The new INFORM Consumers Act (Integrity, Notification, and Fairness in Online Retail Marketplaces (INFORM) Consumers Act), which was passed recently after years of discussions, impacts third-party vendors that generate a larger volume of sales on online platforms in the United States (so-called high-volume sellers). Once the new law comes into force, e‑commerce marketplaces would have to collect relevant data from these high-volume sellers. Next to trade in counterfeit goods, the new legislation also targets the sale of stolen goods. Many business representatives welcome the legislation, which was passed by the US Congress at the end of 2022 as part of the 2023 omnibus spending package and was also recently signed by President Joe Biden.
According to INFORM, the term high-volume sellers refers to larger third-party sellers with at least 200 direct sales totaling at least 5,000 dollars in value within twelve months. E‑commerce marketplaces such as Amazon or eBay would be required to request data such as government and tax IDs, banking details, and contact information from such online sellers in the future. This should make it easier for customers and, in particular, law enforcement agencies to identify fraudulent merchants that might, for example, have sold counterfeits over the Internet.
// “Online marketplaces offer criminal actors anonymity; INFORM now requires information verification for high-volume third-party sellers to help law enforcement and brands with prosecution efforts.“
Steve Lamar, president and chief executive, AAFA
Trade associations such as the American Apparel & Footwear Association (AAFA) and the Buy Safe America Coalition (BSA) emphasize the positive effects that the law could have and from which, according to AAFA, brand manufacturers and trademark holders could directly benefit. At the same time, however, AAFA and other associations expressed regret that the SHOP SAFE Act was not passed. Among other things, this second regulation would have required operators of e‑commerce platforms to also proactively check for illegal or counterfeit goods.
Meanwhile, in Europe, the European Union had passed far-reaching regulations on online trade last year with the EU’s Digital Services Act (DSA). The groundbreaking law on digital services is intended, among other things, to better protect online buyers from counterfeiting and to curb illegal online trade. For this, the bloc wants to make online platforms more accountable for taking faster and better action against counterfeiting traders.
