Amazon Gets Sued By... Wait For It... American Eagle?!

TL;DR: American Eagle is pissed. They’re suing Amazon for allegedly hijacking their Aerie brand’s name in search results and sending shoppers to counterfeit lingerie and apparel. It’s a classic case of “Yo, I asked you not to sell my stuff and now you’re selling my fake stuff.”

(Source: Giphy) 

In short, American Eagle Outfitters just dropped a lawsuit on Amazon’s doorstep, accusing the e-commerce behemoth of playing fast and loose with their beloved Aerie brand’s trademark. According to the lawsuit filed in Manhattan federal court, American Eagle claims that Amazon has been using the Aerie name (and some not so creative misspellings) in sponsored ads and search results to push customers toward... wait for it... counterfeit lingerie and apparel.

(Source: CNBC) 

Yessir - Amazon allegedly took the good name of Aerie, slapped it on some knock-offs, and called it a day. When shoppers clicked on Amazon’s links for Aerie? Big surprise: They were met with some budget-boutique-level imitations, not the real deal.

Now what’s interesting here, is that American Eagle has been very clear they don’t want to sell Aerie on Amazon’s third-party marketplace. Why? Well because they’re trying to build their own vibe and customer experience (think body positivity, comfy bralettes, and celeb endorsements from Aly Raisman and Kelsea Ballerini). But Amazon, being Amazon, allegedly decided to play dirty. Instead of respecting AEO’s “thanks but no thanks,” they allegedly started using Aerie’s name to sell fake goods.

(Source: Giphy) 

Additionally, to make matters worse, after American Eagle called them out for it, Amazon supposedly doubled down on their trolling by trying to get creative with their infringement, switching to misspellings like "Aeries" and "Aries" in sponsored ads (LOL). In other words, when American Eagle said “stop,” Amazon said “cool, we’ll just spell it wrong.” 

(Source: Reuters) 

Now other than a dragged out legal ruling, why does this actually matter? Simply put, this lawsuit is bigger than just some knock-off panties and leggings. It’s part of a longer history of major brands throwing shade at Amazon for not doing enough to curb the sale of counterfeit goods on its site. Mercedes-Benz and Birkenstock have both been down this road, accusing Amazon of letting fakes slide through and hurting their reputations.

(Source: PYMTS) 

Amazon, for its part, has been trying to polish its halo, launching initiatives like Project Zero (which sounds like some kind of Amazon/Elon Musk JV, but it’s actually an AI-based program to weed out counterfeit listings). Still, American Eagle’s lawsuit claims Amazon isn’t doing enough to stop the fakes from flowing, and argues that the tech giant is taking advantage of Aerie’s popularity to confuse customers and cash in. 

(Source: Giphy) 

Plus, when it comes to American Eagle, it’s understandable as to why they are pissed. Aerie is not some niche side hustle for American Eagle. It’s a big deal. In fact, Aerie accounted for 32% of American Eagle’s $2.43 billion in revenue for the first half of the fiscal year. That’s a serious chunk of change. With nearly 1,500 stores worldwide, AEO has been working hard to set Aerie apart from its main brand—and they’re not about to let Amazon mess with that.

(Source: Forbes) 

Meanwhile, over at Amazon HQ, they claim to be doing their best to crack down on counterfeit sales. They’ve repeatedly said that most of the products sold on their platform are legit, but they also like to remind brands that they have to be the ones to police their intellectual property rights. In other words, “Yeah, we’re trying, but really… it’s on you.” Classic. 

Understandably, this now has American Eagle seeing monetary damages and a court order to stop Amazon from infringing on Aerie’s trademarks. Especially since American Eagle’s shares closed at $10.32 on Wednesday, down a brutal 28% over the past 12 months - as they’ve been struggling with excess inventory post-pandemic, a problem that’s been weighing down profitability. 

(Source: Giphy)

Amazon, on the other hand? They’re not exactly crying into their coffee—their shares closed at $116.11, up nearly 13% over the same timeframe. Now sure, both companies have been hit by bloated inventory levels, but Amazon’s behemoth status and diversified revenue streams have cushioned the blow better than American Eagle’s more focused retail play.

So in the end, what’s the takeaway here? Well, it’s clear that Amazon’s got a serious counterfeit problem, and this lawsuit is just the latest in a string of jabs from big-name brands. And while they may have some programs to fight counterfeit goods, as long as major brands keep dropping lawsuits, it’s obvious those efforts aren’t cutting it. 

(Source: Giphy) 

In the meantime, while we all await to see whether American Eagle sticks it to Amazon, or if Amazon comes out unscathed… stay safe and stay frosty, friends! Until next time… 

P.S. The alert we dropped yesterday has already popped +28.68%, and with a Cost to Borrow pushing 600%, this stock is about to crank it up another notch. If you’re thinking you missed your shot, think again—there’s still plenty of juice left in the orange. Don’t be the person “crying in da club” this time—get in on the second leg before it blows up even more.

Stocks.News holds positions in Amazon as mentioned in the article.