Alibaba to pay $600 million to settle US probe into illegal drug sales

Alibaba has agreed to pay $600 million to resolve U.S. federal allegations that its online marketplaces and payment processing business failed to prevent the sale and import of illegal drugs, chemicals, and counterfeit pharmaceutical equipment into the United States, marking one of the largest enforcement actions ever involving a global e-commerce platform.

The settlement, announced by the U.S. Department of Justice, resolves allegations against Alibaba and its U.S.-based payment subsidiary, AUS Merchant Services, through non-prosecution agreements related to violations of the Federal Food, Drug, and Cosmetic Act. Federal prosecutors alleged that the companies failed to adequately monitor merchants selling prohibited products through Alibaba.com and AliExpress, allowing thousands of illegal transactions to reach American buyers.

According to the Justice Department, Alibaba admitted that between 2016 and 2024 it failed to stop roughly 80,000 sales involving illegal pharmaceuticals, precursor chemicals, and pill-making equipment, representing more than $200 million in merchandise. Investigators said many of the products were imported directly into the United States despite existing federal restrictions.

The investigation involved multiple federal agencies that conducted more than 40 undercover purchases of illegal pharmaceuticals and pharmaceutical counterfeiting equipment from Alibaba's platforms. Officials said the evidence demonstrated weaknesses in the company's marketplace oversight and compliance systems.

Investigators also uncovered internal communications showing that some Alibaba employees had previously expressed concerns about the sale of prohibited products, questioning whether existing compliance measures were sufficient to prevent illegal activity from occurring on the platforms.

Authorities further alleged that AUS Merchant Services failed to maintain an effective anti-money laundering compliance program, allowing certain merchants to process payments connected to prohibited imports without adequate oversight.

As part of the agreement, Alibaba and AUS Merchant Services accepted responsibility for the conduct of certain employees and agreed to strengthen compliance programs, enhance monitoring systems, and implement stricter controls to prevent similar violations in the future.

Alibaba said it cooperated fully throughout the investigation and described the settlement as the outcome of an extensive regulatory review. The company stated it remains committed to maintaining stronger marketplace safeguards and adopting industry-leading compliance standards.

The case highlights growing scrutiny of global e-commerce platforms as regulators seek to prevent the online sale of dangerous pharmaceuticals, counterfeit medical products, and controlled substances. U.S. officials have increasingly warned that digital marketplaces must play a more active role in preventing illegal products from reaching consumers.

Justice Department officials said the settlement reinforces the government's commitment to holding technology companies accountable when inadequate compliance systems allow unlawful goods to enter the American market. As cross-border online commerce continues expanding, regulators are expected to place even greater emphasis on marketplace accountability, payment security, and consumer protection.