Alibaba's IPO may open floodgates to counterfeit products, manufacturers warn

LOS ANGELES (KABC) -- It may be the biggest company you've never heard of, but it could soon become a household name in the United States.

China-based e-Commerce giant Alibaba is expected to go public next week in what could be the largest stock IPO in U.S. history, and that worries both manufacturers and lawmakers. There are growing concerns that many goods sold on the company's websites are counterfeit.

Last year, consumers spent nearly $250 billion on Alibaba's retail sites, making the company far bigger than Amazon.com and eBay combined.

On Alibaba's Chinese-language websites, including Taobao, Tmall, and 1688.com, and its U.S. subsidiary, AliExpress, shoppers can order just about anything imaginable from iPhones to drones.

Alibaba doesn't own the merchandise, but acts as a middleman, charging sellers an annual fee or a commission for each transaction.

Craig Crosby, who runs the Counterfeit Report, a website that helps consumers identify fake products, showed Eyewitness News a table-top loaded with fake goods he's found on the Internet. He says Alibaba's IPO will open the floodgates to even more counterfeit products in the U.S.

"Alibaba Group is the largest proliferator of counterfeit products, and, by their own admission, they removed 115 million counterfeit listings," Crosby said.

Alibaba confirms those counterfeit listings were removed last year. Alibaba recently announced its cracking down on counterfeit products and that their websites "have controls in place to penalize and purge repeat violators of anti-piracy rules."

Eyewitness News called several government agencies involved in anti-counterfeiting. And, partly because of sensitive relations between China and the U.S., none of the agencies Eyewitness News contacted would go on record about Alibaba. However, Congressman Adam Schiff (D-Calif) did.

He co-chairs the Congressional Anti-Piracy Caucus, and is in a position to take action against such companies like Alibaba over counterfeit goods ending up in the U.S.

"Alibaba is better now than it was, but there is still a significant problem, and, we have to keep our attention on Alibaba and make sure this isn't just something they're doing in the run-up to the IPO," Schiff said.

U.S. manufacturers had even stronger words, pointing the finger directly at Alibaba and other sites that sell counterfeit goods.

Dave Tognotti, the Vice President of Operations at electronics giant Monster Products, says he believes nearly all the Monster-labeled products sold on Alibaba's websites are fake.

"Often times, consumers end up buying from these sites and the danger to them is they end up getting a counterfeit product a few weeks later in the mail," Tognotti said.

Although, Taobao and other Chinese-language sites target consumers in China, customers in the U.S. can order and ship goods directly to their homes. And, often these products sell for a fraction of their retail price, a sign, anti-piracy experts say usually indicates the products are counterfeit.

Santa Monica-based health and wellness company Beachbody has an anti-piracy room stocked with counterfeit products found online including their popular P-90X and Insanity: The Asylum home workouts.

Gelfand says the Alibaba-owned websites sell nothing but fake Beachbody products, even on Ali-Express, the company's English-language site.

Consumers looking for a bargain may not realize until after the product arrives, that the fakes don't usually work, and in the case of DVDs, may actually corrupt your computer.

If you come across a counterfeit, report it, that way law enforcement can do an investigation and with luck you may even get your money back. Remember, unlike a real product you can't return a fake for a refund.