Key Takeaways
Alibaba Group and its US payment processor AUS Merchant Services, formerly Alipay US, agreed on July 1 to pay $600 million to resolve DOJ allegations they failed to stop illegal pharmaceutical sales into the United States.
Alibaba admitted its platforms hosted roughly 80,000 sales of illegal pharmaceuticals, controlled chemicals, and pill presses between 2016 and 2024, worth more than $200 million in gross merchandise value.
Federal agents made over 40 undercover purchases during the investigation, and the deal is the largest monetary settlement in the District of Rhode Island's history.
The Justice Department announced a $600 million non-prosecution agreement with Alibaba Group and AUS Merchant Services on July 1, resolving allegations that one of China's largest companies let merchants sell illegal pharmaceuticals, controlled chemicals, and pill presses to American buyers for nearly a decade.
Alibaba admitted that between January 2016 and December 2024 it failed to prevent roughly 80,000 illegal product sales into the US through Alibaba.com and AliExpress, with combined merchandise value over $200 million. Employees had raised concerns that compliance controls were inadequate, and some merchants used the platform's private messaging service to move deals onto encrypted apps. Alibaba profited through membership, advertising, shipping, and payment fees. Federal law enforcement made more than 40 undercover purchases of products that were illegal to import.
"Criminals use e-commerce sites to carry on and profit from illicit activity," said Assistant Attorney General Tysen Duva of the DOJ's Criminal Division, who added that another channel for illegal pharmaceuticals is now closed. AUS, a subsidiary of Ant International, admitted its anti-money-laundering program failed to stop payments for prohibited goods, and in at least one case a merchant it had investigated kept selling to US buyers anyway.
Alibaba will pay a $125 million penalty and forfeit $200 million, while AUS pays $85 million and forfeits $190 million, per the non-prosecution agreement. Both companies agreed to strengthen compliance and keep cooperating. The pattern here is familiar. Platforms that move money or goods at scale keep discovering that compliance is the product, a lesson from the record $6.5 billion health care fraud takedown and the Huione Group seizure.
People Also Ask
Why is Alibaba paying $600 million to the DOJ?
Alibaba and AUS Merchant Services entered a non-prosecution agreement to resolve allegations they failed to prevent merchants from selling illegal pharmaceuticals, controlled chemicals, and pill presses into the US, violating the Federal Food, Drug, and Cosmetic Act.
What did Alibaba admit to?
Alibaba admitted it failed to prevent roughly 80,000 illegal product sales into the US between January 2016 and December 2024, with gross merchandise value exceeding $200 million.
What is AUS Merchant Services?
AUS, formerly known as Alipay US, is Alibaba's US-based payment processor and a subsidiary of Ant International. It admitted its anti-money-laundering program failed to block payments tied to prohibited products.
Is this a criminal conviction?
No. A non-prosecution agreement means the companies pay penalties, forfeit funds, and accept compliance obligations, but the DOJ does not pursue criminal charges as long as they meet the terms.