Alibaba to pay $600 million to U.S. for illegal pharmaceutical sales
by Lisa Hornung · UPIJuly 2 (UPI) -- Alibaba Group Holding Limited, one of the largest companies in China, and its U.S.-based processor, AUS Merchant Services, will pay $600 million for allowing merchants to sell illegal pharmaceuticals, controlled substances and more in the United States.
The company entered into an agreement with the Department of Justice, the department announced Wednesday. The companies, via Alibaba.com and AliExpress.com, violated the federal Food, Drug and Cosmetic Act, the U.S. government alleges.
Alibaba admitted that between January 2016 and December 2024, it failed to prevent merchants using its platforms from conducting 80,000 product sales involving imports into the United States, including List I and II chemicals, pharmaceuticals and pharmaceutical counterfeiting equipment, the Justice Department said.
The combined gross merchandise value of these sales exceeded $200 million, a press release said.
Alibaba also allegedly provided merchants and buyers with a private, in-platform messaging service that some merchants used to make illegal transactions. In some cases, merchants used Alibaba's messaging service to direct buyers to third-party, encrypted messaging platforms for the sales.
"Today's resolution reflects the Department of Justice's commitment to ensuring that companies operating e-commerce and digital payment platforms keep illegal, unapproved, misbranded, and dangerous foreign pharmaceuticals off their marketplaces," Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division said in a statement.
"Companies operating online marketplaces -- whether based in the United States or abroad -- must implement appropriate safeguards to prevent bad actors from exploiting their platforms. If they fail to do so, the Department will hold them accountable."