Amazon has expanded its product serialisation service “Transparency” to multiple countries including India in order to deal with counterfeiting. Others where the service is now available are France, Germany, Italy, Spain, UK, and Canada. Under this service, Amazon provides brands with a unique code for every unit manufactured. These codes are verified when an order is placed to ensure authenticity. Amazon had first launched Transparency in US in 2017. Using Transparency, every time one of these products is ordered in Amazon’s stores, it scans and verifies the code to ensure only authentic units are delivered to the customers. Brands can also use Transparency to communicate unique unit-level information, including manufacturing date, manufacturing place, or other product information.
Amazon claims that customers can also use a mobile app to scan the code and verify authenticity regardless of where they purchased their units. It claims to have over 4,000 brands are enrolled under this service in US and has stopped over 250,000 counterfeits of Transparency-enabled products from reaching customers.
In November 2018, a LocalCircles survey revealed that 19% of total 27,000 participants received a counterfeit or fake product from an e-commerce site in the previous 6 months. Meanwhile, 37% of the respondents said Snapdeal had the highest percentage of fake products while 22% said it was Flipkart, 21% said Paytm Mall, and 20% said Amazon.
Previous cases of e-commerce counterfeiting
- In October 2018, India’s drug regulator DCGI had issued notices to Amazon and Flipkart for allegedly selling “spurious and adulterated” cosmetics including imported brands. The companies were also warned against legal action in case they failed to respond in 10 days.
- In August 2018, Delhi High Court had ordered Amazon Seller Services to delist some sellers on its platform following Beverly Hills Polo Club allegations that the company was selling fake products on Amazon.
- In December 2017, footwear brand Skechers dragged Flipkart to Delhi high court after 15,000 pairs of fake shoes were found to be sold as Skechers during the raids.
Anti-counterfeiting measures in the e-commerce policy
The draft national e-commerce policy announced by the DPIIT in February also suggested measures to deal with the problem of counterfeiting in the Indian e-commerce sector. As a part of the anti-counterfeiting rules, the e-commerce companies will have to comply with the following measures:
- Seller details should be made available on marketplace website for all products including full name of the seller (legal entity), address and contact details including email and phone number.
- Sellers must provide an undertaking about the genuineness of products they are selling and make this accessible to consumers
- Trademark (TM) owners shall be given the option to register themselves with e-commerce platforms. Whenever a trade-marked product is uploaded for sale on the platform, the platform shall notify the respective TM owner.
- If the TM owners so desire, e-commerce platforms shall not list/offer for sale, any of the owners’ products without prior concurrence. However, in case TM owners choose to opt for this, they would have to undertake to respond to platforms within a certain time limit.
- In case of specified high value (luxury) goods, cosmetics or goods having impact on public health, marketplaces will be required to seek TM owner’s authorization (that is, authorized/distributor/reseller agreement) before listing the product.
- In case a complaint is received about a product being fake/counterfeit, the same shall be conveyed within 12 hours to the owner of the TM. If the TM owner informs that the product sold is fake and the seller fails to prove its genuineness, then it shall take down its listing and notify the TM owner of the same.
- The e-commerce platform shall enter into an agreement with each of the sellers on its platform, under which it should obtain a guarantee of the authenticity of the products sold and also provide for consequences of violation of the same. It shall also seek a guarantee from the sellers that the product has not been impaired in any manner and that all warranties and guarantees of the brand owner are applicable and shall be honoured accordingly. Sellers unable to provide such a guarantee should not be listed on the platform.
- If a customer complains about a counterfeit product, marketplaces would have liability to return the amount paid by the customer. Additionally, the e-commerce companies should cease to host the counterfeited product on their platform, thereby taking down every information related to the product.
- E-commerce marketplaces should provide for creation of financial disincentives for sellers if found to be selling counterfeit products. If a seller is reported for selling counterfeit products, the marketplace should blacklist that seller from selling on its platform for a specified period.