Alibaba to pay $600M to resolve US drug sales probe
The Chinese e-commerce giant and its US payment processor struck non-prosecution agreements with the DOJ over nearly a decade of illegal pharmaceutical sales on their platforms.
Alibaba Group and its US-based payment processor, AUS Merchant Services Inc., will pay $600 million to settle a Department of Justice investigation into illegal drug sales facilitated through the company’s e-commerce platforms. The resolution covers violations stretching from January 2016 through December 2024, a period during which federal authorities identified roughly 80,000 illegal product sales with a gross merchandise value exceeding $200 million.
The settlement, announced on July 1, allows both companies to avoid criminal charges.
What Alibaba actually did
The DOJ’s investigation centered on Alibaba.com and AliExpress.com, two of the company’s major cross-border e-commerce platforms. Federal authorities alleged that both Alibaba and AUS Merchant Services, previously known as Alipay US, violated the Federal Food, Drug, and Cosmetic Act.
The core accusation: the platforms enabled merchants to sell and import illegal pharmaceuticals, controlled substances, and listing chemicals into the United States. Listing chemicals are precursor ingredients that can be used to manufacture controlled substances, which makes their unregulated sale particularly concerning to law enforcement.
To build the case, federal authorities conducted more than 40 undercover purchases through the platforms.
The resolution came in the form of non-prosecution agreements, meaning neither Alibaba nor AUS Merchant Services admitted to criminal liability beyond the facts acknowledged in the settlement.
What this means for investors
For the broader e-commerce sector, the settlement signals that regulatory costs are going up. Companies operating cross-border marketplaces will need to invest more heavily in compliance infrastructure, product screening, and seller verification.