Opening Bell

Counterfeit Crackdown

Amazon bulks up fraud-fighting efforts as global scams increase

By Rob Smith June 11, 2024

Aerial view of a group of people in white shirts implementing anti-counterfeiting measures by packing boxes in an organized line on a gray background.

This article originally appeared in the May/June 2024 issue of Seattle magazine.

Amazon’s extensive efforts to fight fraud are paying off.

The Seattle e-commerce giant says it stopped more than 700,000 “bad actor” attempts to create new selling accounts last year. Amazon’s recently released 2023 Brand Protection Report reveals that the company invested a staggering $1.2 billion into fighting fraud last year. Amazon has more than 15,000 employees dedicated to fraud prevention.

“When a customer makes a purchase in our store, they trust they will receive an authentic product,” Dharmesh Mehta, Amazon’s vice president of worldwide selling partner services, writes in the report. “We continue to successfully hold more bad actors accountable, stopping them from abusing our and other retailers’ stores.”

Fraud in general continues rising as digital shopping increasingly becomes a preferred way to buy. A 2024 report from Mastercard found that global ecommerce fraud losses hit $41 billion in 2022, and were projected to exceed $48 billion last year. North America holds the dubious distinction of having the largest fraudulent transaction value in the world, at 42% of all fraud. Citing research from data firm Juniper, the report says data breaches and stolen credit cards are particularly worrisome.

“The U.S. is the most fraud-prone country,” the report says. “Thirty-four percent of consumers say they were most likely to have been victims of fraud, with that percentage likely to be higher today.”

Fraud takes various forms. “Promo abuse” involves exploiting promotional incentives. “Friendly fraud” occurs when a consumer makes an online purchase and then disputes it with their bank. Hackers can also take over accounts, and are increasingly using ChatGPT to do so. The Mastercard study notes that more than 50 fake AI apps scam unsuspected users by deploying phishing attacks to capture personal and payment data.

It also found that 70% of companies use three or more tools to fight fraud. Amazon’s strategy focuses on four key areas: Extensive vetting of sellers; the use of machine learning to identify infringement; close affiliations with brands and law enforcement departments around the world; and consumer education.

The company says “proactive controls” last year blocked more than 99% of suspected infringing listings before a brand had even discovered them. Amazon is also making extensive use of AI to protect intellectual property.

“Since 2020, while the number of products available for sale in our store has grown significantly, we have seen a more than 30% decrease in the total valid notices of infringement submitted by our brands,” Mehta writes in the report, noting that the company’s Counterfeit Crimes Unit has pursued more than 21,000 “bad actors” through litigation and criminal referrals to law enforcement.

“This has required significant innovation,” Mehta adds. “We will not rest until we drive counterfeits to zero.”

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