If you’re an online shopper, you may have heard of the INFORM Consumers Act, a federal law that requires online retailers to collect, verify, and disclose identifying information about high-volume third-party sellers. The law aims to protect consumers from purchasing counterfeit, stolen, or unsafe products from online marketplaces. Amazon, one of the largest online retailers, is among the companies affected by the INFORM Consumers Act.
The INFORM Consumers Act took effect on June 27, 2023, and has since impacted the way online marketplaces operate. It requires online marketplaces to collect and verify certain information about high-volume third-party sellers, such as their legal name and contact information. This information is then disclosed to consumers, who can use it to make informed purchase decisions. The law also gives consumers a way to report questionable activity on online marketplaces, such as counterfeit products or fraudulent sellers.
Key Takeaways
- The INFORM Consumers Act requires online marketplaces to collect, verify, and disclose identifying information about high-volume third-party sellers.
- Amazon is among the companies affected by the law.
- The law aims to protect consumers from purchasing counterfeit, stolen, or unsafe products from online marketplaces.
Background of the INFORM Consumers Act
The INFORM Consumers Act is a federal law that requires online retailers to collect, verify, and disclose identifying information about high-volume third-party sellers. The law was introduced in Congress as H.R. 5502 and was signed into law on December 22, 2020, with an effective date of June 27, 2023.
Legislative History
The INFORM Consumers Act was introduced by Representative Jan Schakowsky of Illinois in February 2020. The bill was referred to the Committee on Energy and Commerce, and on July 15, 2020, it was reported out of committee with amendments. The bill passed in the House of Representatives on September 29, 2020, with a vote of 335-78. The bill was then referred to the Senate Committee on Commerce, Science, and Transportation. On December 18, 2020, the Senate passed the bill with an amendment by unanimous consent. The House agreed to the Senate amendment on December 21, 2020, and the bill was signed into law by the President on December 22, 2020.
Purpose and Goals
The INFORM Consumers Act is designed to deter criminals from selling stolen, counterfeit, or unsafe items through online marketplaces. It also gives shoppers information about sellers and a way to report questionable activity. The Act says online marketplaces must disclose contact information about many third-party sellers of new or unused products to consumers, and it requires online marketplaces to verify that the information provided by those sellers is accurate.
The goals of the INFORM Consumers Act are to add more transparency to online transactions and to deter criminals from acquiring stolen, counterfeit, or unsafe items and selling them through those marketplaces. The Act also makes sure online marketplace users have a way to report suspicious conduct concerning high-volume third-party sellers.
In summary, the INFORM Consumers Act is a federal law that requires online retailers to collect, verify, and disclose identifying information about high-volume third-party sellers. The law was introduced in Congress as H.R. 5502 and was signed into law on December 22, 2020, with an effective date of June 27, 2023. The law is designed to add more transparency to online transactions and to deter criminals from selling stolen, counterfeit, or unsafe items through online marketplaces.
Key Provisions of the Act
The INFORM Consumers Act is a new U.S. law designed to protect consumers and small businesses in online transactions. The Act imposes new requirements on online marketplaces like Amazon to ensure transparency and deter the online sale of stolen, counterfeit, or unsafe merchandise. Here are some of the key provisions of the Act:
Verification Requirements
One of the key provisions of the Act is the requirement for online marketplaces to verify the identity of high-volume third-party sellers. This verification process is designed to ensure that sellers are legitimate and that they are not selling stolen, counterfeit, or unsafe merchandise. The Act also requires online marketplaces to provide contact information for third-party sellers to consumers.
Transparency Measures
The Act requires online marketplaces to disclose information about third-party sellers to consumers. This includes information about the identity of the seller, the country of origin of the product, and any relevant product safety information. Online marketplaces must also disclose whether a product is sold by a third-party seller or by the online marketplace itself.
Law Enforcement Cooperation
The Act requires online marketplaces to cooperate with law enforcement agencies in investigating and prosecuting sellers who violate the law. This includes providing information about sellers and their products to law enforcement agencies upon request.
In summary, the INFORM Consumers Act is a new U.S. law designed to protect consumers and small businesses in online transactions. The Act imposes new requirements on online marketplaces like Amazon to ensure transparency and deter the online sale of stolen, counterfeit, or unsafe merchandise. The Act includes provisions for verification requirements, transparency measures, and law enforcement cooperation to ensure that consumers can trust the products they purchase online.
Impact on Online Marketplaces
The INFORM Consumers Act has a significant impact on online marketplaces, especially high-volume online marketplaces like Amazon. As an online marketplace, you have new duties and responsibilities to ensure the safety and authenticity of the products sold on your platform.
Duties and Responsibilities
Under the INFORM Consumers Act, online marketplaces are required to verify certain information about high-volume third-party sellers, such as their name, address, and tax identification number. This information must be displayed on the seller’s product listing page, so consumers can make informed decisions about their purchases.
Additionally, online marketplaces must establish procedures for removing listings that violate the Act, such as listings for stolen, counterfeit, or unsafe products. If a consumer reports a questionable listing, the online marketplace must investigate and take appropriate action.
