Alibaba reaches $600 million US settlement over drug-sale allegations
The Justice Department said Alibaba and a US payment processor failed to block illegal pharmaceuticals and related equipment from US-bound sales.
By Lucas Ferreira · Science & Environment Writer
3 min read
Alibaba and its US-based payment processor have agreed to pay $600 million to resolve US allegations tied to illegal drug sales on Alibaba’s e-commerce platforms. The Justice Department said the case centered on failures to stop merchants from selling and importing banned pharmaceuticals, chemicals and pill-making equipment into the United States.
The department announced Wednesday that Alibaba and AUS Merchant Services entered non-prosecution agreements. Under the deal, the companies agreed to accept responsibility for conduct by their officers and employees and to strengthen their compliance programs, the Justice Department said.
Prosecutors said the agreements resolve allegations that the companies violated the US Federal Food, Drug, and Cosmetic Act. The government said merchants used Alibaba’s online marketplaces to sell products that could not legally be brought into the US, including illegal drugs, chemicals and equipment used in pharmaceutical counterfeiting.
Justice Department cites sales from 2016 to 2024
As part of the settlement, Alibaba admitted that from 2016 through 2024 it did not stop about 80,000 sales involving chemicals, drugs and equipment used to counterfeit pharmaceuticals that were imported from overseas, according to the Justice Department.
Those transactions had a combined merchandise value of more than $200 million, the department said. US law enforcement agencies also made more than 40 undercover purchases during the investigation, buying illegal pharmaceuticals and counterfeiting equipment, according to the settlement announcement.
The Justice Department said Alibaba employees at times raised internal concerns about whether illegal goods were being sold and whether the company’s controls were strong enough to stop those transactions. The department said the conduct occurred across Alibaba’s e-commerce operations, which include Alibaba.com and AliExpress.com.
Alibaba said in a statement that the settlement followed a thorough regulatory process and that the company cooperated fully. The company said the resolution reflected its commitment to high standards for controls, policies and measures aimed at preventing non-compliant product sales.
Payment processor also covered by deal
The US government also faulted AUS Merchant Services, Alibaba’s US-based payment processor. The Justice Department said the processor’s anti-money laundering compliance program did not prevent some merchants from using its services to support the sale and importation of prohibited products.
Assistant Attorney General Brett Shumate said in a statement that the resolution showed the department’s focus on companies that run online commerce and digital payment systems. He said the government expects such platforms to keep illegal, unapproved, misbranded and dangerous foreign pharmaceuticals off their marketplaces.
The settlement closes the criminal exposure addressed in the non-prosecution agreements, provided the companies meet the terms described by the Justice Department. Those terms include the financial payment, acceptance of responsibility for employee and officer conduct, and improvements to compliance controls.
This story draws on original reporting from Al Jazeera.