Alibaba is introducing a ‘three-strikes’ rule to tackle counterfeit goods on its global services

As it edges closer to a blockbuster US IPO, Chinese e-commerce firm Alibaba is increasing its efforts to cut down on fake goods on its international sites after announcing plans to introduce a ‘three-strikes’ rule from next month.

The company readily admits that tracking counterfeit goods and sellers across its network of sites is challenge since “new listings for fakes pop up all too regularly,” but it is honing in on the problem on its international services Alibaba.com and AliExpress, which cover B2B and B2C sales respectively.

Under the new rules, a retailer found guilty of offering fake goods will receive an official warning letter, that escalates to a one-week listing and search removal if they offend again. Finally, if a merchant is hit with a third warning, then their account is banned, as the chart below details.

“The Three-Strikes system is designed to make justice more swift for blatant, repeat infringements on Alibaba.com and AliExpress. The policy is aimed at sellers of merchandise that is clearly counterfeit and merchants who deliberately create product listings to thwart automated and human detection, for example by posting look-alike, but phony, modified trademarks,” writes the company on its Alizila blog.

This new system will replace the existing AliProtect fraud initiative which Alibaba says has been “well received,” but did not deal with repeat offenders as well as it could have.

The company says that some users’ feedback has suggested a one-strike system. It argues against that, saying that its policy is about making it easy to do business anywhere, while such a rule could affect those unaware of its policies.

“A One-Strike rule may indiscriminately kill off merchants who may be careless or ignorant when it comes to these standards. The Three-Strikes system targets blatant and intentional repeat infringers while giving legitimate but ignorant business owners an opportunity to learn to follow the rules,”Alibaba legal counsel David Ho explains.

Alibaba previously teamed up with fashion brand Louis Vuitton to help cut down on fake goods sold in China. The company has steadily increased the focus on its international business this year, in conjunction with its US IPO, thus it makes sense that it is cracking down on its international sites to ensure that they appeal to new shoppers, sellers and brands that are learning about or using them for the first time.

Alibaba’s IPO is tipped to value the firm at more than $150 billion. Reports suggest that the listing is scheduled for August, but it is not clear which market Alibaba will list on.

The company filed its initial prospectus in May, revealing that it has a massive 618 million users and $5.55 billion in revenue for fiscal 2013, which ran through March 31. Yesterday, it updated that prospectus with more financial figures and a disclosure of the 27 partners that will serve on its board.

Headline image via Mike Clarke / AFP / Getty Images