Compliance Challenges
Compliance with the INFORM Consumers Act can be challenging for online marketplaces, especially those with a large number of sellers. For example, verifying the identity of high-volume sellers can be time-consuming and resource-intensive.
Online marketplaces must also ensure that their policies and procedures are in compliance with the Act. This may require changes to existing policies and procedures, as well as the development of new ones.
To ensure compliance with the INFORM Consumers Act, online marketplaces may need to invest in additional resources, such as personnel and technology. They may also need to work closely with their sellers to ensure that they understand their new responsibilities under the Act.
Overall, the INFORM Consumers Act represents a significant change for online marketplaces like Amazon. While compliance can be challenging, it is essential for ensuring the safety and authenticity of the products sold on these platforms.
Protection for Consumers and Businesses
The INFORM Consumers Act is a federal law that requires online retailers to collect, verify, and disclose identifying information about high-volume third-party sellers. This law provides protection for both consumers and businesses. In this section, we will discuss the different safeguards that the INFORM Consumers Act provides to consumers and the support that it offers to small businesses.
Consumer Safeguards
The INFORM Consumers Act is designed to protect consumers from fraud, stolen, and counterfeit products. The act requires online retailers to collect and verify information about high-volume third-party sellers before they can sell products on their platform. This information includes the seller’s name, address, and contact information. By collecting and verifying this information, online retailers can ensure that the products being sold on their platform are legitimate and safe for consumers.
Additionally, the INFORM Consumers Act requires online retailers to disclose information about the products being sold on their platform. This includes information about the seller, the product, and any warranties or guarantees that come with the product. By providing this information to consumers, they can make informed decisions about the products they are purchasing.
Support for Small Businesses
The INFORM Consumers Act also provides support for small businesses. The act specifically exempts businesses that have made their name, business address, and contact information available to the general public. It also exempts businesses that have a contractual relationship with the marketplace to manufacture, distribute, wholesale, or fulfill shipments of consumer products. Businesses that provide the marketplace with identifying information that can be used to verify their identity are also exempt.
By exempting these small businesses, the INFORM Consumers Act ensures that they are not burdened with unnecessary regulations. This allows them to focus on growing their business and providing quality products to consumers.
In summary, the INFORM Consumers Act provides important safeguards for consumers and support for small businesses. By collecting and verifying information about high-volume third-party sellers, online retailers can ensure that the products being sold on their platform are legitimate and safe for consumers. The act also provides exemptions for small businesses, allowing them to focus on growing their business and providing quality products to consumers.
Verification Process
To comply with the INFORM Consumers Act, Amazon requires high-volume third-party sellers to complete a verification process by June 27, 2023. This process involves providing Amazon with various pieces of information about your business.
Information Collection
Amazon will collect and verify the following information during the verification process:
- Government-issued identification, such as a driver’s license or passport
- Tax identification numbers, such as an EIN or SSN
- Contact information, including a phone number and business address
- Bank account information for payment processing
Amazon will also ask for additional information if necessary. You can check your Account Health dashboard to see if you have any outstanding requests for verification.
Privacy Concerns
Amazon takes privacy and security seriously and has implemented measures to protect your information. All data collected during the verification process is encrypted and stored securely. Amazon will only use this information for verification purposes and will not share it with third parties except as required by law.
If you have any concerns about the verification process or the security of your information, you can contact Amazon’s Seller Support for assistance.
Overall, completing the verification process is a necessary step for high-volume third-party sellers to comply with the INFORM Consumers Act. By providing Amazon with the necessary information, you can ensure that your account remains in good standing and continue to sell on the platform.
Enforcement and Penalties
Role of Attorneys General
Attorneys General have an important role in enforcing the INFORM Consumers Act. They can bring civil actions against online marketplaces that violate the law. The INFORM Consumers Act authorizes state Attorneys General to enforce the law and seek injunctive relief, as well as civil penalties of up to $50,120 per violation for online marketplaces that fail to comply with the new requirements.
Penalties for Non-Compliance
Online marketplaces that fail to comply with the requirements of the INFORM Consumers Act may face significant penalties. The law provides for civil penalties of up to $50,120 per violation for online marketplaces that fail to collect, verify, and disclose certain information about high-volume third-party sellers. The penalties can add up quickly, especially for online marketplaces with a large number of sellers.
In addition to civil penalties, online marketplaces that violate the INFORM Consumers Act may also face other consequences. For example, they may lose the trust of their customers, who may stop using their platform if they believe that the online marketplace is not taking sufficient steps to protect them from abusive or criminal activity.
Overall, the INFORM Consumers Act is a significant new law that seeks to protect consumers from abusive or criminal activity on online marketplaces. The law imposes new requirements on online marketplaces that sell new or unused consumer products, and it provides for significant penalties for non-compliance. If you are an online marketplace that is subject to the INFORM Consumers Act, it is important to take steps to ensure that you are complying with the new requirements in order to avoid penalties and maintain the trust of your customers.
