How E-commerce Platforms Build Trust by Tackling Violations

E-commerce platforms are fast-paced and handle a huge number of transactions. Based on our engagement with a leading global marketplace, this means managing 123 million new listings every week, including both B2C (Business-to-Consumer) and B2B (Business-to-Business) transactions. Out of these, around 160,000 listings are flagged as violations, with a violation rate of 130 basis points (bps). 

Such high volumes call for stronger safety measures to maintain the platform’s reputation and consumer trust and prevent potential legal issues.

This blog explores how e-commerce companies leverage AI-driven technology alongside human expertise to identify and address violations on their platforms. It also examines the unique challenges posed by sensitive categories and the proactive measures taken to ensure a safer, cleaner marketplace for users.

Product Categories Most Vulnerable to Policy Violations

Certain product categories are highly prone to violations due to their sensitive or high-risk nature. Many restrictions are region-specific, varying by local laws. E-commerce companies collaborate with regulatory bodies to closely monitor these categories and prevent illegal or unethical sales. 

Some category-based restrictions and their associated legal implications include:

• Alcohol: Unauthorized sales, mislabeling, or counterfeit products can violate local liquor laws and lead to fines, license revocation, or criminal liability for sellers and platforms.
• Animal Products: Items like ivory or exotic animal skins contribute to wildlife trafficking, violating CITES (Convention on International Trade in Endangered Species) regulations, leading to seizures, bans, and heavy penalties.
• Counterfeit Goods: Fake branded items violate intellectual property laws, resulting in multi-million dollar lawsuits, legal takedowns, and reputational damage for e-commerce platforms.
• Firearms Parts and Accessories: Selling these without proper authorization violates firearm control laws, leading to criminal charges, platform bans, and substantial fines.
• Emissions-Cheating Automotive Devices: These bypass emission controls, violating environmental protection laws and exposing platforms to legal suits, government fines, and regulatory crackdowns.
• Hazardous Chemicals: Selling unregulated chemicals breaches public health and environmental safety laws, potentially leading to criminal liability, forced recalls, and operational restrictions.
• Illegal Drugs: Listing banned or unapproved substances violates drug enforcement laws, resulting in severe penalties, legal action, and platform suspensions.
• Knives: Some knives are classified as weapons in certain regions, and unauthorized sales can lead to criminal prosecution, financial penalties, and marketplace restrictions.
• Pharmaceutical Products: Counterfeit or unauthorized medications violate drug safety laws, exposing sellers and platforms to lawsuits, regulatory shutdowns, and consumer harm liabilities.
• Tobacco: Online tobacco sales require strict age verification and licensing compliance—violations can lead to heavy fines, legal bans, and loss of seller privileges.

These legal implications reinforce why e-commerce platforms must enforce strict compliance measures to prevent policy violations and safeguard users. 

A Real-World Example: Alibaba and the Counterfeit Listings Case 

A recent case highlights the stakes—Alibaba is facing a lawsuit from Kelly Toys Holdings for allegedly allowing counterfeit Squishmallows to be sold on its platform. Despite its “three-strike” policy, counterfeit listings persisted, leading to accusations that Alibaba knowingly facilitated infringement. 

The lawsuit seeks statutory damages of $50,000 against each of the 56 defaulting defendants, totaling $2.8 million, along with post-judgment interest. 

This case underscores how lapses in enforcement can lead to legal and financial complications for e-commerce giants. 

Strategies Used by E-commerce Platforms to Detect and Prevent Violations

E-commerce companies adopt a multi-layered approach to detect violations, leveraging both proactive and reactive measures.

Proactive Screening

Proactive screening begins as soon as a seller attempts to upload a product listing. This stage relies on advanced AI screening engines equipped with thousands of rules to identify potential violations.

1. Initial AI Screening:
   • As a first checkpoint, the AI system inspects the item for problematic keywords, inappropriate categories, or signs of circumvention (e.g., using special characters or misleading images).
   • If a violation is detected, the item is blocked outright. The seller can attempt re-uploads, but manual review is required for further actions.

2. Delayed Listings:
   • If the AI engine is unsure, it delays the listing from appearing on the search results page for a few hours.
   • A trained agent reviews the item during the delay, removing it if it violates any policies or approving it to go live.

3. Live Listing Checks:
   • Once live, listings undergo additional screening.
     • AI Inspections: The engine identifies new violations based on updated rules or changes to the item description.
     • Agent Reviews: Specialized teams focus on high-priority categories (e.g., pharmaceuticals) and randomly screen listings.
     • Third-Party Vendors: Vendors with category-specific expertise review items like cosmetics, DVDs, or mobile accessories.

If a violation is detected at any stage, the listing is filed for review. 

Reactive Referrals 

When internal mechanisms fall short, external referrals help identify violations.

1. E-commerce portal form Reports:
   • Users can report an item directly on the platform by selecting the policy it violates. This creates a case for review.
2. Verified Owner Reports:
   • Verified brand owners, such as Nike or Volkswagen, report counterfeit items or sellers through Notices of Claimed Infringement or dedicated reporting tools.

3. Counterfeit Reports:
   • Buyers can flag counterfeit products in the resolution center if they receive items that don’t match descriptions.

All cases, whether internal or external, are reviewed by trained agents. Non-violating items remain live while violating items are removed, and sellers are placed on a consequence path.

Enforcement Actions Against Non-Compliant Sellers

Once a seller violates a policy, they are placed on a consequence path based on the severity of the violation and the risk level of the items involved.

Low-Risk Items:

Low-risk items typically involve listing errors or misleading descriptions. Sellers are given a chance to fix their listings:

Warning Mechanism: 

• For each violation, sellers receive a warning along with a grace period to remove the item themselves. After this period, the platform removes the item.
• Repeated violations beyond the grace period lead to restrictions on the user account.

High-Risk Items:

High-risk items, such as firearms, knives, or counterfeit goods, trigger stricter actions:

• Items are removed immediately without a warning.
• After the third violation, sellers face increasing restrictions, starting with a short-term block and progressing to longer suspensions or permanent bans.

To promote compliance, e-commerce companies provide constant educational materials to sellers, ensuring they are aware of existing and updated policies.

Maintaining a clean and safe e-commerce platform requires vigilance, innovation, and collaboration. Companies continuously refine their AI models to identify violations with greater precision and invest in training for their agents to handle complex cases effectively.

The commitment doesn’t stop there. By educating sellers, collaborating with verified brand owners, and empowering buyers to report violations, e-commerce platforms create a safer marketplace for everyone. This ensures not only compliance with regulations but also fosters trust among users—cementing their role as reliable and secure online shopping destinations.

Through these efforts, e-commerce companies reaffirm their dedication to providing a transparent, ethical, and user-friendly environment, enabling millions of buyers and sellers to engage confidently on their platforms.