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Rogue international sellers are expert marketplace manipulators
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20 min read

In the neverending quest for growth, marketplaces must expand. They expand how they sell (1P, 2P, & 3P models), they offer fulfillment and logistics services, they roll out DTC brands, and they know that one key area is to expand their product catalog by bringing in merchants from across borders. Ideally, increased competition should mean more choice for consumers and inevitably lower prices, and in most cases, that is exactly what happens. However, as platforms like Amazon and Walmart make it easier for global merchants to sell locally, especially here in the U.S., fraud, IP abuse, and souring consumer experiences are going to increase. It's not a matter of if, but rather, how much.

According to Amazon, 2021 saw unprecedented growth in the number of Chinese sellers on its marketplace platform. Unfortunately, the increased number of Chinese sellers also brought a rise in improper and illegal seller activities which Amazon had to address by suspending thousands of these sellers from its marketplace. Still, Chinese sellers continue to manipulate the platform and take advantage of consumers and businesses. Walmart, aggressively looking for expansion to compete with Amazon, launched its marketplace to sellers outside the U.S. back in March 2021 and by the end of 2021 had more than 6,000 third-party sellers from China. To emphasize the importance of this strategy for Walmart, at a conference in Shenzhen on March 25, 2021, Michelle Mi, Vice President of Global Sourcing at Walmart said, “Chinese sellers have very obvious advantages in the global cross-border e-commerce field.”

Along with the brands, agencies, and licensees that use our platform, IPSecure is battling with these sellers daily. To that end, we wanted to compile and share just a few of the common tactics we regularly see being used by these sellers.

Selling counterfeit products. Since 2019, Amazon has admitted publicly that it has a counterfeit problem. A news report from Amazon revealed it blocked 10 billion attempted counterfeit listings in 2020—up from 6 billion from the year before—and destroyed 2 million fake goods in its warehouses. Roughly 80% of counterfeits that enter the United States come out of China and Hong Kong, according to reports from U.S. Customs and Border Protection. If you discover an unauthorized seller selling counterfeit versions of your products, report that seller immediately using Amazon’s infringement portal. In 2020 Amazon began revealing every seller’s address information so to see a seller’s address, you simply need to click on the third-party seller’s name. Using IPSecure’s brand protection platform, users can launch both anonymous test buys and report IP violators to Amazon, helpful since many users perform those enforcement actions in tandem.

Creating fake reviews. Product reviews are an important factor in a customer’s decision to make a purchase. Therefore, it's no surprise that creating a fake review is a tactic often used by unauthorized international sellers. A fake review can be made in one of two ways. First, sellers will pay real customers for leaving a positive review for their counterfeit product. Second, sellers will create fake orders and leave positive reviews through a “zombie” account. Both approaches are clear violations of Amazon’s terms of service.

How to spot a fake review? First, look at the “Verified Purchase” label. Genuine reviews have a “Verified Purchase” label next to the reviewer’s name. Second, read the reviews and see if the reviews appear overly positive or negative. Be wary of reviews that have numerous “five-stars” but lack details. Third, examine the reviewer’s previous reviews. If a reviewer has left a lot of reviews within a short period of time, that reviewer may not be authentic. Finally, look for similarities in reviews. Paid reviews typically have the same tone and content. If you see many reviews that look identical, you likely have found a fake and can report it. Quantity of negative reviews over different time periods, lifetime review count, and other factors are elements users within the IPSecure platform can customize and score, helping to easily bubble up highly suspicious sellers.

Stealing internal marketplace data. In 2018, Amazon made headlines when it discovered some of its Chinese employees were involved in helping Chinese companies steal internal customer sales data and selling it to third-party Chinese sellers. Corrupt Amazon employees have stolen business reports that reveal how many times a product was viewed over a period, how many times a product was purchased, pricing data, and the total sales of those items. This information was sold to Chinese sellers who used this information to make them more competitive.

Ever get delivered strange seeds or packages you didn’t order? That is called ‘Brushing,’ and according to the Federal Trade Commission (FTC) it comes in varying forms, but typically it's perpetrated by sellers tricking both Amazon (in some cases) and primarily payment companies, that they have sold and shipped a product. With a verified shipped and delivered product, the unscrupulous merchant can create a positive review, for a product they never sold to a customer that never bought it. If you got one of these strange packages of seeds or other random items you didn’t order, you unknowingly participated in one of these scams (through no fault of your own, of course).

Arbitrage fraud. This is a scam with multiple angles that is really growing in popularity, especially for difficult-to-find products or hot items out of stock. At IPSecure we analyze millions of seller offers and their pricing, it's an important aspect of how our algorithm identifies suspicious activity. You might expect that extremely low prices are an important indicator of seller reputation and you’re correct - however, extremely high prices are just as likely to be used by unauthorized sellers. Case in point: an unauthorized seller creates an Amazon offer for a hard-to-find product and prices it 20%, 30%, or more above the typical retail price. They don't even have the product to sell. However, if the endeavor stopped here that wouldn’t be so bad, but in these cases, if and when a sale is made (at the inflated price) the seller visits the manufacturer's website and buys the product directly at the typical retail price. They use a stolen credit card to make the purchase and insert the shipping address of the customer who made the buy on Amazon. The manufacturer ships out the product before the fraud is detected.

In the end, the growth of global merchants means each marketplace platform is becoming so large that the necessity for deeper surveillance and purpose-built technologies are growing in importance. Many international merchants are professional and operate ethically, the problem is, as marketplaces continue to grow and optimize the consumer buying experience to the point of almost frictionless commerce, sophisticated unauthorized sellers simply can’t resist trying to capitalize.

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