Chinese e-commerce giant Alibaba has agreed to pay $600 million and enter a non-prosecution agreement with the U.S. Department of Justice (DOJ). This comes after the company admitted failing to prevent the sale of illegal products through its online platforms.
The DOJ announced on Wednesday that Alibaba Group Holding Ltd. and its U.S. payment processor, AUS Merchant Services, will make this payment to address claims about their inadequate oversight. Investigators found that these companies failed to block sales and imports of illegal pharmaceuticals, controlled substances, and related equipment online.
From January 2016 to December 2024, about 80,000 unlawful transactions were recorded, violating the Federal Food, Drug and Cosmetic Act and other laws. These illegal sales reportedly generated over $200 million in gross merchandise value.
Court documents revealed that Alibaba did not fully integrate important wire transfer data into its monitoring system, leading to missed high-risk transactions. In at least one instance, a seller continued to offer banned products even after being reported by AUS. Federal agents conducted over 40 undercover purchases of illegal items, according to the DOJ.
Assistant Attorney General Brett A. Shumate stated that online marketplaces, regardless of their location, must implement measures to prevent misuse. Failing to do so will result in accountability.
Alibaba has expressed its commitment to enhance compliance measures on its platforms. Under the terms of this agreement, Alibaba will face a $125 million criminal penalty, while AUS Merchant Services will pay $85 million. Both companies have pledged to strengthen their compliance programs and cooperate with ongoing federal investigations.
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