NATIONALLY RECOGNIZED FEDERAL LAWYERS

27 Nov 23

Selling Counterfeit Goods Online and Trafficking Penalties

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Last Updated on: 14th December 2023, 04:49 pm

Selling Counterfeit Goods Online and Trafficking Penalties

Selling counterfeit goods online has become a huge problem in recent years. With the rise of e-commerce platforms like Amazon, eBay, and Etsy, it’s easier than ever for counterfeiters to peddle their fake products to unsuspecting customers. But make no mistake – trafficking in counterfeit goods is illegal and can come with serious penalties if you get caught.

In this article, we’ll break down the laws around counterfeit sales, the kinds of penalties you could face, and what happens if you unknowingly buy or sell fakes online. We’ll also talk about how e-commerce platforms are trying to combat the problem, and what you can do to avoid buying counterfeits. Let’s dive in!

What are Counterfeit Goods?

Counterfeit goods are unauthorized reproductions of trademarked products. This includes everything from fake luxury handbags and clothing, to pirated movies and music, to imitation pharmaceuticals. Counterfeiters copy the trademarks, logos, packaging, and appearance of authentic goods, then sell their fakes as the real thing.

Some examples of popular counterfeit goods include:

  • Designer apparel and accessories (Gucci, Louis Vuitton, Chanel, etc.)
  • Luxury watches (Rolex, Omega, TAG Heuer)
  • Sneakers (Nike, Adidas, New Balance)
  • Handbags
  • Sunglasses
  • Jewelry
  • Cosmetics and fragrances
  • Electronics (iPhones, gaming systems)
  • Movies, music, books, software
  • Pharmaceuticals

While some counterfeits may seem harmless, like fake designer handbags, others can pose serious risks. Fake pharmaceuticals in particular can contain toxic ingredients or lack active ingredients altogether. They endanger public health and safety.

Trafficking Penalties for Selling Counterfeit Goods

Under 18 U.S. Code § 2320, it’s illegal to intentionally traffic counterfeit goods in the United States or knowingly sell counterfeits. The penalties for counterfeit trafficking depend on a few factors:

  • Type of goods (commercial vs consumer products)
  • Retail value of the counterfeits
  • Number of prior offenses
  • Presence of aggravating factors (like causing health risks)

For individuals trafficking in counterfeit goods, the penalties can include:

  • Up to 10 years in prison
  • Fines up to $2 million
  • Restitution to victims
  • Forfeiture of assets connected to the crime

The penalties go up if the offense involves counterfeit military goods or services, pharmaceuticals, or consumer products – up to 20 years in prison and a $5 million fine. Subsequent offenses also increase penalties.

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For companies, the fines can be much steeper – up to $15 million for counterfeiting offenses. Company executives can even face prison time if they had knowledge of or participated in trafficking activities.

Selling Counterfeit Goods Online

The internet has made it much easier for counterfeiters to find buyers for their fake goods. Sites like eBay, Amazon Marketplace, and Craigslist are go-to platforms to sell counterfeits directly to consumers. Social media is also used to market and sell counterfeits.

Traffickers typically ship items directly from China through international mail to get them past customs. They also use fulfillment centers in the US to store goods domestically. UNODC research shows clear links between counterfeiting and organized crime.

So while the college student selling fake designer bags to make extra cash may seem harmless, they could unknowingly be supporting serious criminal activity. The penalties for selling counterfeit goods apply whether online or in person.

How E-Commerce Platforms Are Fighting Back

Major e-commerce sites have been ramping up efforts to keep counterfeits off their platforms. They face increasing pressure from brands, consumers, and regulators to crack down.

For example, Amazon has introduced tools for brands to remove counterfeit listings. EBay spends over $5 million each year taking down fake listings. Etsy prohibits selling counterfeit goods in its policies. These sites also use technology like machine learning to proactively detect potential counterfeits.

Some key initiatives e-commerce platforms use to fight counterfeiting include:

  • Brand registry programs – Brands can report counterfeits for fast removal
  • Product serialization – Unique serial codes on products to verify authenticity
  • Seller verification – Checking seller IDs and locations to detect high risk
  • Algorithms to detect violations – Using artificial intelligence to flag potential counterfeits
  • Increased collaborations with law enforcement – Working with agencies like the FBI and Homeland Security

The White House has also made stopping counterfeit sales online a priority. A 2020 memorandum called for increased fines and law enforcement against e-commerce platforms facilitating counterfeit trafficking.

What Happens if You Unknowingly Buy or Sell Counterfeits?

Most consumers who buy counterfeit goods online are unaware they have purchased knockoffs. So what happens if you accidentally buy or sell fake products on eBay, Craigslist, or another site?

In most cases, authorities are focused on going after major counterfeiting rings. Individual buyers and small-time sellers are not the target. Prosecutors also must prove you knowingly trafficked in counterfeit goods.

However, ignorance is not always a defense. Under the law, willful blindness about the authenticity of goods can satisfy the knowledge requirement. You also may still face civil liability or seizures.

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If you bought a counterfeit product, the brand owner could sue for damages under trademark laws. But the odds are low of that happening to a single consumer. The product would just be seized by customs if discovered.

For sellers, you could be banned from the e-commerce platform for violating policies against counterfeit sales. If intentional, you may also face criminal charges or lawsuits from brands. But occasional unknowing sales are unlikely to prompt legal action.

How to Avoid Buying Counterfeits Online

While e-commerce sites are trying to root out fake listings, buyers should still be cautious when shopping online. Here are some tips to avoid buying counterfeit goods:

  • Shop directly from the brand’s official website when possible
  • Check seller ratings and reviews on marketplaces like Amazon or eBay
  • Avoid sellers with prices that seem too good to be true
  • Review product photos closely for signs of low quality
  • Verify security and authenticity tags on goods
  • Research the average prices for items from the brand
  • Avoid buying pharmaceuticals, luxury goods, or collectibles from unknown third-party sellers
  • Use payment methods with buyer protection, like credit cards or PayPal

If you receive an item you suspect is counterfeit, report it to the marketplace or brand immediately. Stop using or selling the item. While buying counterfeits online may seem harmless, you could be supporting criminal activity and serious penalties.

The bottom line? If you choose to traffic in counterfeit goods, proceed with extreme caution. The savings are not worth the risk of fines, prison time, and supporting organized crime.