Ten years ago, at a bar in Brooklyn, Jason Feinberg's brother's friend's wife came to him with a suggestion: a baby pacifier with a plastic mustache attached to it. Feinberg's company, Fctry, made various novelty products and offered a percentage of revenue to people for their ideas. He agreed it had potential. The result, the Mustachifier, became the top-selling pacifier on Amazon in 2014, generating millions in sales for Fctry and hundreds of thousands in royalties for the brother's friend's wife.

Then, says Feinberg, "the funkiness started to happen."

Sometime that year, Feinberg started getting emails from Amazon buyers complaining that their Mustachifiers were defective. A verified buyer posted a review showing a pacifier whose bulb had completely separated from the shield. A mother named Doreen wrote Feinberg to say she'd given her son a Mustachifier and set him in his play pen while she prepared food. "All of a sudden, he started coughing," she wrote. "When I arrived it turns out his pacifier broke in two pieces and he had almost swallowed the rubber nipple. I was able to take it out of his mouth [in] time!"

The thought that one of his products might have caused a child's choking death was "literally the worst thing you can imagine, as a business owner," Feinberg says. He scoured his supply chain trying to figure out where the defects were coming in. But then Feinberg examined one photo, and noticed something odd. "The way the nipple had become dislodged was physically impossible given our design," he says.

It was a fake. Like so many other companies with hit products, Fctry had come to the attention of counterfeiters, who were making ripoff versions in China and selling them to U.S. consumers via Amazon's third-party marketplace.

Feinberg promptly reported the issue to Amazon's marketplace team. "I figured this was going to be fairly straightforward: 'These are Chinese counterfeits and they're pacifiers that could kill babies. You guys want to solve this, right?'"

What followed was anything but straightforward. The responses Feinberg got from Amazon representatives advised him that he could request action only against sellers that were infringing on Fctry's copyrights or trademarks. But proving a product is counterfeit can take months, and puts the burden of enforcement on the IP owner -- and Feinberg was worried about what harm could come while he waited. For a brief time, a sympathetic contact on the Quality Team helped him get problematic listings taken down, but after that contact was transferred to a different team, he was on his own again.

Meanwhile, the complaints about shoddy fake Mustachifiers continued to trickle in, and lookalike products proliferated. But since he ran a U.S. company, Feinberg was bound by the 2008 Consumer Product Safety Improvement Act, which imposes stringent safety-testing and labeling requirements on makers of products for children under age 12. Feinberg knew the lookalikes could be sold without undergoing any such testing.

Increasingly alarmed, Feinberg attempted, without success, to contact Senator Amy Klobuchar, who had worked on the Consumer Product Safety Improvement Act (Cpsia). In January 2016, having failed to convince anyone at Amazon to treat it as anything other than an intellectual property issue, he sent an email directly to Jeff Bezos, forwarding Doreen's note and adding his own beseeching message. (The Amazon CEO is known to monitor his inbox and forward urgent issues to underlings, often appending a single question mark.)

"Sooner or later a baby is going to choke on one of these if they continue to be distributed, which is why I'm stepping forward to try to resolve this, even if doing so may be detrimental to my own business," Feinberg wrote.

He never heard back.

The loophole in the law

Amazon's marketplace for third-party sellers has spawned a vast ecosystem of counterfeiters, scammers, and knockoffs, an ecosystem that poses an existential threat to businesses that lack the financial resources or manpower to do full-time IP enforcement. But it poses an even more direct threat to the health and safety of children and babies who, by law, are supposed to enjoy special protection from dangerous or unhealthy products--products that are now being mainlined into American homes via Amazon's third-party selling platform.

Companies that sell to Amazon as wholesalers must comply with the Cpsia​, testing all of their children's products every year and marking them with tracking labels that can be used to establish liability claims or identify recalled products. To get a vendor account, they must provide proof of Cpsia​ certification, the same certificate required by brick-and-mortar retailers like Target and Buy Buy Baby. Compliance is not cheap. Lindsey Laurain, whose company, Ezpz, makes silicone plates and cups for toddlers, says she spent about $80,000 in 2018 on testing to certify, among other things, that her products don't contain chemicals like phthalates that could leach into children's food.

But, outside of a handful of categories like car seats, sellers who opt to use Amazon's third-party platform, called Seller Central or the Marketplace, aren't required to provide any such certification. Instead, Amazon merely says, "Sellers are responsible for tracking and complying with any regulations issued by the CPSC," or Consumer Product Safety Commission.

Given the fly-by-night nature of the Chinese factories that manufacture thousands of knockoff products and retail them through interchangeable storefronts on Amazon, opening new accounts as needed to replace any that get shut down for violations, it's questionable how many of them are doing testing of the sort that would satisfy the CPSC. In China, consumers are known to avoid domestic brands of products like baby formula because the risk of tainted goods is so high.

