Rampant sales of counterfeit goods on Alibaba’s Taobao platform have already caught the attention of Chinese regulators. After receiving heavy criticism from the state regulator, Alibaba had assured the Chinese quality watchdog to curb sales of fake goods on its platforms. Now the American Apparel and Footwear Association (AAFA) has described Taobao has one of the world’s largest platforms for counterfeit goods.

Alibaba Group Holding Ltd Refutes AAFA's Counterfeiting Claims

Alibaba has been “sluggish” to take action

But Alibaba was quick to refute AAFA’s accusations. The Hangzhou-based company has issued a statement defending itself against the U.S. clothing trade group’s claims that it tolerates counterfeit goods on its Taobao platform. On April 8, the AAFA had written a letter to the U.S. trade representative and the Securities and Exchange Commission (SEC) to bring up the issue with the Chinese company.

The U.S. clothing trade group said that it had already asked Alibaba to take stringent measures to curb fake goods. But the company has been “sluggish” to implement the measures. Alibaba said it was dedicated to fighting the fakes and has been working with the AAFA on the issue since 2012. The U.S. group said it was convinced that Alibaba was either incapable or not interested in resolving the problem.

AAFA asks SEC to increase scrutiny of Alibaba’s efforts

The American Apparel and Footwear Association claims to represent more than 1,000 brands. In its letter, the apparel group urged the Securities and Exchange Commission to increase scrutiny of the Chinese company’s efforts to eliminate counterfeits from Taobao. Alibaba had promised to curb fakes goods in the run up to its historic IPO last year.

In 2012, the U.S. trade office had removed Taobao from its list of “notorious markets” in recognition of the progress made. But the AAFA argues that the problem had only worsened since Taobao was dropped from the list of notorious markets. Even before the U.S. trade group sent its letter, the U.S. trade office said last month that it was closely monitoring Alibaba for sales of pirated and counterfeit goods.

Alibaba shares fell 0.10% to $84.19 in pre-market trading Tuesday.