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Meet Brand Central, Amazon's secret, new plan to squash counterfeits

Just ahead of holiday shopping, the e-retailer is confronting its problem with knockoffs and fakes by going on the offensive.

Here are a handful of phony Amazon listings using stolen designs from baby clothing seller Fayebeline. The California company got Amazon to remove the listings.

Courtesy of Fayebeline

Hugh Milstein wishes Amazon had rolled out its Brand Central fraud-fighting tools last month.

Back then, DigitalFusion, his 25-employee digital photography business in Culver City, California, was selling high-quality space art on the e-retailer's site. The posters got great reviews, including a shout-out from Star Trek's George Takei.

Then, a rash of knockoffs showed up on Amazon, undercutting Milstein's prices and dragging down his reputation.

"This is unfair competition," Milstein said of the fakes. "Our sales have gone to virtually nothing."

Milstein's complaints haven't fallen on deaf ears. Amazon, plagued by everything from phony Birkenstock sandals to knockoff iPhone chargers, is going on the offensive. One step it's considering is Brand Central, a suite of digital tools under development to help sellers protect their brands from fakes and knockoffs, according to two people with knowledge of the project.

That effort comes as the company filed its first-ever lawsuits against alleged counterfeit sellers last week. More suits are expected.

Details about Brand Central remain vague, but the people describing the project say Brand Central will help smaller sellers protect their trademarks and other intellectual property. Ensuring the source of products is also part of the project.

It's unclear when, or if, Brand Central will roll out publicly or whether that name will be used.

With more than 300 million listings, it's hard to know how significant Amazon's counterfeit problem is. In its lawsuits, Amazon attributed the activity to a "a small number of bad actors." Still, Amazon's latest actions demonstrate it wants to get rid of fakes before those products erode consumer trust. Without that confidence, Amazon might struggle to maintain its customer-focused reputation and ensure shoppers keep coming back.

An Amazon spokesperson on Monday declined to confirm the existence of Brand Central but said in a statement the company "has zero tolerance for the sale of counterfeit items on our site" and it's working aggressively to remove fakes.

Amazon isn't the only online seller to face a counterfeiting problem. Chinese e-retail juggernaut Alibaba and handmade goods marketplace Etsy have also struggled with the issue. And the problem isn't limited to the online world; nearly half a trillion dollars in phony goods were imported worldwide in 2013.

Amazon already has a Seller Central site that helps its third-party vendors list and maintain their inventories. Seller Central, however, doesn't offer many tools to assist companies that own a brand name. Instead, the site is more useful for resellers of commodity products like paper towels or phone cases.

One of the people familiar with Brand Central said Amazon has made the project a priority because sellers with their own brands are among its fastest-growing segments and the company wants to support those new merchants.

"I do feel very good about the efforts they are bringing forward," said Randy Hetrick, founder and CEO of exercise equipment maker TRX, who said he will be part of a test group for Brand Central. "Conceptually, it's long overdue."

After working closely with the company on the issue, he said Amazon's approach to killing off fakes has undergone "a sea change." Hetrick, a co-plaintiff with Amazon in one of the new lawsuits, said he expects the online seller to significantly attack the counterfeit problem over the next year as it adds staff and digital tools.

Amazon already has a handful of anti-counterfeiting measures, including reporting tools for sellers and a registry to help merchants manage their brands on Amazon. The company recently made it harder for unauthorized sellers to list items by requiring third-party merchants to pay a fee for listing top brands like Nike or Hasbro. They also have to prove they got the inventory from the manufacturer or an authorized distributor.

Showing support for these third-party sellers is particularly important, since half of what Amazon sells comes from them.

Some smaller brands, however, feel Amazon isn't doing enough to protect them from fakes and leaves them to fend for themselves.

Fayebeline, a mom-and-pop seller of baby clothes based in Walnut, California, said it's found repeated instances of other Amazon sellers stealing its designs and slapping them on T-shirts, shoes and even women's underwear.

"It's a big problem once your stuff gets popular," said co-owner Emily Wilcox, who's had to hire a contract worker to find and try removing fakes every week. "They're popping up all the time."

Don Chernoff, president and founder of luggage-maker SkyRoll, said Amazon has ignored his repeated requests to remove unauthorized listings of his company's products from its site. He doesn't sell on Amazon and has no interest in selling there unless the listings are removed.

"The attitude is they're gigantic and they don't give a shit," said Chernoff, who runs his one-man business in Reston, Virginia. "It was really frustrating."

To cut down on fraudsters stealing sales, DigitalFusion included the following request from buyers in its listings: "Check your buy box and make sure DigitalFusion CTI is your seller."

Still, other sellers have squatted on the company's listings.

But Milstein says he's hopeful Brand Central could give smaller sellers more control.

"That's absolutely the right concept," he said.