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Congress Finally Wants to Do Something about Counterfeiters Online

Last March, US senators Dick Durbin, a democrat representing Illinois, and Bill Cassidy, a republican from Louisiana, introduced a bill called the INFORM Consumers Act. The legislation would force companies operating third-party marketplaces online to verify the identity of “high-volume” sellers on their platforms, meaning those making 200 or more sales totaling at least $5,000 in one year. The marketplaces would be required to gather details from sellers such as their government ID, bank information, and contact information.

Some of that information would be made available to shoppers. They could see a seller’s name, business address, contact information, and whether the seller is a manufacturer, importer, retailer, or reseller. (The bill would include an exception for individual sellers to keep their personal street address and phone number private so long as they respond quickly to consumer inquiries.) The aim is to protect shoppers from buying counterfeit, stolen, or dangerous goods on these marketplaces, which sometimes make it hard to know who is behind the product for sale.

Michael Hanson
Michael Hanson

In recent months, democrats defeated republicans in key elections and took control of the US presidency and congress. Durbin serves as the democratic whip, the second-highest ranking senate position in the party. Under the new democrat-controlled government, the INFORM Consumers Act is one of the policy items affecting retailers most likely to move forward, said Michael Hanson, senior vice president for public affairs of the trade group Retail Industry Leaders Association (RILA), which backs the legislation.

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“Given that Mr. Durbin is now in charge essentially over in the senate with Mr. Schumer”—that is Chuck Schumer, the democratic senator from New York who is now majority leader— “we feel that there is more momentum to finally bring some help to retailers and to others whose goods are also counterfeited,” commented Hanson.

If the bill is eventually passed, it could have a major impact on companies running online marketplaces, including one in particular—Amazon. By far the dominant force in US e-commerce, it gets most of its sales from its third-party marketplace, where knockoffs and unsafe products have been an issue for some time.

Amazon has said these represent a small fraction of the total products it offers and has invested heavily in cracking down on unscrupulous sellers. Last year it launched a special unit to chase down and punish counterfeiters.

Shoppers on Amazon, however, may still find it difficult to know who they are buying from, which Amazon’s critics say makes it easy for consumers to unwittingly purchase knockoffs or stolen goods. The bill, in addition to making clearer who the vendor of a product is, would create a hotline for customers to report suspicious listings or activity.

It isn’t the only pressure on Amazon’s third-party sales. Typically the company has avoided liability for products sold on its marketplace, but court rulings in Pennsylvania and California in the last couple years suggest the tide may be shifting.

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If sellers need to provide more identification, they might hesitate to peddle fake, stolen, or unsafe items on sites such as Amazon. And if the sites are responsible for everything they sell, that’s reason to make sure those products don’t make it online in the first place.

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