It’s not just COVID-19 and fear of it that are spreading. So too are false product claims related to the novel coronavirus.
Amazon has already removed more than one million products for making false claims related to the virus, Dharmesh Mehta, Amazon’s vice president of worldwide customer trust, told a House subcommittee today. Mehta’s disclosure came in response to questioning during a hearing on fake and unsafe products held by the Subcommittee on Consumer Protection & Commerce of the House Commerce Committee.
“During times of panic and anxiety like we’re currently experiencing with the spread of coronavirus here in the United States,’’ observed Rep. Cathy McMorris Rodgers, (R-WA), “bad actors try to prey on consumers.’’ McMorris, the panel’s ranking Republican, asked what steps Amazon is taking to keep scammers from selling products promising to treat or cure the coronavirus or otherwise making fake claims related to it.
“We’ve removed proactively more than a million products making false claims and tens of thousands of products that were attempting to price gauge customers,’’ Mehta answered. “This is a rapidly evolving situation and we’re being vigilant.’’ (Amazon and other online marketplaces that use third-party sellers have faced criticism for examples of hand sanitizer and face mask price-gouging on their sites.)
Looking at the broader problem of fakes sold online, Rodgers pointed out Administration officials estimate more than 100,000 packages from China arrive in America a day that contain goods that could either harm or defraud people.
During the hearing, Commerce Committee Chair Frank Pallone (D-NJ) charged many online marketplaces seem to be abdicating responsibility for fake and unsafe products because they are thriving off the sales. Subcommittee Chair Jan Schakowsky (D-IL) urged the Trump Administration to do more to protect the supply chain.
A particularly dangerous category of fakes cited by several House members at the hearing is counterfeit air bags. Texas Republican Michael Burgess recalled an auto accident where a fake air bag didn’t deploy because there was nothing in it to be deployed.
A Consumer Protection Subcommittee memo prepared for the hearing noted 16 percent of counterfeit products seized in Fiscal Year 2018 by U.S. Customs & Border Protection posed a direct risk to health, safety, and security.
The memorandum warned some sellers can easily set up a new storefront when an existing account is shut down by the platform or by law enforcement—undermining any efforts to stop bad actors.
Pointing to another bad product, the memo noted a CNN investigation found a knock-off car seat on Amazon that failed crash test standards.
Amazon’s Mehta said three years ago 56 percent of counterfeiters sentenced received no jail time and only 0.1 percent of filed federal criminal cases that year involved charges for trafficking in counterfeit goods.
“Increased criminal prosecution alone will not solve the problem of counterfeiting, but more funding for law enforcement and more severe penalties for convictions are essential to winning this fight,” the Amazon executive recommended.
He called increased collaboration between retailers, social media companies, law enforcement, Congress and the executive branch of the federal government vital to holding bad actors accountable and driving counterfeits and unsafe products to zero.
Consumer Reports Advocacy Vice President David Friedman told the panel counterfeit problems would not exist if all if e-commerce platforms supported robust, honest markets and tried to succeed, first and foremost, by truly meeting the needs of their users.
What is critical, he said, is for lawmakers and regulators to close gaps: “While many abusive behaviors are likely illegal under existing law, dishonest marketers are taking advantage of legal uncertainty, lax enforcement, and the ignorance and dearth of case law precedent to deceive and manipulate consumers.”
Friedman called upon Congress to strengthen the ability of the Federal Trade Commission, the Consumer Product Safety Commission and the National Highway Traffic Safety Administration to protect consumers in the online marketplaces.
Schakowsky said she wants the existing relationship between the Consumer Product Safety Commission and Customs and Border Protection to be strengthened to keep counterfeit and unsafe products from entering the country.
