US lawmakers take on fakes with passage of INFORM Act

After years in gestation, the US Congress passed a piece of legislation as part of the 2023 omnibus spending package that aims to make it harder for sellers of counterfeit goods to operate anonymously on online retail platforms.

Once it comes into law, the INFORM Consumers Act will make it mandatory for Internet commerce sites that allows third-party sellers – such as Amazon and eBay – 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.

The passage of the act has been applauded by American Apparel & Footwear Association (AAFA) president and chief executive Steve Lamar, who said it will "deter illicit actors from targeted criminal activity and offloading stolen and counterfeit goods across online marketplaces to unsuspecting consumers."

High-volume sellers will have to provide government and tax IDs, bank account information and contact information, including business address, email and phone number in order to operate as third parties on online marketplaces.

"Online marketplaces offer criminal actors anonymity; INFORM now requires information verification for high-volume third-party sellers to help law enforcement and brands with prosecution efforts," said Lamar. "More information about goods purchased online is a step in the right direction for consumers."

It has also garnered support from the PASS Coalition representing small-scale sellers – once in opposition to the act – which said the final wording "strikes the ideal balance between protecting a robust marketplace and admonishing criminals and those selling counterfeit items without imposing overly burdensome regulations."

The AAFA and other trade organisations are disappointed however that companion legislation to INFORM, called the SHOP SAFE Act, did not make it through to the omnibus spending package.

That would require online platforms to proactively screen for illicit or counterfeit goods and provide more transparency to consumers about third-party sellers, and also impose trademark liability for online marketplaces when a third-party sells a counterfeit that poses a risk to consumer health or safety.