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How Amazon’s Anti-Counterfeiting Exchange Will ‘Stop Criminals Earlier’

Amazon on Thursday unveiled the Anti-Counterfeiting Exchange (ACX), an industry-wide collaboration that will allow stores to share information about counterfeiters and create a database of bad actors in the latest attempt to fight back against the $1 trillion global black market.

With the ACX in effect, participating stores are able to share information about alleged counterfeiters on the site. An independent third party would then share that information with members of the exchange, who could decide for themselves what to do with it, the company said in a statement. Through ACX, Amazon says it has already detected hundreds of matching accounts where the same counterfeiter tried to create selling accounts on Amazon and at least one other store operator.

Amazon Communications representative Christy Distefano, who wasn’t able to disclose to Sourcing Journal the name of that third-party provider, said, “A third-party solutions provider hosts a database into which participants anonymously contribute electronic records containing identifying information about bad actors who have engaged in counterfeiting. Other participants may then access those records and use them to keep counterfeiters from using their services and, where appropriate, make referrals to law enforcement. Each participant makes its own independent decisions about whether and how to use information in the database.”

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Daniel Castro, director of the Center for Data Innovation, a non-profit research center focusing on the intersection of data technology and public policy, who consulted with Amazon on the concept, told Sourcing Journal the game-changing ACX creates a common database to be shared across platforms.

“At the end of the day this is going to require a joint industry effort and I think this is a step in that direction,” he said, adding that up until now, a counterfeiter could be booted off one platform and simply go to another to set up shop. “I think it’s a way to really kind of tackle it so it’s not just a Whac-a-Mole approach to the problem.”

Amazon spent $1.2 billion in 2022 to fight counterfeiting on its platform, resulting in the identification, seizure and destruction of more than 6 million counterfeit items, and referred 1,300 bad actors for investigation.

Earlier this month, a woman in Washington was sentenced to three months in prison and three months of home confinement after she pleaded guilty to trafficking more than $40,000 in counterfeit goods, and last year a Long Island woman was arrested after her online boutique was found with counterfeit goods that could have netted as much as $40 million at authentic prices.

Amazon hopes the exchange will help flag these types of counterfeit outfits before they do outsize damage.

“We think it is critical to share information about confirmed counterfeiters to help the entire industry stop these criminals earlier,” said Dharmesh Mehta, Amazon’s vice president of selling partner services. “By leading the way in creating an industry-wide solution to share information about known counterfeiters, we are excited to have helped improve the industry’s collective ability to fight counterfeit crime, providing consumers and rights owners with greater peace of mind.”

James Mancuso, director of the National Intellectual Property Rights Coordination Center, believes it’s a turning point in the fight against fakes.

“This is an opening salvo in a much larger battle against counterfeiters and criminal organizations, and the effort will need even greater participation, from all industries and sectors, to reach its full potential,” Mancuso said. “We look forward to supporting this momentous effort with all of the tools that the IPR Center brings to bear.”

Castro said the exchange won’t stop counterfeiting outright, but it can help to get everyone working with the same set of data.

“There’s always ways for them to cheat and get through, but I think this moves things in the direction of everyone working together so it’s not just everyone for themselves trying to make their platform the least hospitable to those who want to sell counterfeits,” Castro said.

Beyond the database of counterfeiters the exchange collects, a list of which platforms are and aren’t participating could potentially separate the winners and losers.

“I think long-term, the question is going to be, who doesn’t participate and is there a reason why not,” Castro said. “I think there will be legitimate questions about whether all the platforms are doing enough.”

Distefano told Sourcing Journal that Amazon was not able to comment on which platforms are participating in the exchange right now. Walmart has also run into problems with counterfeits infiltrating its platform, not the least of which was Ye’s lawsuit over knockoff Yeezys that the two sides eventually settled.

While he sees the exchange as a step in the right direction, Castro believes, at some point, government will have to get more involved in the process, beyond just seizures, arrests and prosecutions.

“I think there will probably be useful information about who’s shipping what and how to identify it,” Castro said. “There will probably be some lessons that some of the logistics providers are really going to care about—and Customs and Border [Protection] as well.”

Castro, whose Center for Data Information falls under the think tank Information Technology & Innovation Foundation, said he wants to see if the exchange can scale beyond U.S. borders.

“A lot of the sellers don’t really care who they’re selling to—they just want to sell counterfeit goods,” he said. “So, at the end of the day, I think, ideally, we’ll have European partners and Asian partners, as well.”

Included among Amazon’s investments in recent years to fight international counterfeiting were the establishment of its own crimefighting team. Since 2020 the Amazon Counterfeit Crime Unit has worked with law enforcement agencies around the world to break up counterfeit rings, with one bust last November coordinated with Chinese officials to seize more than 240,000 counterfeit items in three raids in the Guangdong and Jiangxi provinces.

At the time of the raid, Kebharu Smith, associate general counsel and director of the Amazon Counterfeit Crimes Unit told Sourcing Journal, “Amazon strictly prohibits counterfeit products in our store. We know that trust is hard to earn, and easy to lose, which is why we are so focused on creating a trustworthy shopping experience each and every day. The raids and seizures have helped protect Amazon’s customers and consumers beyond our store, by preventing the fake products from entering the supply chain and reaching shoppers.”