In Amazon.com, Inc. (NASDAQ:AMZN), there are two ways brand owners that do business: 1P (first-party) and 3P (third-party). The first-party sells direct wholesale to Amazon Retail using the Vendor Central interface, while the third-party allows private brand owners to sell direct to consumers through the Amazon marketplace using Seller Central interface. This system may seem unfazed, but not for long.
According to a report on Patently Apple, Apple Inc. (NASDAQ:AAPL) recently purchased several power adapters, charging and syncing cable products directly from Amazon.com – not third-party, but the first-party platform. These items were tested and they found out that they were counterfeits. When Apple brought this to Amazon’s attention, the latter reported that the counterfeit products were sourced from Mobile Star. Amazon immediately handed over the entire inventory of items bought from Mobile Star. Then on Monday, Apple filed a lawsuit in California against the New York-based company Mobile Star.
The lawsuit targets the company’s USB power adapters. Apple maintains that the products are not only fake, but potentially hazardous since they may have insulation and voltage circuits deficiencies. Meaning, these counterfeit items can possibly overheat, catch fire, and electrocute consumers in normal use.
Apple is regularly taking steps to combat counterfeit accessories. In fact, the iPhone maker claims that in the last 9 months, it purchased more than 100 iPhones, power products, and charger and syncing cables that were advertised as genuine and authentic through Amazon.com’s “Fulfillment by Amazon” (FBA) policy and revealed that nearly 90% of these were counterfeits.
Apple has expressed concerns over the increasing number of counterfeit products circulating the market. The safety of customers is the most at risk with this recent development given that knock-offs have not undergone industry-standard consumer safety testing. Aside from that, these products were sourced from e-commerce giant Amazon.com, a reputed online marketplace that is popular worldwide. Since these counterfeits were sold directly by Amazon, consumers are less likely to be aware that those products were outsourced.
In a statement, Amazon said that it has a zero tolerance policy when it comes to counterfeiting and that the company is currently working closely with manufacturers and other vendors to pursue any wrongdoings.
When Apple tried to contact the company regarding this issue, Mobile Star would not reveal the name of its supplier. In fact, they even started selling fake accessories directly, and the site carries other brands as well. Apple is seeking injunction against the company, destruction of all fake products, and $2 million worth of damages per product type.
Before removing the selling privileges of Mobile Star, the accessories listings went as low as $9.43 while the official Apple price of the same item costs $35.00. Considering that there are a lot of counterfeit Apple products in the market, vendors offering items that cost significantly lower than the official price should already be a red flag to consumers. While there are authorized resellers, it is always better to be cautious than fall prey to counterfeits.
Hopefully, more companies will follow suit, as these counterfeit activities are damaging not just in Amazon but everywhere else.