In 2017, the U.S. Customs and Border Protection Agency (CBP) attempted to create consumer awareness of the health and safety risks posed by counterfeit products with its "Fake Goods, Real Dangers" campaign. The CPSC, which works closely with CPB to stop the flow of dangerous counterfeits, advises buying certain items like bicycle helmets directly from the manufacturer, or from a big-box stores or other brick-and-mortar retailers. CPSC spokesperson Karla Crosswhite says the agency "is challenged to be able to monitor all e-commerce shipments." The availability of products that falsify their branding or safety claims "is always going to be an issue," Crosswhite says. "Unfortunately, that's one of the downsides of the internet."  

"I would say any counterfeit is a safety issue because they're not doing the safety testing to ensure it's not," says Laurain, whose company has struggled to stem the flow of competing products that steal her company's designs, brand imagery, and product claims. For a while, she tried buying the knockoff items and sending them to laboratories in hopes of proving the knockoffs exceeded permitted limits for chemicals like phthalates or lead, but the testing was expensive and she quickly stopped.

Prohibited, but still for sale

So far, worst-case scenarios like the one that haunted Jason Feinberg have been mostly hypothetical.

But only mostly. In December, a 4-year-old boy in Wisconsin had to have parts of his colon and intestines removed after he'd swallowed 13 tiny magnets from a toy that broke open. Initial news reports identified the toy as a magnetic construction set called Magformers.

In fact, it was a copycat item made by a Chinese company called Imden. The similarity that caused the toy to be mistaken for Magformers' product had also prompted Magformers, which is based in Michigan, to file an IP infringement report with Amazon. Magformers CEO Chris Tidwell says Imden's product listing was removed at least twice previously; Magformers' claim was still awaiting a response at the time of the incident in Wisconsin. Imden's magnetic construction toy has since been removed from the company's Amazon store, although it's not clear whether units already sold have been recalled. 

Like so many other American companies, Magformers has battled with China-based entities misusing its assets in all sorts of ways, from its trademark to its designs to its product photography, which features Tidwell's neighbors' children. "The bottom line is it's very hard for us to get IP-infringing product and unsafe product off Amazon," says Merle Saddick, Magformers' senior sales and operations manager for North America. While similar tactics abound on eBay and Walmart.com, Saddick calls Amazon's third-party platform "the main marketplace where really bad and unsafe products can be listed very easily and dispersed to our consumers."

A 2017 Consumer Reports story highlighted the risks of toys containing powerful magnets to small children. Those risks led the CPSC to impose a federal safety standard for the category, but it was subsequently lifted after a court challenge.

In a statement, an Amazon spokesperson said the company has "proactive measures in place to prevent suspicious or non-compliant products from being listed, and we monitor the products in our stores for safety concerns. When appropriate, we remove a product from the store, reach out to sellers, manufacturers, and government agencies for additional information, or take other actions." The spokesperson also added that "for certain products and categories, Amazon requires additional information, such as compliance and provenance documentation." 

But even in instances where Amazon has taken action, it's easy to question the seriousness of those efforts. Until 2014, Tiffany Chiu used Amazon to sell the Otteroo, a pool float for infants that fastens around the neck. That year, Amazon summarily informed her it was closing down the product category over unspecified safety concerns.

No one is more mindful than Chiu of the frightening implications of a defective flotation device for babies: In 2015, she recalled 3,000 units after reports of leaky seams. Rather than try to get back on Amazon, she has focused her efforts on working with pediatricians to demonstrate her product's benefits for babies with developmental problems, and trying to keep unsafe knockoffs off the market by urging low-price retailers like Walmart and Wish to drop the category as well. "We'd rather not have anyone play in this field than have to compete with three- or four-dollar products," she says. She often gets emails or social media alerts from people complaining about defective products who don't realize the item they bought was not, in fact, an Otteroo -- in part because, in an echo of what Tidwell and many others have experienced, many of the knockoffs use language or images lifted from her website.

So Chiu is perfectly comfortable with Amazon's decision to put inflatable children's neck floats on its list of hazardous and dangerous items that can't be featured in a listing. Yet, as of April 1, an Amazon search for neck floats turned up at least half a dozen such products. One was priced at a mere $6.45; another used photos obviously stolen from a rival listing. After Inc. inquired about why supposedly prohibited products were available for sale, all the listings disappeared within a day.

Saddick from Magformers says Amazon has been more responsive since the Wisconsin child's hospitalization, giving her company direct access to its incident team and working with them more closely to identify infringing listings. She also cites the retailer's ongoing efforts to use artificial intelligence to flag bad actors.

But where children's safety is at stake, it's nowhere near enough.

"The bottom line is it shouldn't take an incident to have any company become socially responsible," says Saddick. "It shouldn't take a death. It should be part of what they do."

Published on: Apr 4, 2019