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eBay and Chinese Sellers Sued over Counterfeits

The maker of a line of accessories for Apple products is suing eBay and a number of its sellers over counterfeits, calling eBay’s VeRO process a “sham.” The plaintiff is Wimo Labs, which sells the Lunatik line of products that famously got its start through a crowd-funding campaign.

There are a number of striking things about the lawsuit. One is that the sellers being sued appear to be Top Rated eBay sellers based in China and selling on eBay.com. Another is that the lawsuit accuses eBay of racketeering.

eBay spokesperson Ryan Moore responded to EcommerceBytes’ inquiry on Friday with the following statement: “We have received a copy of the complaint and are reviewing it. That said, counterfeits are not welcome on eBay and we have a number of sophisticated tools, policies and other measures in place to keep them off our site. We will vigorously defend our practices in court.”

In addition to harshly criticizing eBay’s actions when it comes to how it handles complaints about alleged counterfeits for sale on its marketplace, the plaintiff noted that Amazon has been responsive to its reports about violations on its marketplace.

The lawsuit describes efforts made by The Counterfeit Report in making test purchases and making eBay aware of problems with Lunatik counterfeits. It then praised Amazon for responding to similar complaints by The Counterfeit Report with regard to test purchases made on its marketplace:

“The Counterfeit Report performed a similar study with Lunatik products on www.amazon.com, and brought the results to Amazon’s attention. Specifically, The Counterfeit Report identified to Amazon that Lunatik does not sell TAKTIK brand phone cases in colors other than white and black, and does not make them using aluminum. Using this information, Amazon was able to clear away nearly 7,000 counterfeit listings in a single day using a simply search algorithm to identify and remove TAKTIK brand cases of the wrong color or material.

“Not only has eBay refused to take such a proactive and simple step, it uses similar algorithms to help consumers find these off-color and wrong-material Fake Lunatik Products. For example, a user can go on to ebay.com, search “lunatik taktik” and select “yellow” or “red” and will either be directed by eBay to such counterfeit products or receive an alert from eBay when an Unauthorized Seller offers such a counterfeit product.”

While referencing actions taken by The Counterfeit Report, the complaint does not seem to indicate who or what that is. EcommerceBytes has noted in past coverage that The Counterfeit Report is backed by manufacturers – and it has targeted eBay in the past.

The timing of the lawsuit is interesting and could be strategic. eBay is now a smaller company since spinning off from PayPal. It lost the head of its legal department General Counsel Michael Jacobson; presumably its legal department is smaller after the split; and the breakup left eBay with less cash and more debt. Such lawsuits could leave eBay’s legal department quite busy.

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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/.