Alibaba and Ant Subsidiary Pay $600 Million to Settle DOJ Illegal Sales Claims

Alibaba Group Holding and its U.S.-based payment processor, Ant Group subsidiary AUS Merchant Services, have agreed to pay $600 million to resolve U.S. Justice Department allegations that they failed to prevent illegal sales on Alibaba’s eCommerce platforms.

The Justice Department alleged that Alibaba.com and AliExpress.com failed to prevent merchants’ sales and imports of illegal pharmaceuticals, controlled substances, listed chemicals and pill presses into the United States, thereby violating the Federal Food, Drug, and Cosmetic Act (FDCA), the department said in a Wednesday (July 1) press release.

The payments are part of a non-prosecution agreement with the Justice Department, according to the release.

Reached by PYMNTS, an AUS Merchant Services spokesperson said in an emailed statement: “We are pleased to have reached an agreement with the U.S. Department of Justice to fully resolve this matter. We have made continuous improvements to our compliance program and will continue to do so to ensure compliance with laws and regulations in all markets where we operate.”

An Alibaba spokesperson told PYMNTS in an emailed statement: “Alibaba reached a mutually satisfactory resolution with U.S. regulators on bringing stricter compliance to the sale of products in the United States by third-party merchants on its e-commerce platforms. This settlement reflects a thorough regulatory process with Alibaba’s full cooperation and our commitment to best-in-class standards of control, policies, and measures against non-compliant product sales.”

According to the Justice Department press release, Alibaba admitted that over a nearly nine-year period from January 2016 to December 2024, it maintained policies restricting the sale of prohibited products on its eCommerce platforms but failed to prevent merchants from selling prohibit products in 80,000 transactions involving imports to the U.S. that had a combined gross merchandise value of over $200 million.

Per the release, AUS admitted that over a nearly four-year period from January 2020 to December 2023, its transaction monitoring systems did not always identify transactions involving payments from high-risk jurisdictions or multiple payors on a single invoice, and its anti-money laundering compliance program failed to prevent some Alibaba merchants from using its services to facilitate the sale and importation of prohibited products.

As part of the non-prosecution agreement, Alibaba agreed to pay a criminal monetary penalty of $125 million and to forfeit $200 million, AUS agreed to pay a criminal monetary penalty of $85 million and to forfeit $190 million, and both companies agreed to enhance their compliance programs and to continue cooperating with the Justice Department.

“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 of the Justice Department’s Civil Division said in the release. “If they fail to do so, the Department will hold them accountable.”