, use sequential blocks of ids — far too easy for a counterfeiter to reverse-engineer valid ranges. Which means that you either generate them through some cryptographic signing process - non trivial and the risk of compromised keys, or just generate random guids centrally meaning there's a request/response somewhere in the production cycle to get ids, or batches of ids - also non trivial.

The whole thing sounds like it's a really obvious and simple solution at a glance, but as you dig into it it seems hard, especially for smaller players, and only shifts the counterfeiters' workload (now you need to figure out how to steal barcodes, not impossible depending on how much money you invest).

Countless solutions have tried to solve the problem of counterfeit goods by using some kind of unique identifier but I don't know of any that has seen widespread usage.

The difference is that Amazon is exceptional at tech and has the marketplace to implement and improve their solution over many years. Hopefully Amazon's solution becomes cheap and easy to use for even small brands (but realistically it only needs to be less expensive than the cost of counterfeits to be adopted).

If Amazon's Transparency is REALLY GOOD, they could offer it as a service through AWS. There's an enormous demand for this sort of solution.

The article says each SKU gets its own codes (and my understanding is that Amazon maintains SKU metadata internally and all resellers sell against it). My guess would be a variation of skuUUID:itemUUID:sha1(skuUUID+itemUUID+skuSecret), encoded as a QR code. UUID could be a smaller int ID, hash could be a base64 encode if you need to save space.

This is the reason why I cancelled my Prime account. I could not trust the electronics I buy on Amazon. Too many fake items sourced directly from shenzhen. Now I go directly to the manufacturer's website and pay full price (which is usually about $10 more), and at least I know I'm getting the real thing.

What are you buying that you have had issues with?

I've had fake DSLR camera batteries, Headphones, USB cables, and the list goes on

Yeah. I just bought an $800 pair of binoculars for my dad's birthday from bhphotovideo.com. Normally I would use amazon, but I didn't want to risk getting a counterfeit, and I trust bhphotovideo more.

Seems like any e-commerce aggregator (e.g. eBay, craigslist, etc) has the same counterfeiting problem - at least Amazon is offering a solution.

I don't have the same magnitude of issues on eBay as I have had on Amazon. Much of the problem is exacerbated their commingled inventory and consolidated product pages.

On eBay it is two clicks to see the negative feedback for the seller who is shipping me the item, and I have the confidence that I am going to get the item from that seller.

On Amazon, users post much of the negative feedback on the consolidated product page which doesn't give any indication about the seller, and might not even be for the right product. And in the end, fungible FBA inventory is a roll of the dice. This is a problem that never existed on eBay.

I struggle to see why a brand would be willing to share sensitive sales data with Amazon as this program requires. How many units produced, and production times.

Amazon already uses every scrap if data they get too compete, including via their expanding house brands

Sorry for the dumb question, why wouldn't amazon already have this? how does this share a brand's non-Amazon channel volumes? e.g. sales volume on their own website, retail, etc.

transparency requires a per-unit sticker with a unique code. Brands do not generally share exact volumes per product or their production rates.

Couldn't they be per-unit shipped/sold on Amazon? Does the brand need to use the same unique code system in, for example, their own brick & mortar location?

Yes, because Amazon days you can't stop resellers from selling your x on Amazon (per my reading). Thus you must tag all units.

No, Amazon can easily stop resellers from selling X on Amazon. It's a private platform.

Manufacturers don't need to tag all units unless they sell the same SKU across multiple channels. If they create Amazon-specific SKUs then any non-Amazon SKU would be presumed counterfeit under the new system.

From the article: "Brands are required to put Transparency codes on every unit for every SKU that’s enrolled, whether it’s sold on Amazon or through another channel."

Amazon doesn't want companies to use this to prevent third parties from selling their products obtained via other channels through Amazon by claiming they are counterfeit, and so requires all products to contain the code, not just those sold through Amazon.

edit: spelling

What Amazon wants and what the brands will actually do are two separate things...

Many brands will just print the transparency codes for units destined for Amazon through proper channels...which will be designated by having their own SKU, like brands already do for Costco and Walmart sales.

Product sold through other channels will not have the transparency codes and will be presumed counterfeit.

> Brands are required to put Transparency codes on every unit for every SKU that’s enrolled, whether it’s sold on Amazon or through another channel.

Nike would have to use a separate SKU for Amazon.

This sounds like a good idea if major product producers could join together to create a standard for labeling all consumer goods. This could be used to identify food packages for recalls.

So not only does Amazon co-mingle inventory to cause this problem in the first place, but then they turn around and charge brands if they want to enter this anti-counterfeit program. Incredible.

It's a standard protection racket; create and profit from crime, and then charge the victims for your protection against the crime you are profiting from so you profit either way.

What’re the odds of using RICO here?

As the 'R' in RICO stands for 'Racketeer' (which is explicitly a set of repeated criminal acts) and as Amazon hasn't been alleged to have committed any crimes ...

I'd say slim to none.

This subthread is entirely about the allegation that Amazon engaged in a repeated pattern of actively promoting wire fraud (a RICO predicate offense) as a commercial enterprise.

They haven't previously been charged with a RICO predicate offense, but RICO doesn't require you to be separately charged with a predicate offense (either before or concurrently with RICO charges), only that the required relation to a predicate offense be in the allegation supporting the RICO charge. In fact, the central point in RICO is to allow charging people/orgs involved in schemes to promote predicate offenses for commercial benefit who might not otherwise be able to be charged as principals of those offenses.

So the best move for Amazon would be to do nothing / status quo?

It's not like Amazon does this without any costs on their ends.

It would follow the Backpage precedent consistently at least - and people would hate it.

If they complain about the ethics of industry are low now wait until they cause "Johnny Tightlips" to become the safe legal standard.

The best move, ethically, would be for Amazon to pay for the additional costs of fraud mitigation required by their commingling practice out of the additional profits which motivate the practice, rather than profiting by creating a negative externality.

The simple fact that Amazon shuts down stores that are found to be fraudulent kills any kind of RICO bullshit you want to spew.

Hey so it was a suggestion. No need for the hostility.

Its almost _never_ RICO:

https://www.popehat.com/2016/06/14/lawsplainer-its-not-rico-...

Thanks, that’s fascinating. I mean, I had a feeling this was the case, but I figured I’d ask.

That is quite the inversion of burden of proof there. Amazon is a marketplace in the first place as opposed to a portal of stores. They sell by product. They have no obligation to do otherwise or to bar all secondary sellers. It is a privledge in the first place and they are entitled to demand that it not be used to shut out secondary markets.

>They have no obligation to do otherwise or to bar all secondary sellers.

Even secondary sellers of counterfeit goods? Of course they are.

Or, why don't a 3rd party provide this, and provide a website isthislegit.com/THERANDOMID (typing or API or QR) that returns red or green? Hey, startup idea!

The code has to be logged at Amazon warehouse though so it can linked to your amazon account number. Manufacturer -> Distributor -> Customer. Otherwise I could buy one real product off Amazon, copy the code onto my fake product and sell on Amazon marketplace.

The problem is that you don't know if it is counterfeit until you get the item and scan the code. That's only marginally better than the status quo -- most counterfeits on Amazon are rather easy to spot once you have it in person.

With Amazon's program, they can do it when they accept the shipment and potentially destroy the entire stock of the seller's wares.

Cuban cigars have this: http://verificacion.habanos.com/

The biggest issue is with people taking authentic packages, filling with fake cigars and selling it.

How long until the first substantial successful subversion of this? (Success defined as >USD 100K of sales, or destruction of >10K of a competitor's goods)

How long until it's made public?

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