The INFORM Consumers Act: Consumer Protection in the Digital Age

With the use of ecommerce platforms at an all-time high, protecting consumers and fostering transparency in online marketplaces, like Amazon, has never been more important. To further these initiatives and hold third-party sellers accountable, Congress passed the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (INFORM) that takes effect on June 27, 2023.

The INFORM Consumers Act imposes certain obligations on both ecommerce platforms and high-volume sellers (i.e., those with upwards of 200 transactions and $5,000 in revenue in a 12-month period) that aim to halt the sales of counterfeit and dangerous products and give consumers peace of mind when it comes to searching for and pinpointing reliable sellers.

Beginning on June 27th, high-volume sellers will need to submit their bank account number, contact information, tax ID number, and working telephone number or email address to marketplaces for verification. Additionally, high-volume sellers that amass $20,000 or more in annual gross revenue on ecommerce platforms must disclose their full name, physical address, contact information, and a statement as to whether the seller uses a third-party supplier for the given product. The INFORM Consumers Act requires this information on either the product listing page or in the confirmation message following a purchase.

Upon being asked for this information, high-volume sellers will have 10 days to turn this information over to the marketplace. Should they fail to do so, the marketplace is required to cease all of a given seller’s sales activity on the platform.

While the INFORM Consumers Act is clearly a win for consumers faced with the possibility of purchasing counterfeit products, legitimate online sellers can also feel comforted knowing that competition from counterfeit sellers will be diminished.

Although smaller sellers may be faced with higher burdens and/or costs in order to comply, the INFORM Consumers Act constitutes a major step towards advancing consumer protection in a time when consumers need it the most. By fostering trust, fairness, and transparency, it is clear that the positive effects of the INFORM Consumers Act will be felt for quite some time.

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