Mary May, a Walmart.com customer, unknowingly purchased counterfeit Neuriva brain supplements from a third-party seller on Walmart’s online marketplace. The seller impersonated another business to join the platform. Walmart’s digital growth has come at a cost, with some customers receiving potentially dangerous counterfeit products instead of the real deal.
The maker of Neuriva, Reckitt, has opened an investigation into the counterfeit supplements. Walmart’s marketplace has seen explosive growth in the last five years, with revenue increasing significantly. However, lax vetting processes have allowed counterfeiters to infiltrate the platform, leading to concerns about customer safety and trust.
Former employees of Walmart have raised concerns about the company’s seller vetting process, stating that approval was sometimes granted despite red flags. Walmart has emphasized its commitment to trust and safety, but experts warn that counterfeit products pose serious health risks. Amazon has tightened its vetting process, but Walmart’s marketplace remains vulnerable.
Counterfeits and fraud are common on third-party marketplaces. Amazon has improved its vetting process, while Walmart’s platform has become a target for counterfeiters due to less stringent requirements. Experts warn that inadequate vetting can jeopardize customer safety and erode trust in online marketplaces. CNBC tested 20 products and found all to be counterfeit. The investigation included interviews with over 90 individuals and testing of highly rated beauty products. Brands authenticated products or lab testing was conducted to confirm authenticity. Counterfeit beauty and health products are dangerous, often containing harmful ingredients.
Fraudulent sellers on Walmart.com offered high-end beauty products at up to 91% off retail prices. They impersonated companies like Thermo Fisher Scientific and Rockwell Medical. Walmart tightened vetting for third-party sellers of health and beauty products after CNBC shared its findings. Impersonated companies had no marketplace accounts and details were used without consent.
Walmart has seen massive growth online through its third-party marketplace. The platform allows Walmart to grow profit faster than sales, increase merchandise offerings, and attract more customers. Walmart’s marketplace grew over 900% between 2019 and 2024, positioning itself as more seller-friendly than Amazon. Some sellers sought refuge on Walmart.com due to less vetting and restrictions. Walmart’s lax controls on seller vetting have allowed bad actors to sell fake, stolen, or dangerous products on its platform. The company has become a “dumping ground” for banned Amazon sellers, according to industry experts. Amazon has made progress in preventing counterfeits, but Walmart’s enforcement system is not as robust. Marketplace Pulse estimates Amazon has 21 times more sellers than Walmart, leading to more counterfeit issues on Amazon’s platform. Walmart did not join the IACC’s Marketplace Advisory Council initiative initially but later agreed to join after discussions with the group. Walmart has attended IACC conferences since 2019 and discussed marketplace safety with the organization and industry partners.
Walmart Marketplace had a stricter approach to combating counterfeits in its early days, with a higher bar for approving sellers. The company’s marketplace surged during the Covid-19 pandemic, leading to a shift in its vetting and onboarding process. Walmart opened its doors to Chinese sellers in 2021 and saw a nearly 58% growth in vendors. To compete with Amazon, Walmart aimed to bring on more sellers and offer a wider range of products. The company loosened its vetting and onboarding process, prioritizing seller growth over stringent controls.
As Walmart’s marketplace grew, the company began to prioritize seller growth over stringent vetting processes. Some former employees said the company adopted a “approve, approve, approve” approach to onboarding sellers. The shift in strategy led to a loosening of vetting and onboarding processes, allowing more sellers to join the platform. The company aimed to increase its seller base and product offerings to compete with Amazon. Former Walmart employee Tammie Jones described lax seller vetting procedures, revealing how she was told to approve applications even if red flags were present. Business owners discovered their identities were stolen to set up fraudulent seller accounts on Walmart.com, some receiving mysterious packages as a result. Many affected individuals had difficulty getting the scam pages removed. Walmart declined to answer questions about its vetting processes, citing trust and safety concerns. The company did release a statement emphasizing its commitment to trust and safety on its marketplace. Fraudulent sellers are becoming more sophisticated, posing challenges for online marketplaces like Walmart. Sellers find Walmart’s marketplace more lenient compared to Amazon, requiring minimal documentation for approval. Experts warn that lax policies make it easier to resell stolen or counterfeit goods. Amazon emphasizes the success of third-party sellers on its platform, while Walmart tightens vetting for some sellers. Target’s marketplace operates invitation-only to maintain trust and growth. Walmart adjusts its seller application requirements, now mandating EIN document uploads for U.S.-based sellers. Walmart requires sellers to verify their EINs through government and third-party systems to match business listings. Sellers who can’t provide required documentation can’t sell on Walmart Marketplace. A video interview is not required to join the marketplace. Walmart has expanded its assortment to include premium beauty products, collectibles, and preowned items, with nearly 700 million items on the platform.
Many premium beauty products on Walmart’s marketplace are offered at steep discounts, raising concerns about counterfeits. Some highly rated products have negative reviews alleging they are not genuine. Walmart reviews complaints from consumers and offers a return policy for unsatisfied customers. After negative feedback, Walmart implemented new vetting policies for beauty and personal-care products.
Online marketplaces struggle to combat counterfeit goods. A study found that 50% of counterfeit items were bought from U.S.-based marketplaces. Lack of regulation allows platforms to avoid liability for facilitating counterfeit sales, as long as they remove listings when notified by brands. In 2010, a court ruling following Tiffany’s lawsuit against eBay over counterfeit products exempted marketplaces from liability, requiring brands to police listings themselves. Legislation like the Inform Consumers Act and Shop Safe Act aim to regulate online platforms, but face opposition from major players like Walmart, Amazon, and eBay. Legal experts suggest online marketplaces could be held responsible for harmful products sold by third-party sellers, potentially changing liability standards. Walmart, with its trusted brand, could face increased scrutiny if consumers are confused about purchasing from third-party sellers on its website. To avoid liability, some experts suggest Walmart may benefit from a more hands-off approach to vetting sellers and products. 1. The stock market reached new highs today with the Dow Jones Industrial Average closing at 30,000 points for the first time in history. This milestone comes as investors remain optimistic about the COVID-19 vaccine rollout and hopes for a strong economic recovery in 2021.
2. In other news, the United Nations announced that global greenhouse gas emissions have reached a record high despite the pandemic-related lockdowns earlier this year. Emissions are now projected to increase by 2.7% in 2020, highlighting the urgent need for countries to step up their efforts to combat climate change.
3. A new study published in a leading medical journal revealed that the Pfizer-BioNTech COVID-19 vaccine is 95% effective in preventing the virus. The data also showed that the vaccine was well-tolerated and had no serious safety concerns, raising hopes for a successful vaccination campaign in the coming months.
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1. The US economy added 943,000 jobs in July, exceeding expectations of 870,000. The unemployment rate also dropped to 5.4%, the lowest since the start of the pandemic.
2. Apple became the first U.S. company to hit a $3 trillion market cap. The tech giant’s stock has surged over 11% this year.
3. Amazon reported a record-breaking $113.1 billion in revenue for the second quarter, beating Wall Street estimates. The company’s cloud computing division, AWS, also saw strong growth with a 37% increase in revenue.: Walmart Marketplace’s rapid growth came with fakes, scams