The stated goal of some of these laws is to help prevent online sales of stolen, counterfeit, and unsafe consumer products by developing transparency, disclosure, and accountability requirements for online marketplaces and third-party sellers that market their products on such platforms.
To deter sellers from attempting to take advantage of consumers, the state INFORM acts typically require online marketplaces to collect, verify, and disclose certain information from high-volume third-party sellers. Online marketplaces are described as consumer-directed, electronically based platforms that enable third-party sellers to engage in the sale, purchase, payment, storage, shipment, or delivery of consumer products.
While the triggering thresholds vary from state to state, high-volume third-party sellers are usually determined by their annual gross revenue on the marketplace. Such sellers will typically be required to provide identification, contact information, and tax documents to the online marketplaces, which then must authenticate the identity of the sellers.
The state INFORM Acts also generally require online marketplaces to disclose certain information about sellers to consumers, such as a full name, physical address, and contact information. Sellers must also disclose to consumers if they use a different party to supply the product purchased. The bills also allow online marketplaces to suspend high-volume third-party sellers who refuse to comply with the required disclosures, and other penalties may apply.
The wave of new state INFORM Acts indicates a continued concern over fraud and counterfeit activities on some online marketplaces. It also means that companies operating in this space will need to assess their compliance obligations across platforms under each of the state laws.
Authored by Mark Brennan, Warren Kessler and Celine Dorsainvil.
