Auction site eBay won a big victory in federal court yesterday. Tiffany & Co. sued eBay in 2004 after asking the company to remove listings with the Tiffany name in them. Tiffany claimed that eBay knew many counterfeit goods were being auctioned on the site, and that eBay had a responsibility to stop them.
The court ruled in eBay's favor, saying that it is Tiffany's responsibility to protect its own trademarks, not the auction company. The judge said that general knowledge of trademark infringement didn't make eBay responsible for the infringement.
Last week, eBay lost a similar suit in France, brought by LVMH Moet Hennessy Louis Vuitton SA. The maker of luxury goods won a judgment of over $61 million against eBay because of the sale of counterfeit purses, perfume, and accessories.
EBay management says the company spends millions of dollars a year to fight the problem of counterfeiting, offering companies the opportunity to report auctions they believe are for fake goods. Sellers who are believed to be selling counterfeit goods can be suspended temporarily or permanently from selling on eBay. The company says they took action against 90,000 sellers of counterfeit goods last year.
The problem of counterfeit goods on eBay is troublesome for consumers. How do you know if you're going to fall victim to purchasing a fake purse or bracelet? Even when sellers say their goods are genuine, it's next to impossible to tell if that's really the case.
When shopping online in general, consumers should research the goods they're buying. Is the seller an authorized retailer for the brand name? Have other shoppers reported receiving counterfeit goods from the seller? Does the price of the item make sense? (Hint: A watch that retails for $1,000 and is being sold for $100 is, in all likelihood a fake. The price just makes no sense.)
There are also certain brand names to avoid, especially on eBay. If you research Tiffany jewelry for a few minutes, you will find tons of information about the counterfeiting problem, and you will see that almost all of the eBay auctions for Tiffany goods involve fakes. Don't take any chances with this brand. Other brands are known for heavy counterfeiting too, and you should also avoid them.
Some shoppers don't care if they're buying the real thing or not. I feel that fakes are infringing on the rights of those who created and own the brands, and that consumers shouldn't fuel that dishonest behavior with their dollars. But some consumers think it's okay to buy fakes and don't mind that their stuff isn't authentic. Shop on! For those who care about the integrity of the brand, do your research on the product and the seller before you spend your money.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
Take the first steps to building your portfolio.View Course »