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March 21, 2014

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Amazon, Dangdang pull plug on fake stores

E-COMMERCE companies Amazon and Dangdang said yesterday they have shut down several online retailers accused of selling counterfeit cosmetics via their platforms.

According to a consumer affairs report shown on China Central Television on Wednesday, the stores were offering famous name brands at hugely discounted prices.

In one case, the Meihanmeizhuang Cosmetics Store said the products it sold via Dangdang were sourced from a wholesale market in Beijing.

The manager of the online store, which operated from a residential complex in Beijing’s Fangshan District, said he sold about 2,000 cosmetic products from 10 brands via Dangdang, and sent out goods worth more than 100,000 yuan (US$16,100) every day. The program showed the store’s warehouse packed with items purportedly made by Estee Lauder, Calvin Klein, Versace, Chanel and Shiseido.

After initially saying the products were genuine, the manager later conceded they had been bought from the Beijing Tianzhaotian wholesale market, and that he could not guarantee their authenticity.

Dangdang never asked for credence, he said.

At a store inside the wholesale market CCTV found big brand cosmetics discounted by up to 50 percent. However, its manager was unable to provide any customs declarations or purchase vouchers to prove their authenticity. The goods also lacked a Chinese label, which is a violation of the market’s own rules.

A consumer surnamed Feng who was interviewed on the show said he bought a L’Oreal Biotherm product on Dangdang for 255 yuan, though its recommended price was 530 yuan.

After experiencing problems with it he investigated and found that according to its lot number the item was 11 months out of date. After further research on the website of the China Food and Drug Administration, he discovered that the lot number actually related to a makeup product that came from Japan.

L’Oreal China said in a statement that the Biotherm product purchased by Feng has never been officially sold in China, and that it has no links with the Dangdang store. It added that it has a zero-tolerance policy with regard to counterfeit products, which can have harmful effects on consumers and its brand, and has launched an investigation into the claims made on the CCTV show.

As well as the fake products found on Dangdang, the program also exposed several dubious retailers operating via Amazon.

Among the goods available were a balm allegedly produced by L’Oreal and a creme supposedly by Estee Lauder.

Despite the claims of Amazon workers that all of the cosmetics products shown in the program were genuine, tests by Estee Lauder and L’Oreal confirmed them to be fake. Estee Lauder said also that neither Dangdang nor Amazon was an official retail channel for its products.

Dangdang said it has closed down all of the stores exposed by CCTV and will give refunds to anyone affected by the scams. Amazon said it has closed the store identified by CCTV.

Under the revised consumer rights law, which took effect last Saturday, online shopping platforms can be held liable for the goods sold by the stores they host. In the event of a consumer being duped, the platform should provide a full refund and make a compensation payment equivalent to three times the purchase price.

Wang Dong, from the Shanghai Consumer Rights Protection Commission, said the problem, however, is that platforms can be punished only if they are shown to have made no effort to stop third-party firms selling bogus products. Proving that is almost impossible, he said.


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