Alibaba pays $600M in DOJ deal over illegal online marketplace sales

Chinese e-commerce giant Alibaba has agreed to pay $600 million and enter into a non-prosecution agreement with the Department of Justice (DOJ) after admitting it failed to prevent tens of thousands of illegal product sales into the U.S. through its online marketplaces.

The DOJ announced Wednesday that Alibaba Group Holding Ltd. and its U.S.-based payment processor, AUS Merchant Services, will pay a combined $600 million to resolve allegations they failed to stop merchants from selling and importing illegal pharmaceuticals, controlled substances, regulated chemicals and pill-making equipment through Alibaba.com and AliExpress.com.

As part of the agreement, Alibaba admitted that between January 2016 and December 2024, roughly 80,000 unlawful product sales involving imports into the U.S. violated the Federal Food, Drug and Cosmetic Act, and other federal laws.

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Alibaba Group Holding Ltd. and its U.S.-based payment processor, will pay a combined $600 million to resolve recent Justice Department allegations. (Qilai Shen/Bloomberg via Getty Images, File / Getty Images)

The company acknowledged those transactions generated more than $200 million in gross merchandise value.

Court documents say the company failed to fully incorporate certain wire transfer data into its transaction monitoring system, causing it to miss some high-risk transactions. In at least one instance, a merchant continued selling prohibited products to U.S. buyers after AUS investigated and reported the seller. 

Federal investigators conducted more than 40 undercover purchases of pharmaceuticals and pharmaceutical counterfeiting equipment that were illegal to import into the U.S., the DOJ noted.

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AUS Merchant Services, formerly known as Alipay U.S., also admitted shortcomings in its anti-money laundering compliance program.

According to court documents, the company failed to fully incorporate certain wire transfer data into its transaction monitoring system, causing it to miss some high-risk transactions. In at least one instance, a merchant continued selling prohibited products to U.S. buyers after AUS investigated and reported the seller.

“Companies operating online marketplaces — whether based in the United States or abroad — must implement appropriate safeguards to prevent bad actors from exploiting their platforms,” Assistant Attorney General Brett A. Shumate said in a statement. “If they fail to do so, the Department will hold them accountable.”

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