Online retailers take issue with INFORM Consumers act

A group of online retail marketplaces have formed a coalition to push back against proposed US legislation aimed at protecting consumers from counterfeits.

The Coalition to Protect America’s Small Sellers – or PASS Coalition for short – features some big names in online retail including eBay, Poshmark, Etsy, Mercari and OfferUp and says it is representing "millions of small online sellers who depend on e-commerce to compete and thrive in the digital age."

Re-introduced last month, the INFORM Consumers act would make it mandatory for any online retail platform that allows third-party sellers to authenticate the identity of those who have made 200 or more discrete sales in a 12-month period amounting to $5,000 or more – so-called 'high-volume' sellers.

They would have to provide government and tax IDs, bank account information and contact information, including business address, email and phone number in order to operate on online marketplaces.

The bipartisan bill has resulted in similar state-level legislation being tabled around the US, and is intended to allow consumers and online marketplaces to distinguish between genuine retailers and fraudsters.

The PASS Coalition claims that INFORM Consumers would jeopardise the privacy and security of millions of small online sellers, particularly those selling second-hand items, and its members are pushing for amendments to protect them.

Chief among their concerns? That independent sellers who don't have a business entity would have to list their real names, addresses and other sensitive information.

They also fear that would encourage communications between seller and purchaser outside the retail platforms, bypassing seller and consumer protections. Some claim the act is a tool for big platforms like Walmart to hamstring rivals like Amazon as it bids to regain market share lost to online marketplaces.

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"Requiring the disclosure of personally identifiable information of individual sellers could have potentially unintended and dangerous consequences for sellers, especially minority- and women-owned businesses," claims the PASS Coalition on its website.

"A one size fits all disclosure requirement favours big-box retailers who have a local store or an established e-commerce presence, and harms the small sellers who have thrived developing their online businesses," it adds.

Not all agree. The Buy Safe America Coalition, a group of retailers, consumer groups, wholesaler-distributors, and manufacturers that support INFORM Consumers, says the PASS Coalition "swings and misses on some basic facts."

For example, it challenges the PASS Coalition's position that the legislation applies to used or reused items, saying the text of the act as its stands only covers new or unused consumer products.

"Any person or business selling used clothing or furniture, for example, will not be affected by this legislation," according to Buy Safe America.

"In addition, no business operating out of their home would be required to provide their home address or phone number," it insists.

"The PASS Coalition’s attempt to suggest otherwise is a disserve to the businesses, consumers, and sellers who would directly benefit from legislation aimed at weeding out sellers of counterfeit and stolen goods."