Estée Lauder Sues Walmart Over Alleged Counterfeit Sales on E-commerce Platform

Estée Lauder Sues Walmart Over Alleged Counterfeit Beauty Products

Estée Lauder Inc. has filed a lawsuit against Walmart Inc. in California federal court, alleging the retailer sold counterfeit beauty products on its website and did not adequately ensure only authorized and authentic merchandise was offered to consumers.

According to the suit, filed Monday, Estée Lauder purchased, inspected, or tested several products sold on Walmart.com that utilized the Le Labo, La Mer, Clinique, Aveda, Tom Ford, and Estée Lauder trademarks. These products were subsequently determined to be fakes.

Specific items mentioned in the complaint include counterfeit versions of Estée Lauder's Advanced Night Repair serum, a Le Labo fragrance, a Clinique eye cream, a La Mer lotion, an Aveda hair brush, and a Tom Ford fragrance.

The lawsuit follows a CNBC investigation into counterfeit beauty products and fraud on Walmart.com. Two of the counterfeit products cited in the CNBC investigation – Estée Lauder Advanced Night Repair serum and Clinique Smart Clinical Repair Wrinkle Correcting Eye Cream – were also referenced in Estée Lauder's lawsuit.

While the products were sold by third-party sellers on Walmart's online marketplace, Estée Lauder's suit claims Walmart played an active role in facilitating these sales.

The complaint states that the counterfeit products were promoted and advertised on the platform, and Estée Lauder's trademarks were used in search engine optimization tools to direct traffic. Walmart also allegedly profited from the sales.

Additionally, the complaint suggests that a person shopping on Walmart.com might have reasonably believed Walmart, rather than a third-party seller, was the vendor.

Estée Lauder's complaint asserts that Walmart promotes the "reputation and professionalism" of its sellers but allegedly does "very little to ensure that only authorized and authentic products are available" for sale. The company argues that this is apparent given that counterfeits were sold despite Walmart's stated selection process for marketplace sellers.

Walmart's online marketplace is a key part of its strategy to grow profits and compete with Amazon. This rapid growth contributed to Walmart reaching a $1 trillion market capitalization.

However, the strategy carries risks, including potential liability for counterfeit products and the erosion of customer trust.