Challenges and Criticisms
Concerns from Online Marketplaces
The INFORM Consumers Act has been met with some concerns from various online marketplaces. While the Act is intended to protect consumers from counterfeit products and fraud, some marketplaces fear that it could lead to decreased innovation and increased costs. According to SellerEngine, the Act requires online retailers to collect, verify, and disclose identifying information about high-volume third-party sellers. This could lead to increased costs for sellers who may have to provide additional documentation and verification. Additionally, some marketplaces fear that the Act could lead to decreased innovation as sellers may be hesitant to introduce new products due to the additional documentation and verification requirements.
Impact on Innovation
The INFORM Consumers Act has also faced criticism for its potential impact on innovation. According to a Politico article, some opponents of the Act argue that it could stifle innovation by creating a “one-size-fits-all” approach to online marketplaces. They argue that the Act could limit the ability of smaller sellers to introduce new products and compete with larger retailers. Additionally, some critics argue that the Act could lead to a patchwork of state-level regulations that could further stifle innovation and create confusion for sellers.
Overall, the INFORM Consumers Act has faced criticism for its potential impact on innovation and increased costs for sellers. While the Act is intended to protect consumers from counterfeit products and fraud, some online marketplaces fear that it could lead to unintended consequences. As the Act continues to be implemented, it will be important to monitor its impact on online sales and innovation.
Future of Online Marketplace Regulation
Evolving Policies
As policymakers continue to grapple with the challenges of regulating online marketplaces, the INFORM Consumers Act represents a significant step forward in ensuring transparency and accountability. However, given the rapidly evolving nature of e-commerce, it is likely that further regulations will be necessary to keep pace with new developments.
One area of particular concern is the increasing use of AI and machine learning algorithms in online marketplaces. These tools have the potential to greatly improve the efficiency and accuracy of online transactions, but they also raise a number of ethical and legal questions. As such, it is likely that policymakers will need to develop new regulations to ensure that these tools are used in a responsible and transparent manner.
Global Considerations
While the INFORM Consumers Act is a US law, it is likely that other countries will take note of its provisions and consider implementing similar regulations. This could lead to a more standardized approach to online marketplace regulation across the globe, which would be beneficial for both consumers and businesses.
However, it is also important to recognize that different countries have different cultural and legal norms, and what works in one country may not work in another. As such, any global approach to online marketplace regulation will need to take these differences into account and be flexible enough to adapt to local needs.
Overall, the future of online marketplace regulation is likely to be shaped by a combination of evolving policies and global considerations. While the INFORM Consumers Act represents an important step forward, it is clear that further regulations will be necessary to ensure that online marketplaces remain transparent, accountable, and fair for all parties involved.
Frequently Asked Questions
What are the key provisions of the INFORM Consumers Act?
The INFORM Consumers Act is a federal law that requires online marketplaces to collect, verify, and disclose identifying information about high-volume third-party sellers. The key provisions of the INFORM Consumers Act include:
- Requiring online marketplaces to collect and verify seller information, such as name, address, and tax identification number.
- Requiring online marketplaces to disclose information about sellers, such as contact information and whether they are a U.S. resident or not.
- Requiring online marketplaces to remove sellers who fail to provide accurate information or who are found to be engaging in fraudulent activity.
How does the INFORM Consumers Act impact online marketplaces like Amazon, Etsy, and eBay?
The INFORM Consumers Act has a significant impact on online marketplaces like Amazon, Etsy, and eBay. These marketplaces are required to collect and verify certain information from high-volume third-party sellers. The law aims to protect consumers from counterfeit and other illegal products that are sold online.
What changes will consumers notice on Amazon due to the INFORM Consumers Act?
Consumers may notice changes on Amazon due to the INFORM Consumers Act. Amazon is required to collect and verify certain information from high-volume third-party sellers, which means that sellers who fail to provide accurate information or who engage in fraudulent activity will be removed from the platform. This should help to ensure that consumers are buying from legitimate sellers and that they are receiving authentic products.
What are the requirements for sellers under the new INFORM Consumers Act?
Under the new INFORM Consumers Act, online marketplaces like Amazon are required to collect and verify certain information from high-volume third-party sellers. The information that must be collected and verified includes:
- Identity: For individual sellers, the name of the individual legally authorized to act on the seller’s behalf.
- Business information: For businesses, the name of the business, the address of the principal place of business, and the tax identification number.
- Contact information: A reliable means of contacting the seller, such as a phone number or email address.
Has the INFORM Consumers Act been officially passed, and what are its implementation dates?
Yes, the INFORM Consumers Act has been officially passed and was signed into law on December 22, 2022. The law takes effect on June 27, 2023. Online marketplaces like Amazon, Etsy, and eBay must comply with the new requirements by this date.
Where can I find detailed information about the INFORM Consumers Act?
If you are looking for detailed information about the INFORM Consumers Act, you can visit the Federal Trade Commission’s website. The website provides a comprehensive overview of the law, including its key provisions and requirements for online marketplaces and sellers. You can also find information about the law on Amazon’s website, as well as on other online marketplaces.
