November 02, 2021

Durbin Questions Witnesses in Senate Judiciary Committee Hearing on Cleaning Up Online Marketplaces

WASHINGTON – U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, today questioned witnesses at the Senate Judiciary Committee hearing entitled, “Cleaning Up Online Marketplaces: Protecting Against Stolen, Counterfeit, and Unsafe Goods.” Durbin asked Aaron Muderick, Founder and President of Crazy Aaron's, whether he continues to deal with counterfeit and knock-off versions of his products on online marketplaces.

“You said one of your employees was spending 15 to 20 hours a week submitting forms asking Amazon and other e-commerce sites to remove products with your company’s trademarks. Is that still going on?” Durbin asked.

Muderick said the sellers of knock-off products have changed their tactics because Crazy Aaron’s has been aggressive in defending their trademarks, but said the counterfeiters continue not to comply with safety standards and to flood the marketplace with tons of products at severely discounted prices.

Durbin then spoke with  K. Dane Snowden, President and CEO of the Internet Association – the lobbying group which represents e-commerce sites like Amazon – about Amazon’s recently-announced support for the INFORM Consumers Act.

“If [online marketplaces] are going to maintain their reputation and integrity, they should be on our side in this battle…In my observation, Amazon is late to the party but we welcome them as a guest. They have said, ‘We look forward to working with lawmakers to further strengthen the [INFORM Consumers Act].’ The proposals they have made over the years have not strengthened the bill, they strengthened Amazon’s hand in avoiding the bill. I, for one, am not going to stand by and watch this watered down any further. We need to move on this. We’re going to test your statement that they’re on our side,” Durbin said.  

Durbin also asked Ben Dugan of CVS Health about organized retail crime groups that steal large volumes of retail products and resell them online. 

“So they swoop in with some container and drag everything off the shelf.  Where do they end up selling these products that they’ve stolen?” Durbin asked.

Dugan replied that online marketplaces are the number one place where these professional crews dispose of their products.

Durbin concluded his questions by stating, “In 2019, the U.S. Customs and Border Protection reported that 83 percent of IP-based seizures of goods came from one country…the equivalent of $1.4 billion. So we have retail theft at home being translated into the fencing of stolen goods in these internet marketplaces, and then we have foreign suppliers of counterfeit goods…that is another venue.”

The vast majority of counterfeit products, globally and in the U.S., originate from China and Hong Kong. In fiscal year 2019, U.S. Customs and Boarder Protection (CBP) reported that 83 percent of IP-based seizures of goods came from China and Hong Kong, approximately 23,000 seizures of goods equivalent to more than $1.4 billion.  No other country exceeded two percent.

Video of Durbin’s questions in Committee is available here.

Audio of Durbin’s questions in Committee is available here.

Footage of Durbin’s questions in Committee is available here for TV Stations.

The INFORM Consumers Act, a bill Durbin and U.S. Senator Bill Cassidy, M.D. introduced, would require online marketplaces to verify the identity of their high-volume third-party sellers of consumer products and to ensure consumers have sufficient information to identify and contact a high-volume third party seller who has sold them products. Specifically, the bill would require online marketplaces to verify the identity of their high-volume third-party sellers of consumer products (with “high volume” defined as sellers who have made 200 or more discrete sales in a 12-month period amounting to $5,000 or more) by obtaining and verifying information, including the seller’s name, tax ID, bank account information, and contact information.  The bill would also direct online marketplaces to ensure that consumers have sufficient information to identify and contact a high-volume third-party seller who has sold them consumer products.  The bill would further require marketplaces to inform consumers if an order was fulfilled by a different seller than the seller whom the consumer ordered the product from and the online marketplace would also have to provide a hotline to enable customers to report to the marketplace suspicious marketplace activity such as the selling of stolen or counterfeit goods. 

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