Alibaba settles for $600 million over illegal drug sales on US platforms

Alibaba and its U.S. payment processor agreed to pay $600 million over claims they failed for eight years to stop dangerous drugs, chemicals and pill presses from being sold to American customers. The resolution covers conduct from January 2016 through December 2024 and includes non-prosecution agreements with Alibaba Group Holding Limited and AUS Merchant Services Inc., formerly Alipay US and a subsidiary of Ant Group.

Alibaba admitted it did not prevent about 80,000 product sales involving imports into the United States through Alibaba.com and AliExpress.com, including List I and II chemicals, pharmaceuticals and pharmaceutical counterfeiting equipment. Those transactions carried a combined gross merchandise value of more than $200 million, and federal law enforcement carried out more than 40 undercover purchases of pharmaceuticals and counterfeiting equipment that were illegal to import.

Employees had already raised concerns that Alibaba’s compliance controls were inadequate. In some cases, merchants used Alibaba’s private messaging service to direct buyers to third-party encrypted messaging platforms to push the transactions further out of view. AUS Merchant Services’ anti-money-laundering compliance program failed to stop some merchants from using its services to facilitate prohibited product sales.

Assistant U.S. Attorney General Brett A. Shumate: "The resolution reflected the department's commitment to keeping illegal, unapproved, misbranded and dangerous foreign pharmaceuticals off e-commerce and digital payment platforms." The U.S. Attorney’s Office for the District of Rhode Island called the $600 million payout the largest monetary settlement in the history of the district, where the case was handled in Providence.

Alibaba called the settlement a "thorough regulatory process" and remained committed to stronger controls and measures against non-compliant product sales.