Cassidy, Durbin Introduce INFORM Consumers Act to Require Greater Transparency from Third-Party Sellers for Online Products

WASHINGTON – U.S. Senators Bill Cassidy, M.D. (R-LA) and Dick Durbin (D-IL) introduced legislation today to fight the online sale of stolen, counterfeit and dangerous consumer products by requiring extensive transparency of large-volume third-party sellers in online retail marketplaces.

The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM) Act would mandate online retail marketplaces that include third-party sellers of consumer products to authenticate the identity of “high-volume third-party sellers,” which will help equalize transparency among brick-and-mortar retailers and prevent organized retail crime rings from stealing items from these stores to resell those items in bulk online.

“Criminal third-party sellers trick consumers into buying counterfeit and hazardous products online. This bipartisan bill provides information so that consumers can distinguish between genuine retailers and frauds in the internet marketplace,” said Dr. Cassidy.

“Transparent marketplaces are safer marketplaces, and consumers should be provided with basic identifying information about those who sell consumer products online. Our bill ensures a baseline level of transparency for online marketplaces, where currently it may be difficult for consumers to know who third-party sellers are and how to contact them. In an era where stolen, counterfeit, and dangerous goods are increasingly offered for sale online, the INFORM Consumers Act will help promote responsible marketplace behavior, deter shadowy sales practices, and protect consumers,” said Senator Durbin.

The INFORM Consumers Act will 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. The bill presents an exception for individual high-volume third-party sellers that permits them not to have their personal street address or personal phone number revealed to the public if they respond to consumers’ questions over email within a reasonable timeframe. The bill’s requirements would be implemented by the FTC and violations would be subject to civil penalties.

The INFORM Consumers Act has received support from the Household & Commercial Products Association, the U.S. Public Interest Research Group, Public Citizen, the Retail Industry Leaders Association, the Louisiana Retailers Association and The Home Depot.

“Retailers take great care to ensure the products on their shelves are responsibly sourced and meet product safety standards. Third-party marketplaces must take similar precautions to eliminate counterfeit and stolen goods from their platforms,” said Jessica Elliott, Executive Director of the Louisiana Retailers Association.

“The ease with which organized criminal networks can utilize the anonymity of online marketplaces to fence stolen goods has led to a proliferation of organized theft targeting local retailers,” said Ulta Beauty CEO and Retail Industry Leaders Association Chair Mary Dillon. “Most disturbing, are the threats and physical acts of violence our employees and customers experience when confronted with this criminal activity. Reversing this trend is about much more than protecting goods and property—this is about protecting people throughout the country who are increasingly at risk when these crimes are committed. Reducing these threats starts with making it harder to sell stolen goods online, and the INFORM Act is a great first step in the right direction.”

“We’re pleased to see the U.S. Senate work toward keeping online marketplaces accountable for the products sold on their platforms which will prevent criminals from selling counterfeit and stolen goods to unsuspecting customers,” said Scott Glenn, Vice President of Asset Protection for The Home Depot.

“In the last few years, researchers have found toxic toys, mislabeled drugs, and other hidden dangers for sale online. The first step to keeping everyone healthy and safe is knowing who is selling these products so sellers of counterfeit or fake products can be held accountable. We applaud Senators Cassidy and Durbin for introducing the INFORM Consumers Act,” said U.S. PIRG.