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New law takes effect that aims to put a dent in organized retail theft online

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Online marketplaces need to be more stringent in detecting sellers of illegal goods.

The INFORM Consumers Act is officially the law of the land.

Recently passed by Congress and in effect as of June 27, 2023, the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act, the INFORM Consumers Act, is intended to add more transparency to online transactions and to deter criminals from acquiring stolen, counterfeit, or unsafe items and selling them through online marketplaces.

The act, which will be enforced by the Federal Trade Commission (FTC), puts new requirements in place for online marketplaces, which are defined as a person or business that operates a consumer-directed platform that allows third party sellers to engage in the “sale, purchase, payment, storage, shipping, or delivery of a consumer product in the U.S.”

Online marketplaces covered by the law must collect and verify certain financial and identifying information from “high-volume third party sellers,” which are defined as a person or business that meets specific sales thresholds on that platform.

In addition, the law requires that online marketplaces generally must disclose on those sellers’ product listing pages, or in order confirmation messages and account transaction histories, the seller’s name, address, and contact information.

Online marketplaces also must now suspend high-volume third party sellers that don’t provide the required information and must offer a clear way for consumers to report suspicious conduct. 

A recent study from the National Retail Federation (NRF) found that organized retail crime (ORC) groups largely target everyday consumer goods, which offer a favorable balance between ease of theft, monetary value and ease of resale. About 45% of ORC groups for which fencing information was available used online marketplaces for resale operations, according to NRF data.

The NRF is also formally urging Congress to advance the Combating Organized Retail Crime Act, which would amplify resources and coordination among federal, state and local law enforcement agencies to address ORC.

Retail trade organization welcomes INFORM Act

Industry trade group the Retail Industry Leaders Association (RILA) emailed a statement supporting the INFORM Consumers Act to Chain Store Age.  

“Organized retail crime exploded over the last few years as criminals exploited the anonymity of third-party online marketplaces to fence billions in stolen products. Retailers, members of Congress, law enforcement and the Buy Safe America Coalition labored for years to advance the INFORM Consumers Act to finally bring transparency and accountability to marketplaces,” RILA senior executive VP, public affairs Michael Hanson said in the statement. “Retailers are thrilled to see the INFORM Consumers Act become a reality today because it will make it much harder for criminals to hide behind fake screen names and bogus business accounts to sell illicit goods."

“Organized retail crime continues to be a complex challenge impacting the entire industry, in cities large and small across the country. With INFORM in effect, retailers and law enforcement will have a new mechanism for deterring bad actors,”  RILA senior executive VP, retail operations Lisa LaBruno said in the statement. “The industry is hopeful that requiring online marketplaces to collect, verify and disclose information about high-volume third-party sellers, marketplaces will finally evict bad actors from their platforms. In turn, consumers can shop with more confidence that the products they purchase online are legitimate.

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