EBay to Pay $59M Settlement for Online Sales of Drug-Making Equipment

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() EBay Inc. agreed Wednesday to pay $59 million and make changes to its compliance program as part of a settlement with the U.S. Department of Justice that it violated the federal law by selling thousands of pill presses and encapsulating machines through its website.

The San Jose, California-based e-commerce company allegedly violated the Controlled Substances Act which regulates pharmaceutical manufacturing equipment, including pill presses and encapsulating machines, by requiring identity verification of buyers, record-keeping, and reporting to the Drug Enforcement Administration.

EBay denied the allegations, but said it was easier to settle than fight the case.

“While eBay acted lawfully and denies the DOJ’s allegations, we determined that this agreement is in the best interest of the company and its shareholders as it avoids the costs, uncertainty and distraction associated with protracted litigation,” the company said in a statement.

“EBay’s actions to remove products that could be used for counterfeit pills—including dies, molds and pill presses—prior to any request from the DOJ or other authorities, and years before the government turned its attention to these products, prevented tens of thousands of potentially problematic listings from appearing on our marketplace,” it added. “Government officials have repeatedly commended eBay for our partnership with law enforcement and efforts to support investigations into illegal pill press usage.”

America’s opioid crisis has been fueled in part by people using pill presses and encapsulating machines to make illegal drugs, including those laced with fentanyl, that resemble pharmaceutical pills.

The DOJ alleged eBay failed to comply with Controlled Substances Act requirements for thousands of pill presses and encapsulating machines that were sold through its website. The sales included high-capacity pill presses capable of producing thousands of pills per hour.

A federal investigation found that hundreds of people who bought pill press buyers through eBay also bought counterfeit molds, stamps or “dies,” allowing them to make pills that mimicked the products of legitimate pharmaceutical companies.

It also found and that many of the people who bought pill presses through eBay had been prosecuted in connection with trafficking illegal counterfeit pills.

“Counterfeit pills laced with fentanyl are a significant contributor to the deadly overdose epidemic,” Associate Attorney General Vanita Gupta said in a statement. “The Department is committed to using all available enforcement measures to ensure that companies involved in selling the equipment that makes it possible to create these dangerous pills comply with the Controlled Substances Act.”

On top of the $59 million, eBay also agreed to enhance its compliance program with respect to its prohibited and restricted items policy as it pertains to sales of pill presses, counterfeit molds, stamps, and dies, and encapsulating machines, according to the Justice Department.

The settlement alleged the company failed to report the sale of thousands of pill presses to the DEA. It also said that eBay buyers with residential shipping addresses bought pill presses and counterfeit dies bearing the imprint “M30,” which is the marking associated with 30mg oxycodone pills.

The settlement agreement also noted that “the vast majority of these commercial-grade machines were shipped to residential addresses.” According to the agreement, eBay didn’t report a single transaction to the DEA from 2015 to the present day.

EBay’s revenue comes from collecting a percentage of the final sales price of each transaction completed on its website.

“Fentanyl—pressed into fake pills that look like real prescription medications—is killing Americans,” DEA Administrator Anne Milgram said in a statement.

“Drug traffickers buy the tools to make fake pills, like pill presses, online,” Milgram said. “EBay and other e-commerce platforms must do their part to protect the public. And when they do not, DEA will hold them accountable.”

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