On Tuesday, independent tech publisher No Starch Press found out that Amazon was selling counterfeit copies of Python for Kids, one of its popular programming books. A concerned customer alerted Bill Pollock, the founder and publisher of No Starch. He immediately knew what he was up against, because Pollock has dealt with this problem before.

In September 2016, William E. Shotts Jr., the author of The Linux Command Line, alerted No Starch that counterfeit copies were affecting the book's Amazon reviews. When No Starch contacted Amazon, it pulled the title from the marketplace altogether. Pollock told Inc. that one-star reviews from disappointed customers remained for months after the book's listing was restored.

In an echo of the previous incident, No Starch was dismayed on Tuesday and Wednesday when several of its titles were taken down, in response to the publisher's complaints to Amazon that customers were receiving shoddy counterfeits. The books' listings were restored again on Thursday.

As it happens, on the same Tuesday that No Starch Press discovered the problem with Python for Kids, Amazon announced plans to launch an intellectual property registry that will allow companies to police the usage of their brands. The move was seemingly prompted by growing consumer awareness that Amazon's counterfeit problem rivals Alibaba's. This isn't a new state of affairs, but so far Amazon has taken less heat than its Chinese counterpart for allowing fake goods to be peddled on its marketplace. Perhaps not for long.

No Starch's problem blew up on tech industry forum Hacker News, where commenters expressed a broad distrust of Amazon. One user reported receiving counterfeit baby supplies, and multiple people indicated that buying electronics from Amazon is an unpredictable gamble.

One person reported buying iPad Minis to use as contest giveaways only to receive plastic dummies designed to look like iPads. "We can no longer trust [F]ulfilled by Amazon which greatly reduces the value of their Prime membership and 'free' shipping," the user wrote.

Fulfillment by Amazon, commonly abbreviated as FBA and called Fulfilled by Amazon colloquially, is the program that allows sellers to "store [their] products in Amazon's fulfillment centers, and [Amazon will] pick, pack, ship, and provide customer service for these products," according to Amazon's promotional page. Amazon declined to comment for this story, either on the No Starch Press situation or on the marketplace's counterfeit problem more broadly.

No Starch founder Bill Pollock told Inc. that Amazon's platform does not have adequately robust escalation systems in place to ensure swift and effective handling of complaints. "I don't think that Amazon's sale of counterfeit books is willful. I think it's the result of a process that is a bit too automated," Pollock said on Twitter, adding, "but it's still illegal."

He is most upset by the lack of communication. Even though No Starch has engaged a lawyer to remonstrate on its behalf, Pollock says that Amazon is stonewalling. He wasn't even notified when additional No Starch titles were pulled from the marketplace. "The best thing they could do is actually talk to us, but they don't," Pollock said. "They just hide from this stuff, they don't want to deal with it." Pollock sees Amazon's laxity as copyright infringement. "I have a responsibility to my authors," he said.

IT architect Vlad Didenko pointed out on Twitter that Bjarne Stroustrup, who invented the popular C++ programming language and penned several books about it, has also dealt with rip-offs being sold on Amazon. Technology books may be a particular target for counterfeiters because they have a relatively high price point despite being cheap to manufacture. No Starch Press gives its customers DRM-free digital files when they purchase a book, which counterfeiters may be feeding into a print-on-demand program.

Counterfeiters are able to exploit legitimate brands that sell through Amazon not only by copying their products but by taking advantage of the way that Amazon commingles listings from different sellers. Aaron Richard, director of operations for paint company Dr. Ph. Martin's, which sells substantial volume through Amazon, explained how it works.

Essentially, Amazon assigns a unique ID to each product on its platform. Depending on which programs the brand participates in, a variety of sellers can provide inventory for each SKU (stock keeping unit). For example, if you buy Huggies diapers on Amazon, you may be buying diapers that the manufacturer shipped directly to Amazon, or you may be buying diapers that a third party procured and shipped to Amazon. The problem arises when that third party sends in fake goods. In an email, Richard laid out the process in detail:

When you list on Amazon through Seller Central you are a 3rd party. You have three options via Seller Central:

  1. Self fulfillment -- You ship directly to the customer (no Prime badge)
  2. Fulfilled by Amazon (known as FBA) -- You ship to an Amazon warehouse, Amazon fulfills orders for you (you get a Prime badge, on the product page it says "Fulfilled by Amazon")
  3. Seller Fulfilled Prime -- You ship directly to the customer under the same terms as Amazon does and you get a Prime badge (I don't know anyone who doe this, you basically have to guarantee to Amazon that you can provide 2-day shipping everywhere in the U.S.)

Most people realize the difference between 1 and 2, because if there is no FBA you don't get a Prime badge and the invoice comes from someone who isn't Amazon. But where consumers get tripped up is the difference between "Shipped and sold by Amazon.com" and "Fulfilled by Amazon"

Shipped and sold by Amazon.com means that the product is shipped and sold by Amazon Retail (via Vendor Central or Vendor Express) directly. Basically, the manufacturer sends product to Amazon.com at a set price through a traditional PO process. This inventory is commingled with all other FBA inventory.

Amazon DOES let you opt out of commingled inventory, but only for FBA (at least as far as I know). Opting out also hits you with additional fees.

Richard added, "[T]he consumer always thinks the chain is: Manufacturer » Amazon » Me. But the reality is that is pretty much never guaranteed. The only way that's guaranteed is if you find the manufacturer's listing on Amazon.com and buy via [F]ulfilled by Amazon directly from them, AND they happen to choose to opt out of commingled inventory. In every other scenario there's a chance that you get inventory that didn't come from the manufacturer."

The prevalence of counterfeit goods on Amazon harms consumers, because they may receive subpar or even unsafe products. It erodes trust in the marketplace, as Hacker News commenters pointed out. Counterfeits also harm legitimate brands in three ways: lost revenue, damage to the brand's reputation, and intellectual property theft. The sellers Inc. has spoken to see it as Amazon's responsibility to help them, and across the board they report being frustrated by the company's unresponsiveness.

Published on: Mar 24, 2017