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More than 40 percent of Amazon's unit sales now come through its third-party marketplace.

Much of the expansion has occurred since Amazon started opening the floodgates to Chinese manufacturers, who previously had to count on middlemen, brands and private labels to reach global consumers.

"Word is out in the counterfeit community that it's open season on Amazon." It's not just niche brands like Bed Band feeling the pain.Her patented product called Bed Band consists of a set of shock cords, clamps and locks designed to keep fitted bed sheets in place.Whaley and her husband found quite an audience, selling up to 200 units a day for .99 a set. Revenue plummeted by half and Whaley was forced to lay off eight employees.To unsuspecting consumers, fake products can appear legitimate because of the Fulfillment by Amazon program, which lets manufacturers send their goods to Amazon's fulfillment centers and hand over a bigger commission, gaining the stamp of approval that comes with an FBA tag.Furthermore, Amazon's commingled inventory option bundles together products from different sellers, meaning that a counterfeit jacket could be sent to an Amazon facility by one merchant and actually sold by another.

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Alibaba, the Chinese e-retail giant, has been dealing with it since launching in 1999.

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