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Bad Apples Make It Harder to Sell Luxury Goods Online

Counterfeiting plagues retailers and flourishes online where it’s easy to set up shop, but the publicity generated by fraudsters hurt legitimate business. Case in point, Forbes magazine warned shoppers on Thursday to think twice before buying expensive pocketbooks online, pointing to a counterfeiting ring uncovered by the Feds. A Grand Jury indicted five men for allegedly victimizing online shoppers for 3 years using numerous websites.

The U.S. Attorney’s Office and the U.S. Postal Inspection Service said in a press release that the five defendants operated websites that sold luxury items – primarily handbags – at prices of up to $3,000. “The websites advertised that the goods offered for sale were authentic and that they were offered at a discount because of manufacturing defects that were, according to one of the websites, “infrequently noticeable to the consumer.” In fact, however, the defendants either never shipped goods to consumers who ordered them or shipped goods that were verifiably counterfeit.”

The statement went on to outline the alleged ring. “In order to prevent the proceeds of their scheme from being eroded by credit card chargebacks initiated by deceived customers, the defendants also defrauded the credit card processors for the websites by misrepresenting the reasons for disputed charges and obstructing efforts by credit card processors to recover disputed funds. The losses attributable to such efforts exceeded, in some cases, hundreds of thousands of dollars.”

Such reports can make it difficult for legitimate online merchants. This week Forbeswarned readers to “shop carefully before blowing your wad on a luxury handbag, especially when buying online.”

The USPIS Inspector-in-Charge Philip R. Bartlett said, “When criminals counterfeit goods they harm the economy and legitimate businesses that pay their fair share in taxes and employ American citizens. It’s the same as identity theft, but only from a brand. Postal Inspectors have little tolerance for this type of theft and will aggressively investigate and bring to justice anyone who defrauds American consumers.”

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.