Alibaba and U.S. payment unit to pay $600 million in DOJ settlement over illegal sales

Alibaba Group Holding Ltd. and its U.S.-based payment processor, AUS Merchant Services, have agreed to a non-prosecution settlement with the U.S. Department of Justice that requires a total payment of $600 million. The companies admitted that between January 2016 and December 2024, about 80,000 transactions involving illegal pharmaceuticals, controlled substances, regulated chemicals and pill-making equipment were processed through Alibaba.com and AliExpress.com, violating the Federal Food, Drug and Cosmetic Act and other statutes.

Federal investigators conducted more than 40 undercover purchases that confirmed the illicit nature of the goods. Court filings indicate the firms failed to fully integrate certain wire-transfer data into their monitoring systems, allowing high-risk transactions to go undetected. In at least one case, a merchant continued selling prohibited items after AUS reported the seller.

"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 said.

Under the agreement, Alibaba will pay a $125 million criminal penalty and forfeit $200 million, while AUS Merchant Services will pay an $85 million criminal penalty and forfeit $190 million. Both entities have pledged to strengthen their compliance programs and continue cooperating with federal investigators.

"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," an Alibaba spokesperson said.