New Life For The INFORM Consumers Act

In March of 2021, the Senate introduced the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (referred to as the INFORM Consumers Act) aimed to protect consumers against harm from the online sale of counterfeit products.  The bill languished in the Senate for more than a year but recently found new life when, in October 2022, its provisions were inserted into the 2023 National Defense Authorization Act (NDAA). Now, with key backing from e-commerce giants, and previous foes Amazon, Walmart, and others, critical portions of the INFORM Consumers Act are now law.  While no knowledgeable sources claim this will solve or mitigate all the risks consumers face from unscrupulous marketplace sellers, it's a big leap in the right direction.  

The INFORM Consumers Act provisions in the NDAA mandates marketplaces must collect and verify information regarding the identities of “high volume” (i.e. $20,000+ annual sales) third-party sellers that use their e-commerce platforms. This information includes: 

• Bank Account Information. Bank account numbers, names of payees on the accounts, and information regarding payment processors used by the seller in sales transactions. 
• Seller Contact Information. Presentation of a government-issued ID for an individual or, for a company, a valid government-issued record or tax document that includes the seller’s business name and physical address. Also required is a working email address and phone number of the seller.   
• Annual Certification. Each year sellers must report to the marketplace any changes to the information required above or face suspension.  
• Verification and Disclosure. Each marketplace must verify the accuracy of the information collected from sellers and disclose this information in a “clear and conspicuous” manner on the product listing or through a link placed near the product shown online. 
• Reporting Mechanism. The requirement that each marketplace discloses, in a “clear and conspicuous” manner, a reporting mechanism that helps consumers report  suspicious marketplace activities. 

Amazon originally opposed the bill because it believed the legislation unfairly favored large retail stores because it targeted small businesses that sell online. However, Amazon has now changed its tune and joined others such as the National Retail Federation, Walmart, Etsy, and eBay in signing  a letter to Senate leadership supporting the legislation saying: “This common-sense legislation is critical in helping law enforcement, manufacturers, retailers, and online marketplaces of all sizes work together to protect consumers from bad actors peddling counterfeit and stolen goods.”

Now that the NDAA has passed into law with the INFORM Consumers Act provisions intact, it will make seller identities more transparent and will most certainly deter some counterfeiters.  However, the bill has shortcomings that need to be addressed, such as the lack of guidance regarding how e-commerce platform providers verify identities when some sellers do not have physical addresses or phone numbers.  In addition, and of significant importance is the fact that while sellers are now required to provide a valid name, contact information, and address, residential locations are excluded from the legislation.  Protecting the privacy of legitimate sellers operating from home based business locations certainly is an important consideration, but how is that weighed against the obvious fact that both legitimate, as well as, trademark abusers and unauthorized sellers operate from residential addresses? 

With the INFORM Consumers Act provisions incorporated into the now passed larger omnibus defense authorization bill, fueled by receiving Amazon’s support, the likelihood this reduces counterfeit sales is real. Question marks do remain however, and the impact this new legislation has will be a direct result of its real-world implementation, and that still remains less than clear.

To learn more about IPSecure brand protection services or join our private beta program, visit ipsecure.com or contact us at info@ipsecure.com.

‍