The INFORM Consumers Act: What’s Next?

Now that the INFORM Consumers Act has been signed into law, there is plenty of work to be done by the retail asset protection community to ensure the federal law serves its intended purpose of deterring organized retail crime.

The INFORM Consumers Act—which will insert transparency and accountability into online marketplace transactions—takes effect June 27. Planning for implementation and ensuring the Federal Trade Commission (FTC) and state attorneys general are prepared to enforce the law immediately is a top priority for the Retail Industry Leaders Association (RILA).

The INFORM Act gives state attorneys general or an official or agency of a state the authority to initiate an enforcement action against online marketplaces that do not comply with the law. That means an attorney general can hold an online marketplace accountable if, for example, the marketplace fails to verify high-volume sellers, or a high‑volume seller refuses to disclose certain information to consumers.

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Retail Investigations

INFORM will impact retailer investigations once the law becomes effective, and AP teams should start to identify best practices to fully leverage the benefits of increased online transparency.

INFORM imposes new requirements on online marketplaces (OMs) to collect and verify information from high‑volume third-party sellers (HVSs), while also requiring OMs to ensure certain sellers disclose specific information on their website. OMs must collect and verify bank account numbers, contact information, tax ID, email address, and phone number. INFORM requires HVSs—those having an aggregate total of $20,000 in annual gross revenue—to disclose specific identifying information to consumers. In addition to disclosing this information, the OM must provide a reporting mechanism that allows for electronic and telephone reporting of suspicious marketplace activity to the online marketplace.

Retail investigators will be able to see HVS information that was not readily available pre‑INFORM. Having that information should reduce time investigators spend on open-source applications trying to figure out a HVS’ verified identity. While it’s not entirely clear how AP investigators can leverage the reporting mechanism and the associated obligation of OMs to act on those reports, the Act doesn’t restrict the use of the reporting mechanism to consumers; presumably anyone can use it. Investigators can report that a HVS failed to post required information—or report that product is stolen.

AP teams should have a process for keeping track of the reports they make and resulting actions. More importantly, retailers should compile a clear and compelling “paper trail” to share with the FTC, state AGs, and other state officials who are expressly authorized to enforce INFORM. If investigators experience non-compliance, retailers should share that information with enforcement agencies. RILA will work with member company AP teams to consider how our industry can best tell one story of the collective experience of all retailers.

We strongly believe that marrying the transparency of INFORM with regulatory enforcement in a coordinated effort at the local, state, and federal level to investigate and prosecute criminal actors who sell large quantities of stolen product online is vital to combating organized retail crime. ORC has eroded the vibrancy of communities, and all stakeholders—including online marketplaces—need to work together to address the crime scourge playing out in retail stores across the country.

Next Steps at the Federal Level

In addition to federal and state enforcement of the verification and disclosure provisions under INFORM, RILA is also supporting legislation to enact a federal ORC center that brings federal law enforcement, including the Department of Homeland Security, Department of Justice, Federal Bureau of Investigation, and United States Postal Service together to help disrupt and prosecute criminal rings targeting retail stores.

We applaud and support the efforts of the FTC, HSI, FBI, Secret Service, IRS, DEA, ATF, state attorneys general, district attorneys, local law enforcement, and other agencies who are working to dismantle organized retail crime rings. Given the enormous reach of these criminal enterprises that stretches across the country and the globe, it is vital that law enforcement and prosecuting agencies coordinate and streamline their investigations to ensure resources are pooled, criminal actors are identified, prosecutions cover the full scope of criminal conduct, and punishments truly fit the crimes.

The bipartisan, bicameral Combating Organized Retail Crime Act, introduced in the US House and Senate earlier this year, establishes a Center to Combat Organized Retail Crime at HSI. The center will combine expertise from federal, state, and local law enforcement agencies as well as retail industry representatives. Coordinating these resources creates a unified government and industry collaboration to fight against the sophisticated criminal rings engaged in retail theft operations.

Michael Hanson

“Establishing a federal task force that pulls together all the respective agencies that have jurisdiction over organized retail crime is necessary to enhance collaboration and transparency in the fight against sophisticated crime rings. Many of these criminal syndicates are using the profits derived from the sale of stolen goods to fund additional violent criminal activity in our communities such as human trafficking, gun smuggling, narcotics, and terrorism. It makes collaboration between agencies more important than ever,” said Michael Hanson, RILA senior executive vice president, public affairs.

RILA is building a national strategy to help fight against the tide of organized retail crime. We recognize the problem is multifaceted and requires all stakeholders to do their part to deter increasingly dangerous and violent crimes against retailers and their employees.

Integrated Technology Solutions

Problem solving need not fall entirely on the shoulders of your asset protection team. Innovative technology solutions are showing real promise in the fight against ORC, habitual theft offenders, and violence against store employees. Even more exciting is how vendors are integrating solutions to create an ecosystem of cutting-edge technology in stores and adjoining parking lots that give retailers a leg up on boosters and violent offenders.

Imagine this suite of technology installed at a retail store:

  • The security unit in the parking lot detects a suspicious actor or incident.
  • The unit alerts the body-worn camera technology utilized by in-store asset protection associates and the body-worn camera (BWC) activates.
  • The AP associate approaches the subject who is throwing merchandise into a shopping cart.
  • The subject flees with the cart full of merchandise and the BWC alerts the cart containment technology.
  • When the cart jams, the subject flees with stolen merchandise in hand.
  • The cart containment technology alerts the license plate reader technology in the parking lot.
  • The reader captures the license plate of the subject’s vehicle as it exits the parking lot.

Admittedly, this scenario may be a bit aspirational. It wasn’t that long ago that AP solution providers operated in silos, rarely seeking opportunities to join forces with other AP vendors. But something changed. Solution providers started talking to one another, problem-solving together, and integrating solutions that complemented each other. Pilots are underway in the industry to test solution integration focused on ORC, habitual theft offenders, and violent criminals. Retail AP executives collaborate with each other, why not solution providers? It makes all the sense in the world.

Vendor collaboration to address retail theft and violence in stores is alive and well among strategic partners that are part of RILA’s AP Leaders Council, which consists of top-level AP executives from among RILA member retailers. Crime-linking platforms, body-worn cameras, and real-time retail alerts in response to criminal activity are just some of the leading‑edge technologies developed by RILA vendor partners.

The innovation and technology solutions available to retailers today are extremely promising. RILA is charging forward on all fronts to stop the tide of ORC. It’s a multifaceted problem that requires multiple parties to do their part.

Lisa LaBruno

“Organized theft can be a big hit to a retailer’s bottom line, but even more disheartening is the emotional impact on retail workers who are victims of violence by these brazen criminals and who may have no choice but to watch cartloads of unpaid for merchandise leave their store,” added LaBruno. “But the days of hiding behind fake screen names to fence stolen product online is coming to an end—with INFORM, better transparency, more resources, and enhanced collaboration across all stakeholders, these criminal networks better get the message: We’re coming for them.”

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