estee lauder sued walmart A major retailer was sued in California federal court for allegedly selling counterfeit beauty products on its website and failing to take sufficient steps to ensure that only certified genuine products were available to consumers.
Estée Lauder said it purchased, inspected and tested numerous products sold on Walmart.com using the Le Labo, La Mer, Clinique, Aveda, Tom Ford and Estée Lauder trademarks and determined they were counterfeit, according to the lawsuit filed Monday.
Products include counterfeit Estee Lauder Advanced Night Repair serum, Le Labo fragrance, Clinique eye cream, La Mer lotion, Aveda hairbrush, and Tom Ford fragrance.
Representative examples of Estee Lauder’s accused products
Complaint in U.S. District Court
It’s unclear when Estée Lauder purchased and tested the products, but the lawsuit comes months after CNBC published an investigation into counterfeit beauty products and fraud at Walmart.com.
Two of the counterfeit products cited in the CNBC investigation, Estée Lauder’s Advanced Night Repair Serum and Clinique Smart Clinical Repair Wrinkle Correcting Eye Cream, were also mentioned in the Estée Lauder lawsuit. It is unclear whether the products cited in the lawsuit are the same counterfeit products that CNBC provided to Estée Lauder.
In response, Walmart initially told CNBC in a statement that it requires “all sellers to offer only authentic and legal products” and does not tolerate “malicious actors” on its platform. It then retracted the message and two hours later sent a shortened statement to CNBC with the text deleted.
“We are aware of the complaints and have zero tolerance for counterfeit products,” the revised statement reads. “Once served, we will respond appropriately in court,” he said.
Estée Lauder did not respond to a request for comment.
Examples of Clinique accused products
Complaint in U.S. District Court
Although the products were sold by third-party sellers on Walmart’s online marketplace, Estée Lauder said Walmart took an active role in promoting sales to suit-wearing shoppers. The traditional beauty company called Walmart’s actions “extreme, outrageous, fraudulent…despicable and harmful.”
The complaint states that counterfeit products were promoted and advertised to shoppers on the platform, and Estée Lauder trademarks were used in search engine optimization tools to drive traffic to the products, with Walmart profiting from the sales.
Additionally, it may have caused confusion for shoppers because “someone shopping on Walmart.com would have reasonably believed that the item was being sold by Walmart and not by a third-party seller,” the complaint states.
At the heart of CNBC’s investigation into Walmart’s online marketplace were steps the company took, or failed to take, to vet third-party sellers and the products they offer to prevent fraudulent and counterfeit sales on its platform.
Examples of La Mer’s accused products.
Complaint in U.S. District Court
Estée Lauder said in its complaint that while Walmart promoted the “reputation and professionalism” of sellers allowed to operate on its platform, the retailer actually “did little to ensure that only certified, authentic products were available for sale.”
“This is readily apparent given that sales (of counterfeit products) are allowed on Defendants’ websites despite the stated careful selection process regarding who is selected as marketplace sellers/partners,” the complaint states. “Thus, Defendants knew or had reason to know that the sellers they worked with and ‘regularly reviewed’ were selling products that infringed the Estée Lauder marks.”
Walmart’s online marketplace has become a key part of its strategy to grow profits faster than sales and better compete with longtime rivals. Amazon. Thanks to the rapid growth of its online platform, Walmart reached a market capitalization of $1 trillion last week, joining an exclusive club made up almost entirely of technology companies.
But this strategy comes with risks, a CNBC investigation found. Offering counterfeit and potentially dangerous products to shoppers through third-party sellers in the Marketplace could expose Walmart to liability and undermine customer trust, which is at the heart of the brand.
Examples of Le Labo’s accused products
Complaint in U.S. District Court
It can be difficult for brands to hold platforms accountable for their role in selling counterfeit goods, since a court ruling that arose after Tiffany & Co. sued eBay in 2010 over counterfeit goods on the platform. Experts previously told CNBC that lawsuits may be avoided unless the conduct is extreme or particularly egregious.
The ShopSafe Act, a bipartisan federal bill aimed at curbing the sale of counterfeit goods on online marketplaces, aims to address some of the problems posed by the Tiffany v. eBay decision by encouraging platforms to do better to sellers and the products they offer. If a platform complies with certain anti-counterfeiting measures, it can escape liability if a seller offers a counterfeit product.
Brands widely supported the bill, but it has failed to pass at least three times. Part of that is because other online marketplaces such as Walmart, Amazon, Etsy and eBay have lobbied against that aspect, two U.S. Senate aides previously told CNBC, speaking on condition of anonymity because the discussions were private.
