Alibaba agrees to pay $600 million to settle illegal drug lawsuit

By
FOX Local
Published July 3, 2026 12:20 PM MST

FILE-The Alibaba logo is seen in front of Alibaba's Wangjing office in Chaoyang district, Beijing, China, Dec. 24, 2020. (Photo credit should read Costfoto/Future Publishing via Getty Images)

The Brief

    • Alibaba will pay millions of dollars in a settlement with the federal government tied to allegations that the organization sold and imported unlawful pharmaceuticals.
    • The company admitted that they didn’t stop tens of thousands of goods sold involving illegal imports. 
    • Dozens of undercover purchases of the unlawful products were made by the IRS.  

Alibaba is set to pay $600 million to resolve a dispute with the federal government over accusations that the company sold and imported unlawful pharmaceuticals, controlled substances, regulated chemicals, and pill-making equipment into the United States.

According to The Associated Press, the U.S. accused AUS Merchant Services, Alibaba’s U.S.-based payment processor, of violating federal law by failing to stop merchants from selling and importing illegal products into the U.S. through Alibaba.com and AliExpress.com.

Alibaba $600 million lawsuit settlement 

Dig deeper:

In an agreement with the Department of Justice, Alibaba, a Chinese tech giant, admitted that between January 2016 and December 2024, the company failed to prevent about 80,000 item sales involving illegal imports that violated the Federal Food, Drug, and Cosmetic Act and other laws, according to a DOJ court document published on the agency’s website. 

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Alibaba workers expressed concerns that the organization’s compliance controls were substandard and failed to stop the sale of unlawful goods, while some merchants used Alibaba’s messaging service to direct buyers to third-party messaging platforms to aid illegal sales, The Associated Press reported, citing a news release on the settlement resolution.

The AP obtained a statement from Alibaba where the company said they and the federal government came to mutual agreement to impose rigorous compliance to the sale of goods in the U.S. by third-party merchants on its platforms. 

The IRS performed over 40 undercover purchases of illegal items. A non-prosecution agreement was reached. The AP noted that a non-prosecution agreement was established between Alibaba and the Department of Justice. 

Alibaba runs some of the world's biggest e-commerce platforms. 

The Source: Information for this story was provided by The Associated Press, which cites a news release on the settlement resolution and a Department of Justice court document. This story was reported from Washington, D.C.



 

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