The U.S. Department of Justice announced on Wednesday that Alibaba Group and a U.S.-based payments firm, AUS Merchant Services, have reached a settlement totaling $600 million to resolve allegations tied to illegal drug sales and the importation of related equipment. The companies entered into non-prosecution agreements addressing claimed violations of the Federal Food, Drug, and Cosmetic Act.
According to the Justice Department, the core of the case focused on the inability of Alibaba and its payment processor to prevent merchants from listing, selling and arranging imports of illegal pharmaceuticals, chemical substances and pill presses via Alibaba’s e-commerce platforms. In the settlement, both companies agreed to accept responsibility for the conduct of their officers and employees and committed to enhancing their compliance programs.
The department said Alibaba acknowledged that, over the period from 2016 to 2024, it failed to stop roughly 80,000 product sales involving chemicals, drugs and pharmaceutical counterfeiting equipment that entered the United States from overseas sellers. The transactions identified in the investigation had a combined merchandise value of more than $200 million, the Justice Department said.
Investigators carried out more than 40 undercover purchases of illegal pharmaceuticals and counterfeiting devices as part of the inquiry. The undercover buys were cited by the Justice Department in describing the scope of the activity it investigated.
As part of the resolution, Alibaba and AUS Merchant Services accepted accountability for internal actions tied to the offenses and pledged to improve compliance measures. The non-prosecution agreements are the legal mechanism used to resolve the claims without pursuing criminal charges, contingent on the companies meeting the terms set by the Justice Department.
The settlement and the admitted failures highlighted by the Justice Department center on enforcement of U.S. regulatory protections intended to keep illegal and potentially dangerous drugs and manufacturing equipment out of the country. The announced payment and compliance commitments conclude the department’s action as described in its statement on Wednesday.
Context and next steps
The Justice Department’s announcement resolves its claims through financial payment and formal agreements requiring remedial steps by the companies. The settlement text, as summarized by the department, emphasizes both the monetary component and the expectation that Alibaba and its payment processor bolster systems designed to prevent illicit listings and shipments.