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Chinese e-commerce giant Alibaba has agreed to pay $600 million and enter into a non-prosecution agreement with the Department of Justice (DOJ) after admitting it failed to prevent tens of thousands of illegal product sales in the US through its online marketplaces.
The DOJ announced on Wednesday that Alibaba Group Holding Ltd. and its US-based payment processor, AUS Merchant Services, will pay a total of $600 million to settle allegations that they failed to stop merchants from selling and importing illegal drugs, controlled substances, controlled chemicals and pill-making machines through Alibaba.com and AliExpress.com.
As part of the settlement, Alibaba admitted that between January 2016 and December 2024, the sale of approximately 80,000 illegal products involving imports into the US violated the Federal Food, Drug and Cosmetic Act, as well as other federal laws.
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Alibaba Group Holding Ltd. and its US-based payment processor, will pay $600 million to settle the latest allegations by the Department of Justice. (Qilai Shen/Bloomberg via Getty Images, File/Getty Images)
The company admitted those businesses generated more than $200 million in gross sales.
Court documents say the company failed to fully include certain wire transfer data in its transaction monitoring system, causing it to miss some of the more dangerous activities. In at least one instance, a seller continued to sell prohibited products to US consumers after AUS investigated and reported the seller.
Federal investigators have made more than 40 undercover purchases of drugs and counterfeit pharmaceutical products that were illegal to import into the US, the DOJ noted.
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AUS Merchant Services, formerly known as Alipay US, also admitted to failings in its money laundering compliance program.
According to court documents, the company failed to fully integrate certain wire transfer data into its transaction monitoring system, causing it to miss some high-risk transactions. In at least one instance, a seller continued to sell prohibited products to US consumers after AUS investigated and reported the seller.
| A ticker | Security | Finally | Change | Change % |
|---|---|---|---|---|
| FATHER | ALIBABA GROUP HOLDING LTD. | 97.99 | +2.01 |
+2.09% |
“Companies operating online marketplaces — whether based in the United States or abroad — must implement appropriate safeguards to prevent bad actors from exploiting their platforms,” Assistant Attorney General Brett A. Shumate said in a statement. “If they fail to do that, the Ministry will hold them accountable.”
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The allegations included failure to stop merchants from selling and importing illegal drugs, controlled substances, controlled chemicals and pill-making machines through Alibaba.com and AliExpress.com. (iStock / Stock)
Alibaba said it is cooperating fully with the Justice Department's investigation and has agreed to strengthen compliance measures that govern products sold by third-party sellers on its e-commerce platforms.
“Alibaba has reached a mutually satisfactory settlement with U.S. regulators to bring stricter compliance to the sale of products in the United States by third-party sellers on its e-commerce platforms,” an Alibaba spokesperson told FOX Business on Wednesday. “This solution reflects a comprehensive regulatory process with the full cooperation of Alibaba and our commitment to the highest standards of regulation, policies, and measures against the sale of non-compliant products.”
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Under the agreement, Alibaba will pay a criminal fine of $125 million and forfeit $200 million, while AUS Merchant Services will pay a criminal fine of $85 million and forfeit $190 million.
Both companies also agreed to strengthen their compliance programs and continue to cooperate with federal investigators.
The Associated Press contributed to this report.
