Amazon settles with influencers who allegedly peddled counterfeits on Instagram and TikTok

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 declined to disclose financial terms of the settlement. As part of the agreement, the influencers, Kelly Fitzpatrick and Sabrina Kelly-Krejci, will be barred from marketing, advertising, linking to, promoting or selling any products 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.

Counterfeits are a longstanding issue on Amazon’s third-party marketplace. The marketplace, launched in 2000, is made up of millions of third-party sellers and now accounts for more than half of Amazon’s overall e-commerce sales. 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 has stepped up its efforts to curb counterfeits. The company has pursued counterfeiters in court, launched several programs to identify sales of counterfeit goods and rolled out the Counterfeit Crimes Unit, made up of former federal prosecutors, investigators and data analysts, to mine the site for fraudulent activity.

As Fitzpatrick and Kelly-Krejci’s case illustrated, detecting fakes can prove to be more challenging when the activity occurs both on and off 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.

The influencers then allegedly provided links to Amazon listings, run by nearly a dozen third-party sellers in on the scheme, that featured a non-infringing, generic item. After the buyer placed an order for the generic item, they’d receive a luxury counterfeit product in return.

The influencers would post side-by-side photos of the generic, non-infringing product and the counterfeit product on their Instagram Stories.

Fitzpatrick and Kelly-Krejci’s personal websites, “Budget Style Files” and “Stylee and Grace,” respectively, have since been shut down. Both Fitzpatrick and Kelly-Krejci apologized for their actions, Amazon said.

“I would warn others engaged in similar conduct on social media that there will be serious consequences for their actions,” Fitzpatrick said in a statement.

Kelly-Krejci declined to comment further on the case. Fitzpatrick didn’t immediately respond to a request for further comment.

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.

The lawsuit names 11 individuals and businesses based in the U.S. and China that allegedly listed the counterfeit products on Amazon. Amazon now believes that “all or nearly all of the seller defendants are located in China,” the filing stated.

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

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