Millions of items sold on Etsy could be counterfeit or constitute trademark infringement, an analyst warned on downgrading the company’s stock.
“As many as 2 million items on Etsy (more than 5 percent of all merchandise) may potentially be either counterfeit or constitute trademark or copyright infringement,” wrote Gil Luria and Aaron Turner of Wedbush Securities, as quoted by Business Insider, adding: “Etsy has become a go-to destination for counterfeits. Counterfeit candidates include items infringing on Louis Vuitton, Chanel, and Michael Kors, as well as a wide range of Disney and NFL brands.”
Because of the Tiffany vs. eBay suit, Etsy may not be legally liable for these items. But if the site ignores this problem, it could hurt its reputation—just as Chinese site Alibaba’s reputation has been hurt by the perception it is a counterfeiting haven, the analysts conclude. It could also hurt revenues or commission fees if Etsy has to start policing the site.
With a little searching, JCK was able to find listings for a replica Rolex and replica Gucci watch. Other listings mention watches with aftermarket parts, a potentially problematic area as watchmakers such as Rolex have said that could make the item counterfeit, particularly if they bear a stamp of the company’s brand. Other pieces have labels like “David Yurman–inspired,” another dicey legal area.
Etsy did not return a request for comment by press time.