Amazon has warned investors, reportedly for the first time, about the risk of counterfeits on its online platform.

In Amazon’s annual report, filed on Friday, February 1, the online marketplace acknowledged the challenges, saying in the ‘risk factors’ section of its report:

“We also may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies.”

According to news website CNBC, this is the first time that Amazon has issued a counterfeit warning to its investors, reflecting the marketplace’s increased concern over the problem.

The marketplace added that under its sales guarantee, Amazon reimburses buyers for payments up to certain limits in these situations and as its third-party seller sales grow, the cost of this programme will increase.

“In addition, to the extent any of this occurs, it could harm our business or damage our reputation and we could face civil or criminal liability for unlawful activities by our sellers,” it concluded.

Simon Baggs, CEO of online brand protection company Incopro, noted that all online marketplaces have an issue with counterfeits.

“A quick search online reveals articles about Amazon going back years discussing the latest initiatives that they are putting in place to fight counterfeits. Yet the issue continues to grow, and this is largely down to not putting action behind their words and not putting comprehensive enough programmes in place to adequately protect their consumers,” he said.

Amazon’s warning comes nearly a year after it was forced to defend itself against criticisms that it is “complicit” with counterfeiters.

Casey Hopkins, founder of US-based mobile phone accessory company Elevation Lab, warned that customers are unknowingly buying fake versions of products and that Amazon and the counterfeiters are profiting.

In a statement sent to TBO at the time, Amazon said that it strictly prohibits the sale of counterfeit products on its platform and heavily invests in ensuring that its counterfeit policy is followed.

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