By: Bridget Visconti
The goal of the INFORM Consumers Act is to increase transparency and accountability of businesses in order to cut down on the online sales of counterfeit or stolen goods, which is admirable, but the methodology for doing so is deeply flawed.
This is a very important issue and definitely one that needs to be addressed, however legislation on such a critical issue must go through the proper channels. By adding it as an amendment to the U.S. Innovation and Competition Act, lawmakers are circumventing the full legislative process which could lead to serious unintended consequences and creating more harm than good.
What is the INFORM Act?
The Integrity, Notification, and Fairness in Online Retail Marketplaces (INFORM) for Consumers Act (S. 936), referred to as the INFORM Consumers Act, was introduced by Senators Dick Durbin (D-IL) and Bill Cassidy (R-LA). This legislation requires that small businesses owners who sell goods through e-commerce marketplaces like Amazon, Etsy, and eBay to publicly disclose personal information such as their full names, addresses, phone numbers, and email addresses. It would also require business owners to have their identity and banking information verified annually.
Concerns with the Legislation
Multiple organizations and trade associations have raised concerns about the content of this legislation and the unintended consequences that would likely arise from it.
The requirement for the public disclosure of personal information is, first and foremost, a substantial breach of privacy. Business owners should not be required to list their personal information for anyone to access. On top of that, it creates safety risks for business owners. As expressed in a letter signed by multiple trade organizations, public disclosure of personal information can lead to harassment, discrimination, or even violence. Most small businesses that participate in e-commerce are owned by women and are operated out of their home. We teach kids from a young age the dangers of putting this type of information on the internet, so why would the government require it?
RALIANCE, an organization dedicated to ending sexual assault sent a letter regarding the negative implications this policy could have on survivors, outlining that there are serious privacy and safety concerns, especially for survivors of domestic violence and sexual assault.
This legislation would apply to businesses deemed “high volume third party sellers,” however, the threshold is very low. Any business that sells $5,000 of goods, has 200+ discrete sales for 12 continuous months or over a 24-month period falls into this category. This would make it that most online retailers would have to participate. Furthermore, there is only a 3-day grace period for businesses to renew this information annually, or they are taken offline. There could be substantial loss of revenue for companies even if they are only removed temporarily.
There is also concern that the legislation would only disincentivize people from starting small businesses due to having to share such personal information publicly, while criminals selling counterfeit goods would quickly find a work around.
Lastly, this legislation does nothing to fight back against counterfeit or stolen goods that are sold offline. One study by the National Retail Federation cites that one of the most common ways stole goods are sold it by returning them to the seller in exchange for gift cards. Other offline methods involve selling goods at flea markets or through classified ads.
The Big Picture
The U.S. Innovation and Competition Act, previously known as the Endless Frontier Act, has become a Christmas tree bill that keeps getting more amendment ornaments added to it by the day. As explained in our previous post this is not an effective or transparent way to govern.
The U.S. Innovation and Competition Act seeks to take steps to make the US more competitive with China, so it’s ironic that Congress would consider including the INFORM Consumers Act in the bill, given that all it does is create regulation that would make it harder for businesses to compete.
Policymakers should definitely take steps to combat the sale of counterfeit and stolen goods on the internet, however, this should be done through proper channels with the opinions of stakeholders and the business community being taken into account. Shoving it in with another already massive legislative package is not the way to go.
Photo Credit: Brooke Lark