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Amazon settles with influencers who allegedly ran counterfeit scheme

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Amazon on Thursday filed a lawsuit against two influencers and nearly a dozen merchants for allegedly marketing and selling counterfeit goods like the knockoff Gucci belt pictured above.

Amazon reached a settlement with two influencers after it sued them and several sellers last November for allegedly peddling counterfeit luxury goods on Instagram and TikTok, the company announced Thursday.

Amazon refused to reveal the financial terms. In accordance with the settlement, Kelly Fitzpatrick, Sabrina Kelly Kelly-Krejci and other influencers will not be allowed to market, advertise, link to, promote or sell any product on Amazon.

Additionally, Amazon will donate proceeds from the settlement to charities, including a consumer awareness campaign overseen by the International Trademark Association, of which Amazon is a corporate member.

Amazon’s third-party marketplace is prone to counterfeits. It was established in 2000. The marketplace now represents more than half the ecommerce revenue of Amazon. While it remains a critical component of Amazon’s business, counterfeits, unsafe products and even expired goods have become a notorious problem and attracted scrutiny from lawmakers and regulators.

Amazon is intensifying its efforts to combat counterfeits. Amazon has launched several programs that identify counterfeit products and pursued counterfeiters in courts. It also established the Counterfeit Crimes Unit made up of ex-federal prosecutors, investigators, and data analysts to search the website for fraud.

Fitzpatrick and Kelly Kelly-Krejci demonstrated that it is more difficult to spot fakes in cases where the activity takes place both inside and outside of Amazon.

In the lawsuit, Amazon claimed the influencers used their Instagram, Facebook and TikTok accounts, along with their personal websites, to promote counterfeit goods, which included knockoff purses, bags, belts and wallets that were falsely branded as luxury items from the likes of Gucci and Dior.

According to the lawsuit, they provided links that led to Amazon listing pages, which were run by almost a dozen sellers involved in the scheme. These listings featured an identical, non-infringing product. The buyer would receive the luxury fake product after placing an order for the generic article.

Instagram Stories featured side-by sides photos from the original, counterfeit and generic products.

Fitzpatrick and Kelly Krejci’s websites, “Budget Style Files” and “Stylee and Grace” respectively have been taken down. Amazon stated that Fitzpatrick as well Kelly-Krejci had apologized.

Fitzpatrick stated in a statement that she would warn anyone who engaged in similar social media behavior to be aware of the serious consequences.

Kelly-Krejci declined further information. Fitzpatrick did not immediately reply to my request for more information.

Amazon has yet to serve the sellers with a lawsuit because they “actively misled Amazon as to their locations when registering their Amazon selling accounts,” according to an August court filing.

According to the suit, the fake products were allegedly sold by 11 businesses and individuals based in China as well as the United States. According to the filing, Amazon believes “all or almost all” of the sellers defendants are in China.

WATCH THIS: Watch CNBC’s full interview with Amazon CEO Andy Jassy

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