China's third-largest ecommerce site faces lawsuits in US over alleged counterfeits

The Chinese e-commerce platform Pinduoduo has been criticized by the media for selling knockoffs after its initial public offering in the US in late July.

Pinduoduo, the third-largest ecommerce website in China after Alibaba and JD.com, is facing class-action lawsuits in the US following recent media reports that it has been selling fakes and knock-offs over the platform resulted in share tumbles.

Six law firms, including Rosen Law Firm, Pomerantz LLP, Law Offices of Howard G. Smith, Faruqi & Faruqi LLP, The Schall Law Firm, and Bronstein, Gewirtz & Grossman LLC, are looking to file class-action lawsuits on behalf of individual investors who bought Pinduoduo shares, according to a Sina news report on Saturday.

Pinduoduo has faced a flood of media reports in China since its initial public offering (IPO) in New York claiming that the platform has been actively selling low-price knock-offs with a high resemblance to brand names of well-known products.

Law Offices of Howard G. Smith said on its website that it believes Pinduoduo and certain executives violated federal law, which specifically misled investors regarding its financial condition. Pomerantz LLP said it's investigating concerns whether Pinduoduo and its officers and/or directors have engaged in securities fraud or other unlawful business practices.

"If you invested in Pinduoduo stock or options and would like to discuss your legal rights, please fill out the form below. There is no cost or obligation to you," Faruqi & Faruqi LLP said on its website, adding that it is investigating potential claims against Pinduoduo without elaborating.

A number of diaper products branded like "Pampois" and "Parmepas" were sold on Pinduoduo and received warm responses from consumers due to low prices. Pampers, the diaper brand owned by P&G, told Chinese media that it has always maintained a zero tolerance attitude towards the production or sale of goods that infringes IP rights. The company will investigate the legal liability of responsible persons, including both producers and sellers, it added.

China's top market watchdog, the State Administration for Market Regulation, announced last week that it is initiating an investigation on Pinduoduo into its sale of counterfeit products and items that infringe copyright.

Pinduoduo counter-attacked by saying it was under malicious attacks following a slew of negative media reports.

The three-year-old Chinese ecommerce platform earned a $33 billion market valuation after its stock surged more than 40 percent on its trading debut on the Nasdaq on July 26. Pinduoduo's stock closed at $19.07 in New York on Friday, down over 30 percent since its peak of $27.54 on the first day of trading, which is close to the $19 per share IPO price.

Founded in September 2015 by a former Google software engineer Colin Huang, Pinduoduo's gross merchandise volume (GMV) reached 141.2 billion yuan and 66.2 billion in 2017 and the first quarter of 2018, respectively, during which its total orders were also registered at 4.3 billion and 1.8 billion.

For the 12 months ended March 31, active buyers on Pinduoduo reached 295 million, while monthly active users were 103 million. Active merchandisers also exceeded 1 million during the same period, according to the company.

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