Amazon this morning announced a new initiative focused on reducing counterfeiting on its site called Project Zero – a name that references Amazon’s lofty goal of driving counterfeit sales to zero. The program will take advantage of Amazon’s technology, including machine learning capabilities, combined with brands’ own knowledge of their intellectual property in order to automatically and continuously scan Amazon’s store to identify and proactively remove violations, among other things.
Brands who want to utilize the new tools will provide Amazon with their logos, trademarks and other key data about their brand. Amazon will then scan its 5 billion product listing updates per day, looking for any suspected counterfeits, it says.
The idea here is to put more technology behind the search for counterfeits, in order to become more proactive instead of reactive. In the past, brands would need to file a counterfeit report with Amazon in order to take action. The new tools allow brands to directly remove and control listings from Amazon’s store without having to first contact Amazon.
Another optional service involved with the larger Project Zero program is product serialization.
This service will allow Amazon to scan to confirm the authenticity of every one of a brand’s products purchased on the site. It provides a unique code for each manufactured unit, which are put on products during the manufacturing process. When the product is later ordered, Amazon scans this code to verify the purchase is authentic. If it’s not, Amazon can detect and stop a counterfeit item before it reaches the customer.
While Project Zero enrollment itself is free, brand that use the product serialization service will incur a cost between $0.01 and $0.05 per unit, based on volume, Amazon notes.
Counterfeiting has become a serious problem on Amazon, largely due to the size and scale of Amazon’s third-party marketplace, which it does little to regulate. Some of these items are never even touched by Amazon, but are sold and shipped by the third-party seller themselves. Others are only fulfilled by Amazon, but that doesn’t include a verification process.
However, those will bear a “Fulfilled by Amazon” label, which some consumers misunderstand to mean they’re trustworthy because Amazon is somehow involved.
According to a study by advocacy group The Counterfeit Report last year, there have been around 58,000 counterfeit products on Amazon since May 2016, Engadget reported. But the total number of fakes is much higher, because TCR only accounted for the brands it represents.
Amazon has been repeatedly called out by brands for effectively being “complicit” with the counterfeiting business, always dusting aside issues because they involved third-party sellers, not Amazon’s own store.
This has also allowed Amazon to escape many legal issues around counterfeiting in the courts, though it continues to face lawsuits. For instance, Daimler AG sued Amazon in 2016 for profiting from sales of wheels that violated its patents. That same year, a family sued Amazon when a counterfeit hoverboard burned down their house.
Apple also sued Mobile Star LLC for making counterfeit Apple chargers, which it tried to pass off as authentic on Amazon, which brought the retailer’s name to the news.
More recently, Amazon has inserted itself into the legal battles. Last year, it filed three lawsuits in partnership with fashion designer Vera Bradley and mobile accessories maker Otterbox, over counterfeits.
Counterfeiting is not only detrimental to consumers and the brands being knocked off, it impacts Amazon’s business directly – particularly in the increasingly important fashion category.
Many fashion brands won’t work with Amazon period. Birkenstock, for example, decided to stop doing business with Amazon. LVMH (Celine, Dior, Givenchy, Louis Vuitton, and others), said last year that the business of Amazon “does not fit” with its brands, and Swatch backed out of a deal to sell on Amazon in 2017 when the retailer refused to implement proactive protections against counterfeiters.
Despite all these issues, recent pressure from the U.S. government may have been what helped turn the tide here – forcing Amazon and others in the industry to take counterfeiting more seriously.
Last year, federal investigators purchased counterfeit products off the biggest and most well-known e-commerce sites, including Amazon, Walmart, eBay, Newegg, and Sears Marketplace. Of 47 products, 20 were counterfeit – including Urban Decay cosmetics, Yeti mugs, Nike Air Jordan shoes, phone chargers and more.
The e-commerce companies, naturally, expressed righteous condemnation of counterfeiting and pledged to work with policy makers on resolutions.
Amazon says its new Project Zero tools have been in testing with several brands before today’s launch, including the above-mentioned Vera Bradley; pet anxiety products manufacturer Thunderworks; mobile accessories maker Kenu; and lint remover manufacturer Chom Chom Roller. During the testing period, Amazon claims it was able to proactively stop 100 times more suspected counterfeit products, compared to what it reactively removes based on brands’ reports.
“Project Zero, with its automated protections and the self-service removal of counterfeit products, is a significant development that will help ensure our customers receive authentic Vera Bradley products from Amazon,” said Mark Dely, chief legal & administrator officer at Vera Bradley.
“Amazon’s product serialization service has been a game changer for us. We are excited to have this self-service counterfeit removal tool for the US Marketplace and consider this to be an insurance policy,” said Ken Minn, ceo, Kenu.
Project Zero is placing a lot of trust in the brands submitting the claims, so Amazon warns it will monitor usage for accuracy of their reports.
“We are providing brands with an unprecedented level of responsibility, and we are willing to do so because we believe that the combined strengths of Amazon and brands can drive counterfeits to zero,” the company writes on the Project Zero website FAQ. “Brands must maintain a high bar for accuracy in order to maintain their Project Zero privileges. We have a number of processes in place to promote accuracy, including required training as part of Project Zero enrollment and ongoing monitoring to prevent misuse of our tools.”
Project Zero is launching first as an invite-only product in the U.S. which brands can sign up for to join, before rolling out more broadly. Participants must have a government-registered trademark and be enrolled in the Amazon Brand Registry to qualify.
Tags: Amazon, Tech Crunch