The Inform Consumers Act, a new legislation aimed at addressing organized retail theft and the sale of counterfeit and harmful products on online platforms, is set to take effect. The law requires online marketplaces like Amazon and eBay to verify and share information on high-volume third-party sellers in order to discourage the sale of stolen or unsafe goods. Failure to comply could result in fines exceeding $50,000 per violation.
The INFORM Consumers Act, which stands for Integrity, Notification, and Fairness in Online Retail Marketplaces, was passed in December as part of a larger spending bill. It was introduced by Representatives Jan Schakowsky and Gus Bilirakis in an effort to add transparency to online transactions and deter criminals from selling illicit goods.
Retailers and trade associations have been advocating for this legislation due to a surge in organized retail theft, which they attribute to weak regulations surrounding online platforms. These criminals steal merchandise from physical stores and resell it online, often at a reduced price, which has impacted retailers’ profits.
Online shopping has experienced significant growth, especially during the Covid pandemic, with e-commerce sales in the US accounting for 16.1% of total retail sales during the second quarter of 2020. While stolen or counterfeit goods make up only a small portion of online transactions, law enforcement officials and retail groups have emphasized the need for action to address this issue.
The Inform Act aims to eliminate the anonymity that criminals enjoy when selling stolen goods online. Online marketplaces will now be required to collect and verify specific information about high-volume sellers, such as contact details, bank account information, and tax records. Failure to disclose this information can result in the suspension of sellers.
Enforcement of the law will be carried out by the Federal Trade Commission (FTC) and state attorneys general. Violations may lead to fines of $50,120 per instance, and additional penalties may be imposed through legal action. The FTC has already communicated the new obligations to online marketplaces and has urged them to educate sellers on how to avoid potential scams.
Several major retailers, including Gap, Home Depot, Walgreens, and Best Buy, have expressed their support for the law and have called for its strict enforcement. The Buy Safe America Coalition, an advocacy group against the sale of stolen or counterfeit goods, has offered its assistance to the FTC in enforcing the law.
Online marketplaces like eBay and Amazon have already taken steps to comply with the law. eBay has modified its practices to strike a balance between transparency, consumer safety, and seller privacy. Amazon has notified high-volume sellers to verify their information to avoid consequences.
Overall, the Inform Consumers Act aims to protect consumers from fraudulent online transactions and provide retailers with stronger support in combating organized retail crime. Its implementation will enhance transparency and accountability in online marketplaces, ensuring a fair and secure environment for online shopping.
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