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EBay to pay $59 million to settle US charges over illegal pill-making machines

FILE PHOTO: The eBay logo is pictured on a phone screen in this photo illustration in New York

By Jonathan Stempel

(Reuters) -EBay agreed to pay $59 million and upgrade compliance measures to resolve U.S. Department of Justice allegations it didn't try hard enough to stop criminals from buying devices for making counterfeit drugs, including pills laced with fentanyl.

Wednesday's settlement arose from eBay's alleged inadequate monitoring since October 2015 of thousands of pill presses and encapsulating machines sold through its website, including presses capable of producing thousands of pills an hour.

It is the Justice Department's first settlement with an e-commerce company for violating the federal Controlled Substances Act, which governs the manufacturing and distribution of drugs.

EBay denied wrongdoing in agreeing to settle.

Criminals can use pill presses and encapsulating machines to produce counterfeit pills, including fentanyl-laced pills that helped fuel the nation's opioid epidemic.

The Justice Department said eBay failed to verify the identities of people who bought the pill-making machines, did not conduct required recordkeeping, and reported no transactions involving the machines to the Drug Enforcement Administration.

Many people who bought pill presses on eBay were later successfully prosecuted for drug-related crimes, the Justice Department said.

"Fentanyl - pressed into fake pills that look like real prescription medications - is killing Americans," DEA Administrator Anne Milgram said in a statement. "EBay and other e-commerce platforms must do their part to protect the public."

The settlement requires San Jose, California-based eBay to enhance policies on items banned from sale, and adopt a new policy governing pill presses, dies and molds.

EBay will report on its compliance measures to the Justice Department for three years.

In a statement, eBay said it settled to avoid the cost and uncertainty of litigation, and will fund the settlement with cash on hand.

"Maintaining a safe and trusted marketplace for our global community of sellers and buyers is a fundamental principle of our business," eBay said.

(Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)