Prepared Remarks by U.S. Senator Chuck Grassley of Iowa 

Ranking Member, Senate Judiciary Committee 

Hearing on “Cleaning Up Online Marketplaces: Protecting Against Stolen, Counterfeit and Unsafe Goods,”  

Tuesday, November 2, 2021 

VIDEO

 

Americans increasingly rely on the Internet to purchase everything from health care products and infant formula to iPhone chargers and automotive parts. Unfortunately, criminals are using online platforms to sell counterfeit or stolen items that can be dangerous to consumers. This hearing will explore the problem and what we can do to stop it. 

 

Thanks to the Internet, we can now purchase nearly anything from nearly anywhere. Companies of all sizes can reach new customers all over the world.  

 

However, counterfeiters and other criminals are exploiting online platforms – threatening consumer safety and businesses’ bottom lines. Criminals can easily open online store fronts on e-commerce marketplaces, and operate under fake names or stolen identities. They use false and unvetted credentials. If a marketplace takes them down, they simply re-surface under a different storefront identity. All the while, their listings look authentic to unsuspecting customers. 

 

Counterfeit products are usually substandard and often unsafe. Products often don’t meet strict safety standards or comply with quality controls or handling and storage requirements. For example, drug traffickers are using social media and other e-commerce platforms to falsely market their product. In fact, the DEA has issued a Public Safety Alert warning consumers of the lethality of knock off prescription pills containing fentanyl. 

 

We’ve also seen a spike in professional shoplifters of high-value items to re-sell online. According to a 2020 survey by the National Retail Federation, organized retail theft has increased nearly 60% from 2015.  

 

Brand owners, manufacturers and retailers are doing their best to fight this epidemic. But even the largest companies who can afford to have dedicated staff monitor online marketplaces can’t keep up. Small businesses lack the necessary resources to pursue online counterfeiters. Law enforcement also is overwhelmed. That’s why I introduced S. 1159, a bill that was included in the U.S. Innovation and Competition Act, so businesses can get more information to shore up the integrity of their supply chain. 

 

Consumers should be confident that what they see on the internet is what they’ll get in a brick and mortar store. Consumers have to rely on the accuracy of the online listing. So if a product listing consists of misleading images or fake reviews, it’s more likely that a consumer will be tricked into purchasing a counterfeit or stolen good. 

 

It’s clear that voluntary efforts by big tech companies, while a good first step, are not enough. Online companies profit off every sale of an item on their platform, even if it’s counterfeit or stolen.   

 

Consumers need more accountability and transparency, including who’s operating online and selling these products. We should promote better screening, more transparent seller information, and increased collaboration and data sharing. It’s essential that businesses and platforms work with law enforcement to identify criminals selling counterfeits and stolen goods online.    

 

Congress should consider legislation to protect consumers from criminal enterprises operating online. But none of the proposed solutions are a silver bullet. There needs to be a multi-faceted approach to addressing this problem. 

 

Online shoppers deserve to have confidence that they’re getting exactly what they’re paying for, and that their purchases are safe and authentic.  

 

I look forward to today’s testimony.