Chinese technology company Alibaba has agreed to pay $600 million to settle a dispute with the federal government over claims that the Hangzhou-based firm allowed illegal pharmaceuticals, controlled substances, regulated chemicals, and pill-making equipment to be sold and shipped into the United States.
Alibaba is the parent company behind some of the world’s biggest online shopping platforms, including Alibaba.com and AliExpress.com.
Federal authorities allege that Alibaba’s U.S.-based payment processing arm, AUS Merchant Services, broke federal law by failing to block merchants from selling and importing prohibited products through those platforms.
In its agreement with the Justice Department, Alibaba acknowledged that from January 2016 through December 2024, the company failed to halt approximately 80,000 transactions involving illegal imports that violated the Federal Food, Drug, and Cosmetic Act and other federal statutes.
According to a news release announcing the settlement, Alibaba employees had internally raised red flags about the company’s compliance systems being insufficient to stop illegal product sales. In some cases, merchants even used Alibaba’s own messaging service to redirect buyers to outside platforms where illegal transactions could take place.
Investigators from the FDA, FDIC, IRS Criminal Investigations, and other agencies carried out more than 40 undercover purchases of pharmaceuticals and equipment that were prohibited from being imported into the U.S. The resolution came in the form of a non-prosecution agreement between the company and the Justice Department.
IRS Criminal Investigations Chief Jarod Koopman commented on the outcome, saying the resolution “underscores IRS Criminal Investigation’s commitment to following the money and ensuring that companies operating in the United States comply fully with federal law.”
