Online marketplaces such as Amazon, eBay, and Etsy will now be required to verify the identity and contact information of “high-volume” third-party sellers, according to the recently passed INFORM Consumers Act. This legislation, which was included in the year-end omnibus spending bill, defines high-volume sellers as those who have made 200 or more sales in a 12-month period worth $5,000 or more. In addition to verifying these sellers, the Act also directs online marketplaces to provide a hotline for customers to report suspicious activity, such as the posting of stolen, counterfeit, or dangerous products.
The INFORM Consumers Act will be implemented by the Federal Trade Commission (FTC) and violations will be subject to civil penalties. It has received support from eBay and a coalition of marketplaces called Protect America’s Small Businesses (PASS), but has received mixed reactions from sellers. Some have praised the law, while others have expressed concerns about safety and the definition of “high-volume.”
The passage of this legislation aims to curb the fencing of stolen merchandise, a serious and costly problem for retail stores, and provides protections for small sellers who use online platforms to sell their products. It also avoids a patchwork of state laws that sellers must comply with in terms of collecting and remitting sales tax. We’ll be sure to keep you updated on any further developments regarding the INFORM Consumers Act in the coming year.