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Senate Finance Committee calls on private sector to combat online counterfeits

Senate Finance Committee leaders on May 30 penned letters to online retailers, payment processors, shipping companies and trade groups, asking them to describe what they are doing to combat the ever-growing problem of counterfeit goods sold online in the U.S.

"We write today to request information from your company on the types of activities you participate in, facilitate, or otherwise have knowledge of to help us better inform American consumers of the dangers of counterfeit goods as well as to curtail the illegal sale of counterfeits through e-commerce sites," said Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., in the letters, which were nearly identical aside from varying questions directed at each type of entity.

The committee leaders, who did not identify the organizations and companies, gave the respondents a June 29 deadline to write back, at which point they will compile a public report.

The letter included 18 questions posed to online retailers, including what processes they use to discover and remove counterfeit distributors on their platforms, as well as 14 questions asking shipping companies how they work with U.S. Customs and Border Protection, or CBP, to identify and prevent the distribution of counterfeit products from online sellers.

Payment processors were asked how they work with U.S. government authorities as well as what protections they provide to consumers to remedy losses from the purchase of counterfeit goods. Trade groups were asked about what types of legal action they pursue after it is discovered that an importer or distributor within the U.S. is distributing counterfeit goods, among other topics.

The letters follow a March 6 hearing that the committee held scrutinizing private companies that "buy, sell, distribute, hold rights to, facilitate delivery for, transact and process payments for, and otherwise engage with American consumers via e-commerce websites" and the role they can play in combating counterfeits.

It also follows a February 27 report from the Government Accountability Office that found that CBP seized $1.38 billion worth of counterfeit goods in fiscal 2016. That report suggested that customs officials work with the private sector to allow for more free flow of information to better enforce the law and prevent sales of counterfeit products.

The U.S. Trade Representative's Office says that imports of counterfeit and pirated physical products make up roughly half a trillion dollars, or approximately 2.5% of global imports.

The USTR's office specifically called out Chinese e-commerce giant Alibaba Group Holding Ltd. in its "2017 Special 301 Out-of-Cycle Review of Notorious Markets" report released Jan. 12 that said Alibaba's online shopping website, Taobao.com, continues to sell a high volume of counterfeit U.S. automobile parts.