The INFORM Consumers Act directs online marketplaces to verify high-volume third-party sellers by acquiring the seller's government ID, tax ID, bank account information, and contact information. High-volume third-party sellers are defined as vendors who have made 200 or more discrete sales in a 12-month period amounting to $5,000 or more.
The legislation instructs online marketplaces to order their high-volume third-party sellers to disclose to consumers the seller's name, business address, email address, phone number, and whether the seller is a manufacturer, importer, retailer, or a reseller of consumer products. The online marketplace will also need to supply a hotline to allow customers to report to the marketplace suspicious marketplace activity such as the posting of suspected stolen, counterfeit, or dangerous products.
In addition, the bill directs marketplaces to inform consumers if the product shipped to the consumer is from a seller other than the seller on the product listing page where the product was purchased.
A diverse group of organizations including the Association have indicated support of the bill and the concepts of fair disclosure in both the Senate and House Bill's:
- Association of Home Appliance Manufacturers
- Automotive Anti-Counterfeiting Council
- Communications Cable & Connectivity Association
- Consumer Healthcare Products Association
- Fashion Accessories Shippers Association
- Gemini Shippers Association
- Halloween & Costume Association
- Juvenile Products Manufacturers Association
- Kids in Danger (KID)
- Motor & Equipment Manufacturers Association
- National Consumers League
- Personal Care Products Council
- Public Citizen
- Retail Industry Leaders Association
- The Fashion Jewelry & Accessories Trade Association
- The Toy Association
- TIC Council Americas
- Transnational Alliance to Combat Illicit Trade
The Energy and Commerce Committee's Subcommittee on Consumer Protection and Commerce (of which Representative Schakowsky is Chair) is planning on holding a markup of the bill in September.
In other news, the National Association of Manufacturers (NAM) has issued a white paper on counterfeits, "Countering Counterfeits: The Real Threat of Fake Products
". Significantly, the paper includes strong recommendations for Congress to enact legislation mandating that marketplaces share information with consumers, verify sellers, and implement takedown measures or face contributory liability for infringing goods sold on their sites.
Finally, the Transnational Alliance to Combat Illicit Trade and the American Apparel & Footwear Association issued a new report titled Fraudulent Advertising Online: Emerging Risks and Consumer Fraud
. As noted in the TRACIT press release, "The report investigates and points out that Internet-based platforms for social networking and shopping from home have inherent systemic weaknesses that are exploited by criminals to sell any variety of counterfeit or illegal product with little risk of apprehension. The lack of sufficient policies and procedures to verify an advertiser's true identity and limited vetting during the onboarding process are identified as the main vulnerabilities that enable fraudulent advertising online."
Social media and advertising are issues that we will begin to touch on in our updated white paper as an "emerging" concern for the toy industry as well.
The Association has joined in supporting these efforts to foster greater Seller transparency and to combat in online Infringement of branded products in such marketplaces. The Association also welcomes Amazon's recent announcement that they will identify sellers on their platform and has encouraged all platforms to do so.