Chinese e-commerce giant Alibaba and its United States-based payment processor AUS Merchant Services is ready to pay $600 million to resolve federal allegations that they failed to prevent merchants from selling and importing illegal drugs, chemicals, and pill presses into the U.S.
The settlement was announced by the U.S. Department of Justice, involves non-prosecution agreements resolving allegations that the companies violated the U.S. Federal Food, Drug, and Cosmetic Act.
The federal officials claim that the companies failed to stop merchants from utilizing Alibaba’s major e-commerce platforms, including Alibaba.com and AliExpress.com, to ship illicit items into the country.
According to Reuters, as part of the agreement, Alibaba admitted that from the year 2016 to 2024, it failed to prevent approximately 80,000 product sales of chemicals, drugs, and pharmaceutical counterfeiting equipment imported from overseas. The Justice Department stated these transactions represented a combined merchandise value of more than $200 million.
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The law enforcement officers from multiple U.S. government agencies, conducted an investigation by making more than 40 undercover purchases of pharmaceuticals and counterfeiting equipment that were illegal to import into the U.S.
The probe also revealed internal corporate tensions regarding platform safety. The Justice Department noted that during the investigation, Alibaba employees themselves had apparently raised concerns about whether illegal products were being sold on the marketplaces.
These workers explicitly questioned whether the company’s compliance measures and policies were inadequate to prevent such unauthorized sales from happening.
Furthermore, the U.S. government found that the anti-money laundering compliance program at AUS Merchant Services also failed to prevent certain merchants from using its payment processing services to facilitate the sale and importation of the banned products.
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Under the terms of the deal, both companies agreed to accept responsibility for the acts of their officers and employees. They are also required to update their corporate compliance programs to prevent future such infractions.
Alibaba stated that the settlement reflects a thorough regulatory process conducted with the company’s full cooperation.
The e-commerce firm added that it is committed to implementing best-in-class standards of control, policies, and measures against non-compliant product sales.
Assistant U.S. Attorney General Brett Shumate emphasized that the resolution underscores the Department of Justice’s commitment to ensuring that companies operating e-commerce and digital payment platforms keep illegal, unapproved, misbranded, and dangerous foreign pharmaceuticals off their marketplaces.