Shop Safe Act reintroduced by US lawmakers

Bipartisan legislation that aims to protect consumers from harmful counterfeit products that are sold online has been reintroduced in Congress, despite failing to make it onto the statute for a number of years.

The Shop Safe Act was tabled this week by US Senators Chris Coons (D-Del) and Thom Tillis (R-NC), seeking to protect consumers by “incentivising platforms to engage in best practices for vetting sellers and goods and stopping repeat counterfeiter sellers.”

It would establish trademark liability for online marketplaces when a third party sells a counterfeit that poses a risk to consumer health or safety.

Under the proposals, marketplaces would be required to take steps necessary to prevent the continued sale of counterfeits by a fake-selling third party – or face contributory liability for their actions. The requirements include verifying a third-party seller's identity and asking them to confirm that they can verify or vouch for the authenticity of their goods.

It would also provide a safe harbour from liability for platforms that vet sellers to ensure their legitimacy, remove counterfeit listings, and remove sellers who repeatedly sell counterfeits.

“As Americans have increasingly turned to e-commerce for convenience, selection, and safety, some third-party sellers have begun to exploit consumers’ trust in established online marketplaces to trick them into purchasing dangerous counterfeit goods,” said Coons.

“These counterfeit goods pose health and safety risks, damage the reputations of legitimate brands, and line the pockets of organized crime. The bipartisan Shop Safe Act is an important step that will protect consumers and encourage greater transparency and accountability.” 

The Act has been endorsed by various industry groups including the American Apparel & Footwear Association, the Alliance for Automotive Innovation, the Toy Association, the National Association of Manufacturers, and the Footwear Distributors and Retailers of America.

AAFA president and chief executive Steve Lamar said it would help tackle “the abundance of dangerous counterfeits promoted and sold online” if enacted, and make online retailers “meet the same requirements, and face the same accountability, as brick-and-mortar retailers when it comes to the sale of counterfeit or illicit products that harm American consumers.”

Not everyone is in favour, however. The Information Technology and Innovation Foundation (ITIF) think tank said it would make online shopping more of a hassle without even bolstering safety in e-commerce.

“Protections outlined in the Shop Safe Act already exist,” argues Becca Trate, policy analyst at the ITIF’s Centre for Data Innovation.

“The INFORM Act, which went into effect earlier this year, increased transparency on platforms by helping to verify the identities of high-volume sellers,” she adds. “In addition to increasing transparency and communication between online marketplaces, law enforcement agencies, and retailers, the law also empowers consumers to exercise caution and report suspicious sellers and activity.”

“Instead of creating liability for platforms, Congress should work with industry leaders to help craft best practices for addressing counterfeit products online.”