A group of online marketplaces including eBay, Etsy, Poshmark, Mercari and OfferUp have banded together to highlight what they feel are oversights in the proposed INFORM Consumers Act — which is aimed at cracking down on the sale of stolen and counterfeit products online — and other similar legislation in states around the country. However, organizations such as the Retail Industry Leaders Association (RILA), along with retailers including Gap and The Home Depot, have expressed support for the legislation in its current form.
The federal legislation in question — The Integrity, Notification and Fairness in Online Retail Marketplaces (INFORM) for Consumers Act — was re-introduced in the U.S. Senate on March 10, 2021. It would require high-volume third-party sellers to authenticate their identity by providing government and tax IDs, bank account information and contact information, including business address, email and phone number. High-volume sellers are defined as vendors that have made 200 or more sales in a 12-month period, amounting to $5,000 or more. The proposed law would also require these sellers to indicate whether they are a manufacturer, importer, retailer or reseller.
A previous version of the INFORM Consumers Act was introduced in the Senate in March 2020 with companion legislation in the House of Representatives, but did not receive a vote.
“Criminal third-party sellers trick consumers into buying counterfeit and hazardous products online,” said Senator Bill Cassidy (R-La.) in a statement announcing the legislation. “This bipartisan bill provides information so that consumers can distinguish between genuine retailers and frauds in the internet marketplace.”
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Senator Dick Durbin (D-Ill.) introduced the bill alongside Cassidy, and the legislation is cosponsored by Senators Chuck Grassley (R-Iowa), Mazie K. Hirono (D-Hawaii), Chris Coons (D-Del.) and Thom Tillis (R-N.C.).
The bill does include an exception for individual high-volume third-party sellers that allows them to avoid sharing details like personal street address and phone number, if they respond to consumers’ questions over email “within a reasonable timeframe.”
Despite that proviso, a group of competitive third-party marketplaces have joined forces to voice concerns over the impact this legislation would have on their businesses and that of their sellers, many of whom are individuals operating out of their own homes.
“New marketplace verification and disclosure requirements would jeopardize the privacy of millions of small online sellers by requiring them to publicly disclose their full name, address, phone number and email address,” according to a statement from Poshmark announcing the formation of the Protect America’s Small Sellers (PASS) Coalition. “We believe this type of public disclosure compromises our sellers’ privacy, security and ability to thrive.”
The coalition members maintain there is “an important voice missing” in these legislative conversations and plan to push for amendments that will protect small online sellers, according to the Poshmark statement.
RILA and a number of other industry trade associations have publicly supported the INFORM Consumers Act, touting increased transparency for consumers and the fact that it will enable law enforcement to more easily identify bad actors. RILA issued a scathing response to the claims of the PASS Coalition via another coalition of which it is a member, Buy Safe America (BSA). Other members of the BSA coalition include Gap, The Home Depot, Ulta Beauty and JCPenney, to name just a few.
“The Coalition to Protect America’s Small Sellers has made a number of false and misleading statements right out of the gate, which calls into question their commitment to protecting consumers and small business,” said Michael Hanson, spokesperson for the Buy Safe America Coalition in the statement. “Instead of working with lawmakers and industry stakeholders to tackle the blatant lack of transparency on ecommerce platforms, the [PASS] Coalition has chosen a misinformation campaign — lawmakers shouldn’t be fooled.”
Among the misinformation that BSA sought to clarify was the fact that the legislation only applies to sellers of new or unused products, not used or reused items as some PASS Coalition members suggested in comments in a recent WWD article. The BSA maintains that businesses, consumers and sellers alike will benefit from the “weeding out” of sellers of counterfeit and stolen goods that would result from the legislation.
The lawmakers behind the bill also say it will help “equalize transparency” among brick-and-mortar retailers and their online counterparts by preventing criminals from stealing items from stores and reselling them in bulk online.
“Transparent marketplaces are safer marketplaces, and consumers should be provided with basic identifying information about those who sell consumer products online,” said Senator Durbin in the statement announcing the legislation. “Our bill ensures a baseline level of transparency for online marketplaces, where currently it may be difficult for consumers to know who third-party sellers are and how to contact them. In an era where stolen, counterfeit and dangerous goods are increasingly offered for sale online, the INFORM Consumers Act will help promote responsible marketplace behavior, deter shadowy sales practices, and protect consumers.”
For its part, the PASS Coalition doesn’t want to dismantle the INFORM Consumers Act completely. Coalition members told WWD they have been in talks with legislators since the bill was introduced to discuss modifications.
“We believe it is possible to find solutions that address ecommerce policy concerns while also supporting and protecting the needs of small online sellers,” said the Poshmark statement.
