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New Bipartisan Bill Goes After Counterfeiters

March 16, 2020
The SHOP SAFE Act incentivizes platforms to engage in a set of best practices to curb the presence of counterfeits on their sites.

A new bipartisan bill focused on stopping the online sale of dangerous counterfeit goods is currently being reviewed by the House Committee on the Judiciary. The SHOP SAFE Act incentivizes platforms to engage in a set of best practices to curb the presence of counterfeits on their sites.

“Many counterfeits do not undergo safety testing and pose a substantial health and safety risk for consumers, the committee noted, listing cosmetics, baby formula, batteries, chargers, air bags and car seats among the potentially life-threatening counterfeits sold online,” Multichannel Merchant points out. “The Government Accountability Office found that 20 of 47 items purchased from third-party sellers on popular consumer websites were counterfeit.”

The SHOP SAFE Act would:

  • Establish trademark liability for companies who sell counterfeits that pose a risk to consumer health and safety.
  • Require online platforms to establish best practices to vet sellers to ensure their legitimacy, remove counterfeit listings and remove sellers who repeatedly sell counterfeits.
  • Call for online marketplaces to take steps necessary to prevent the continued sale of counterfeits by the third-party seller or face contributory liability for their actions.

“Consumer lives are at risk because of dangerous counterfeit products that are flooding the online marketplace,” said Rep. Doug Collins (R-Ga), one of several congressmen who introduced the bill. “Congress must create accountability to prevent these hazardous items from infiltrating the homes of millions of Americans. The SHOP SAFE Act would make families safer by requiring online sellers to help prevent the sale of counterfeit products to consumers.”

Hitting the Pirates Where it Hurts

In January, the Department of Homeland Security released a report outlining recommendations the federal government and online marketplaces can take to reduce the number of counterfeits. The report notes that private sector actions have not been sufficient to prevent the importation and sale of a wide variety and large volume of counterfeit and pirated goods to the American public.

More and more American consumers are shopping online—e-commerce sales are expected to reach nearly 15% of total retail spending and more than $4 trillion in 2020. Counterfeiters have moved online too, the House Committee on the Judiciary states.

“They frequently take advantage of the features of online platforms to appear as legitimate sellers. They may use false and unvetted credentials and make their counterfeit listings appear as authentic as possible to online shoppers, often by lifting wording and images from the real brand owner.”

Putting Consumers First

According to the committee, courts currently will not hold the online seller responsible for selling counterfeits to consumers regardless of the fact that the seller is responsible for every step in the transaction. Many counterfeits do not undergo safety testing and pose a substantial health and safety risk for consumers and pose a financial risk for companies,” it adds.

For example, products like cosmetics, baby formula, batteries, chargers, air bags, car seats and brakes are a few of the potentially life-threatening counterfeits currently sold online. “Counterfeit products pose significant threats to consumer health and safety and have devastating impacts on businesses,” said Hank Johnson (D-GA), Ranking Member of the House Judiciary Committee.

“Platforms must do their part in ensuring that their sellers are reliable and that their products are authentic,” Johnson continued. “This legislation makes great strides in addressing the increasing problem of unsafe counterfeit products sold to unsuspecting consumers by encouraging platforms to take steps that are reasonable, workable and necessary for keeping dangerous counterfeits out of consumers’ hands.”

Trademark Lawyer Josh Gerben told CNBC that the bill would hold e-commerce companies more accountable for the goods sold on their sites. “Quite frankly,” Gerben said, “it is about time that Congress did something about it because the online marketplaces that exist today have not put consumer safety first.”

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About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.