“We think the amount of fraud and counterfeit goods that were sold to consumers was between $110 and $140 million just this past holiday season,” James Lee of the Consumer Fraud Center in Santa Monica said. “We expect if nothing is done, that number is probably going to double by next year.”

Sandra Torres of Canyon Country is among the hundreds of customers who bought a counterfeit version of a hair straightening iron called the InStyler.

“I put it on my hair and immediately it was really hot. It started sizzling my hair,” Torres said. “I could hear, and I could see the smoke coming out of it.”

InStyler, which is based in Culver City, brought a lawsuit against Amazon in 2011 to stop selling the device — real or fake.

“This is not just like a handbag. This thing can be dangerous,” one of the creators of InStyler, David Richmond, said.

The attorney representing the maker of the straightener, Tom Peistrup, alleges more than 20,000 knockoffs have been sold through Amazon.

Lee compares the company’s marketplace to the Wild West.

“You don’t know what you’re getting,” he said. “There’s no law, there’s no system of justice.”

Lee said the manufacturers of knockoffs, in places such as China, can bypass customs and border security agents by sending goods directly to Amazon’s warehouses.

He’s seen knockoffs of prescription drugs, popular headphones such as Beats by Dr. Dre and even designer shoes.

InStyler is working to find Amazon customers who bought fake devices and replace them with authentic ones.

Torres recently received hers.

“I know I’m not going to buy anything from Amazon anymore, it’s ridiculous,” she said.

CBS2 reached out to Amazon for comment but there has been no response.

Link to Original Article

KUSA – Many turned to online shopping this holiday season for a convenient way to score some deals. Not everyone got what they bargained for, thanks to the work of cybercriminals.

“With a depressed economy and fears of the ‘fiscal cliff’ looming, shoppers went online with a vengeance this year looking for bargains. But many fell prey to cybercriminals who racked up over $2 billion in fraudulent sales in counterfeit and fake goods,” said James Lee, executive director of the Consumer Fraud Center. “We saw the heaviest counterfeiting in clothing, accessories, drugs, toys, electronics, personal care and beauty items and CDs, DVDs and video games.”

According to comScore, there was a 16 percent growth in holiday online shopping, with almost $40 billion in goods bought online in 2012.

Anti-piracy organizations have tracked the growth in the global trade in counterfeit and fake goods as a percentage of total global trade from 1.85 percent in 2000 to almost 5 percent last year; amounting to $600 billion in counterfeit goods.

Even sites that are considered reputable for online shopping are not safe.

“We’ve seen a considerable number of complaints come in from consumers who have purchased goods from what they thought were legitimate sellers who set up shop on Amazon,” Lee said. “We have forcefully urged Amazon to revise its practices to join others in the industry such as eBay and Buy.com to adopt better consumer protections. But so far we’ve only been met by silence.”

If you were scammed the Consumer Fraud Center urges you to dispute the charge with your bank or PayPal and report it immediately to appropriate law enforcement agencies, including the Internet Crime Complaint Center, a partnership between the FBI and National White Collar Crime Center, and the Consumer Fraud Center’s complaint system.

http://www.ic3.gov/default.aspx

SANTA MONICA, Calif. – (Dec. 31, 2012) – Noting how consumers have embraced online shopping this holiday season, the Consumer Fraud Center said holiday shoppers went off a “shopping cliff” in terms of being ripped off by counterfeit and fake goods sold by cybercriminals this year in excess of $2 billion for the period of November-December 2012.

“With a depressed economy and fears of the ‘fiscal cliff’ looming, shoppers went online with a vengeance this year looking for bargains and many fell prey to cybercriminals who racked up over $2 billion in fraudulent sales in counterfeit and fake goods,” said James Lee, executive director of the Consumer Fraud Center. “We saw the heaviest counterfeiting in clothing, accessories, drugs, toys, electronics, personal care and beauty items and CDs, DVDs and video games.”

Lee cited data from comScore which saw 16 percent growth in online shopping from last year with almost $40 billion in goods bought online by consumers this holiday season. He also noted the Consumer Fraud Center and other anti-piracy organizations, such as the International Anticounterfeiting Coalition, have tracked the steady growth in the global trade in counterfeit and fake goods as a percentage of total global trade from 1.85 percent in 2000 to almost 5 percent last year; amounting to $600 billion in counterfeit goods.

“It’s staggering to see how quickly cybercriminals have adapted to online sales, especially exploiting weaknesses in the international supply chain such as using Amazon Marketplace’s direct shipping initiative and Amazon Pages to build illegitimate stores on legitimate websites,” Lee said. “We estimate the growth in counterfeit sales will double each year unless stopped either by retailers such as Amazon acting voluntarily to halt these sales or through federal and state governments enacting more rigorous consumer protections.”

The Consumer Fraud Center detailed some statistics from this season’s holiday shopping:

• The National Retail Federation (NRF) estimates total holiday sales to rise to $586 billion, even though it represents the smallest increase in sales since 2009, the growth in online sales surged and continues to grow;
• The NRF also estimated the retail industry will lose a whopping $2.9 billion this holiday season from fraudulent holiday returns involving online purchases, a total of 4.6 percent of holiday returns;
• According to MarketMonitor®, one in five online bargain shoppers were duped into shopping on e-commerce sites selling counterfeit goods while looking for deals online. Especially troubling was the conversion rate – putting an item into a shopping cart – for these sites being higher than conversion rates for sites selling legitimate merchandise;
• With online sales accounting for almost 7 percent of total holiday sales, Amazon continues to be the largest e-tailer, accounting for over 11 percent of total holiday online sales, an estimated $3.7 billion;
• Amazon continues to spend heavily in expanding its fulfillment program (58.1 percent increase in 2011 alone to $4.57 billion), building new distribution centers where third-party sellers can direct-ship goods from notorious counterfeiting producers in China and Hong Kong.