November 6, 2016

How to Identify Anonymous Unauthorized Marketplace Sellers


According to a Nov. 3, 2016 Business Insider report, U.S. consumers are expected to spend an estimated $385 billion online this calendar year. While this generally sounds great for companies engaging in e-commerce, many companies are being harmed by countless anonymous unauthorized sellers.

Bad actors online can cause a host of problems. This includes, but is not limited to, selling products at low prices (which causes companies to lose control of pricing and affects their brands) or simply selling non-genuine goods.

In cracking down on anonymous unauthorized marketplace sellers, including putting an end to their impermissible selling activity and obtaining the sources/suppliers of their products, it is beneficial—if not necessary—to identify the sellers.

A major component of an ideal enforcement system is sending cease and desist letters to anonymous unauthorized marketplace sellers. The first wave can be taken care of online via private messaging on the relevant forums or marketplaces on which the sales are taking place.

But if the unauthorized sellers ignore the messages or explicitly refuse to comply, the next step would be to try to identify them and send them cease and desist letters to their actual addresses.

Unauthorized sellers are likely to comply with such letters. They will have realized that a company (or its legal team) took the time and effort to identify them.

A primary identifying technique is for investigators to engage in product purchasing. This process is exactly how it sounds. An investigator can purchase a product from an offending seller and potentially obtain his or her identity by way of a return address on a packaging label or payment processing information.

Sometimes, however, a seller might have provided fake information, used P.O. boxes or perhaps the third-party marketplace on which they were selling might have handled the shipping.

Thus, if it is not possible to identify a non-compliant seller through traditional investigation techniques, a company’s counsel can send a subpoena (for records containing identifying information) to the entity that owns the online marketplace on which the sales are taking place — or to the third-party entity that handles payment for the marketplace’s transactions. It might also be possible to obtain information from private mail boxes. However, this technique is typically not necessary.

Note that sending a subpoena does involve filing a complaint and opening an actual case. As always, the issuing party must satisfy certain standards before an entity can and will actually produce the requested records and information.

Of course, identifying information might actually be traceable through search results just by searching the name of the storefront in question or based off other information obtained through the various investigative techniques.

After a company has identified an unauthorized seller, it can send him or her a cease and desist letter to his or her actual address. Beyond the information contained in the initial letters, these letters communicate to the seller that he or she is not hidden. In other words, the threats of potential legal action are real.

In fact, if a targeted unauthorized seller continues not to comply, a company can engage in escalated legal enforcement against the non-compliant seller.

These efforts can include sending the unauthorized seller a draft complaint; actually filling a lawsuit against the seller; obtaining an injunction to order them to cease selling the company’s products; obtaining a court order that can be used to de-index the seller’s personal e-commerce website from the search engines (if this seller has his or her own website); and preparing and executing a settlement agreement (or a combination of these tactics).