Alibaba Pays $600M Over Illegal Sales

Alibaba has agreed to pay $600 million to settle a U.S. government investigation into claims that its e-commerce platforms let merchants sell illegal pharmaceuticals, controlled substances, regulated chemicals and pill making equipment to American buyers, according to a resolution announced by the Justice Department.

Nearly a Decade of Unlawful Sales

Between January 2016 and December 2024, Alibaba failed to stop roughly 80,000 product sales that violated the Federal Food, Drug, and Cosmetic Act and other federal statutes, the company acknowledged in its agreement with prosecutors. The sales moved through Alibaba.com and AliExpress.com, two of the company's largest marketplaces, which connect buyers around the world with merchants based mostly in China. Investigators found that AUS Merchant Services, the U.S. based payment processor tied to Alibaba, did not do enough to block merchants from shipping restricted goods into the country, a failure that sits at the center of the government's case.

Employees Flagged the Problem Internally

Court documents cited in the settlement show that Alibaba's own staff raised alarms about weak compliance controls long before the case was resolved. Those employees warned that the systems in place were not catching illegal listings, and in some cases merchants exploited Alibaba's messaging tools to steer buyers toward third party apps where the actual illegal transactions could be arranged away from the platform's oversight.

How Investigators Built the Case

More than 40 undercover purchases formed the backbone of the government's evidence. Agents from the FDA, the FDIC, IRS Criminal Investigation and other federal offices posed as ordinary customers and bought pharmaceuticals and pill making equipment that are illegal to import into the United States, according to the Justice Department's announcement. Those controlled buys let investigators trace how easily banned products moved from foreign sellers to American doorsteps through Alibaba's platforms.

A Non Prosecution Deal, Not a Criminal Charge

Rather than pursue criminal charges, the Justice Department reached a non prosecution agreement with Alibaba, with the $600 million payment serving as the resolution's centerpiece. Jarod Koopman, chief of IRS Criminal Investigation, said the outcome shows his agency's determination to trace financial flows and hold companies accountable for following federal law while doing business in the United States. The agreement closes out years of scrutiny into how the compliance gaps at AUS Merchant Services allowed illegal sales to continue largely unchecked for almost a decade.