Questions About Another Seller Who Started Selling Under Our ASIN...

We have recently had a new seller start selling under our ASIN and undercutting us on price. I have researched this issue in the forums and have reported the infringement through the correct channels on Amazon, but still have a few questions while I wait to hear anything back due to some circumstances that are different from what I have seen posted. We are fairly new to this, so bear with me. I apologize in advance if these are "newbie" concerns/questions, but we only switched to selling through Amazon FBA a little over a year ago after being overwhelmed handling direct sales/daily shipping ourselves,

Some extra background info:

1.The product we sell is not a "white label" or rebranded product (we worked with a local firm to design/ finalize the CAD files and hired an overseas manufacturer to produce.)

2. I don't believe this would be the case of a shady manufacturer selling our product to third parties. We use separate manufacturers for our product and for the packaging. Nothing comes "ready to sell" from the manufacturer. We handle all packaging ourselves once we receive both batches of orders.

3. This has caused a significant drop in our sales since the infringement occurred yesterday. We were trending down nearly 40% yesterday and 90% today.

4. Our product is the "Amazon Overall Pick" for its search term, so even a few days waiting to get things sorted out results in a pretty significant loss. They are already showing a low inventory alert, so I am not sure how many they have sold already and if a new store will pop up once they are sold out.

5. The seller is from China and has four ASINs listed in their newly launched store. Three of the four are FBA and piggybacking on existing ASINs. The one that is not piggybacking is shipped and sold by seller from China.

6. We are brand registered with Amazon.

7. We do not label the product with Amazon barcodes....we use the GS1 UPC on the packaging.

8. Since we were being undercut on price by less than $.30, I dropped our price under their offer. They lowered under that new price within minutes of ours changing, so assuming they are also automating offers.

I think that's everything...as for my questions:

1. Of course the big question, how does Amazon allow this to happen? I naively assumed being brand registered would stop things like this. I thought we might have to deal with knock-offs being listed as competing products (which is why we filed a patent) but never imagined someone would list under our actual ASIN. Is there an additional step to gate products which requires brand approval to sell (like Adidas, Lego, etc, do?)

2. We recently launched a new product and before Amazon received our first shipment, they allowed customers to purchase with an estimated delivery date. Our products being sold by this scam seller show 1 day delivery. Is it possible that this new seller created a shipment and doesn't intend on sending in any actual products (leaving Amazon to use our inventory to fulfill the orders in the meantime until this seller's shipment "arrives?") In this scenario, I'm assuming they would do so in hope that their first payout would hit before the product is expected to arrive from shipping overseas/before Amazon realizes and shuts down their store. (Not sure if this scenario is possible.) I know that sounds a bit crazy, but after experiencing different instances of Amazon's incompetence first hand over the past year, I can see it as a loophole that scam artists have identified and are currently taking advantage of until it's shut off. If so- what happens to our missing inventory...is it reimbursed at full price by Amazon?

3. If they did in fact send in actual product, I'm assuming since we use our manufacturer barcode that their counterfeit items will be commingled with ours? Is there any recourse to correct this?

Really about at my wit's end with Amazon over this and thinking about going back to direct sales like we did previously...especially since we completely missed out on Q4 sales last year after our holiday shipment got lost at an Amazon warehouse...only to be found two days before Christmas. Any advice helps...thanks in advance!