Online marketplaces like eBay, Amazon, and Etsy will be required to verify "high-volume" third-party sellers and must ensure those sellers disclose their identity and contact information to buyers.
Congress passed the INFORM Consumers Act as part of the year-end omnibus spending bill on Friday. Senator Durbin hailed the legislation days before its passage - the following excerpt of his
press release offers a general explanation:
"The INFORM Consumers Act directs online marketplaces to verify high-volume third-party sellers by authenticating 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 ensure that their high-volume third-party sellers disclose to consumers basic identity and contact information.
"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. 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."
On Friday,
eBay praised its passage and explained one of its biggest advantages: it avoids a patchwork of state laws. Sellers who continue to deal with collecting and remitting sales tax to states - each with their own rules - understand the benefit of a single Federal law on a particular issue.
Before its passage, there had been heavy lobbying from big-box retailers and online platforms, each side pushing their own agendas. Three days before the passage of the omnibus bill, the National Retail Federation (NRF) said requiring online marketplaces to verify high-volume third-party sellers would
help curb the fencing of stolen merchandise - a serious and costly problem for retail stores.
In eBay's statement on Friday, it said the original version of the INFORM Consumers Act would have imposed burdensome information collection and disclosure requirements for small businesses and individuals and thanked the over 33,000 members of its Main Street Community for making their voices heard on the issue.
Sellers discussing the new provisions had varying reactions. Some praised the law, seeing no reason why a seller shouldn't publicly provide their contact information. Others disagreed, citing sellers who work from home and have safety concerns.
Some sellers felt the definition of "high volume" was too low - 200 transactions totaling $5000 in a year would work out to an average of 4 transactions totaling $95 a week - a very low bar.
Marketplaces already had to comply with some state versions of the INFORM law. An
eBay help page currently explains there are three exceptions to sharing sellers' full physical address, one of which is: "If your address is your residential address, only state and country will be shown."
We've yet to determine if that will remain the case under the newly passed Federal law. Expect to hear more on this in the New Year.
New Law Requires Sellers to Disclose Identity and Contact Info