The new Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM Consumers) Act, which is included in the Fiscal Year (FY) 2023 omnibus appropriations bill, aims to increase transparency and combat the sale of counterfeit goods on online marketplaces like eBay and Amazon.
In a press release U.S. Senate Majority Whip Dick Durbin (D-IL) said “People deserve to know basic information about those who sell them consumer products online. By providing appropriate verification and transparency of high-volume third party sellers, the INFORM Consumers Act will shine a light that will deter online sales of stolen, counterfeit, and unsafe goods and protect consumers”.
Some of the transparency and verification measures introduced by the act include directing online marketplaces to verify “high-volume” third-party sellers by authenticating their government IDs, tax IDs, bank account information, and contact information. This includes the disclosure of basic identity and contact information to consumers.
Sellers are divided over the legislation’s definition of “high-volume” sellers, which it says are those vendors who have made 200 or more discrete sales over a 12-month period amounting to $5,000 or more. Many Amazon FBA sellers have pointed out that this sets the bar rather low, and would subject the majority of sellers on Amazon to the act’s disclosure requirements.
Some sellers also raised concerns over the privacy of home-based online vendors. However, the act does provide an exception where individual high-volume third-party sellers will be permitted to keep their personal street address and phone number private, as long as they respond to consumer inquiries via email within a reasonable timeframe—which in turn raises a few eyebrows, as contacting customers directly via email is considered a violation of the selling terms of service of big marketplaces like Amazon.
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The act also contains provisions aimed at protecting consumers from bad actors on the internet, particularly those who post and sell suspected stolen, counterfeit, or dangerous products. For instance, online marketplaces like Amazon will be required to provide a hotline for customers to report such activity.
For many third-party sellers, the INFORM Consumers Act is a welcome development, as many Chinese and China-based sellers are dominating product niches by ripping off competing sellers and selling counterfeit goods, while being able to keep their seller information private—or at least mask it with a US-based dropshipper’s information. More than 50% of the top sellers on Amazon are based in China.
The legislation passed the House last month, with support from various consumer groups, retailers, and law enforcement organizations, including the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Association of Wholesaler-Distributers, and the Coalition to Protect America’s Small Sellers, among others.