Alibaba Group (HKG:9988) and its US payments processor, AUS Merchant Services, agreed to pay a combined $600 million to resolve an investigation by the US Justice Department into illegal pharmaceutical sales on the company's e-commerce platforms.
The Chinese tech and e-commerce firm admitted that between January 2016 and December 2024, it failed to prevent roughly 80,000 product sales on Alibaba.com and AliExpress.com that involved unlawful imports of pharmaceuticals, controlled substances, listed chemicals and pill presses, according to a Wednesday notice from the Justice Department.
In a statement issued to, Alibaba described the settlement as a "mutually satisfactory resolution with U.S. regulators."
"This settlement reflects a thorough regulatory process with Alibaba's full cooperation and our commitment to best-in-class standards of control, policies, and measures against non-compliant product sales."
The products involved in the investigation have a combined gross merchandise value exceeding $200 million, the DOJ said, adding that federal agents made more than 40 undercover purchases of illegal drugs and counterfeiting equipment during the probe.
Separately, AUS admitted that from January 2020 to December 2023, it accepted US dollar-denominated wire and credit-card payments on behalf of overseas Alibaba merchants.
Under a non-prosecution agreement, Alibaba will pay a $125 million criminal penalty and forfeit $200 million, while AUS, formerly known as Alipay US, will pay an $85 million penalty and forfeit $190 million.
First Assistant U.S. Attorney Charles C. Calenda for the District of Rhode Island called it "the largest monetary settlement in the history of the District of Rhode Island."
Alibaba did not immediately respond to' request for comment.
Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division, said, "Companies operating online marketplaces - whether based in the United States or abroad - must implement appropriate safeguards to prevent bad actors from exploiting their platforms. If they fail to do so, the Department will hold them accountable."
The settlement marks the latest US action against Alibaba after the US Department of Defense in June added the company to its list of "Chinese military companies" under Section 1260H of the National Defense Authorization Act, alongside Baidu (HKG:9888), BYD (HKG:1211, SHE:002594), Nio (HKG:9866), WuXi AppTec (HKG:2359, SHA:603259), Robosense Technology (HKG:2498) and more.
Last week, Alibaba sued the Pentagon, seeking to overturn the designation and accusing the department of acting without factual basis or fair process in branding it as a threat to national security.
"The determinations have no basis in fact or law... To label Alibaba a 'Chinese military company' is to brand it an instrument of the Chinese military and a threat to US national security," Alibaba wrote.
