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Avoiding Criminal Penalties for Unknowingly Selling Fake Goods
Avoiding Criminal Penalties for Unknowingly Selling Fake Goods
Selling counterfeit goods can lead to serious criminal penalties, even if you didn’t realize the goods were fake. As an online seller, it’s important to educate yourself on how to avoid accidentally trafficking in counterfeits. This article will discuss common defenses, legal implications, and steps you can take to reduce your risk.
Ignorance is Not Always a Defense
Under 18 U.S. Code § 2320, penalties can apply even if you didn’t knowingly traffic in counterfeits. Prosecutors only need to prove you were “deliberately ignorant” of the goods’ infringing nature. So even if you stick your head in the sand, you could still face fines or jail time.
That said, honest mistakes do happen. If you take reasonable precautions, you may be able to avoid charges or reduce penalties. Document your sourcing and authentication efforts. Show you did your due diligence before listing items for sale.
Civil vs. Criminal Penalties
Selling counterfeits can lead to both civil lawsuits and criminal prosecution. In a civil case, the rights holder sues for monetary damages. Criminal charges mean steep fines and even prison time.
Prosecutors tend to focus on willful, large-scale counterfeiting rings. But civil lawsuits can target accidental counterfeit sales too. Either way, you could end up paying tens or hundreds of thousands in penalties.
Your Customer Isn’t Safe Either
Think only sellers get prosecuted? Think again. Under CBP guidance, buyers can face civil fines or even criminal smuggling charges. So you could be exposing customers to legal jeopardy too.
Spotting Counterfeit Goods
How do you know if that designer handbag or luxury watch is legit? Here are some red flags to watch for:
- Prices that seem too good to be true
- Shoddy or inconsistent manufacturing
- Misspellings or grammatical errors on labels
- Incorrect logos, tags, or packaging
If you have suspicions, consult an authentication expert. It’s well worth the peace of mind.
Best Practices for Avoiding Counterfeits
Here are some tips to help avoid accidentally selling counterfeit goods:
- Carefully vet your suppliers. Ask for invoices and proof of authenticity.
- Inspect all merchandise thoroughly before listing. Compare to authentic versions.
- Remove listings if a buyer or rights holder identifies an issue. Consult a lawyer ASAP.
- Maintain thorough records on sourcing, vetting, and authentication.
- Consider authentication services to verify legit brands before selling.
- If the price seems too good to be true, it probably is. Tread carefully.
- Watch out for common counterfeited brands like luxury, sportswear, electronics.
- Brush up on anti-counterfeiting laws and consumer protection policies.
Staying vigilant takes work but reduces legal exposure. It also helps build shopper trust and protects your reputation.
What To Do if You Receive a Counterfeiting Complaint
Finding out you accidentally sold fakes can be scary. Here are some steps to take:
- Immediately stop selling the item and inform previous buyers.
- Apologize to the rights holder and offer to help remedy issues.
- Ask your lawyer to contact prosecutors/plaintiffs on your behalf.
- Offer to surrender remaining stock and sales records.
- Consider settlement offers but consult your lawyer.
Taking quick, cooperative action shows good faith and may mitigate penalties. Most prosecutors care more about halting counterfeits than punishment.
The Bottom Line
While penalties can be strict, there are defenses available. Document your sourcing and authentication efforts. Show how you carefully vet suppliers and merchandise. Demonstrate good faith cooperation if issues crop up.
Staying vigilant is work, but pays dividends through reduced legal risk and better customer trust. Protect yourself and shoppers by keeping counterfeits off your virtual shelves.