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What You Need to Know About the INFORM Consumers Act

Someone is signing a contract, or signing legislation.

The INFORM Consumers Act goes into effect June 27, 2023, and the Federal Trade Commission (FTC) recently sent letters to 50 online marketplaces in preparation. Read further for more information about what the INFORM Consumers Act is and what it means for online marketplaces. Then contact us for more information about how LegitScript can help.

 

What Is the INFORM Consumers Act?

The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act — or the INFORM Consumers Act — “requires online marketplaces to collect, verify, and disclose certain information from high-volume, third-party sellers.”

Online marketplaces are defined by Congress as “any person or entity that operates a consumer-directed electronically based or accessed platform that:

  1. (A) includes features that allow for, facilitate, or enable third-party sellers to engage in the sale, purchase, payment, storage, shipping, or delivery of a consumer product in the United States;
  2. (B) is used by one or more third-party sellers for such purposes; and
  3. (C) has a contractual or similar relationship with consumers governing their use of the platform to purchase consumer products.”

The INFORM Consumers Act requires online marketplaces to annually collect the following information from high-volume sellers:

  1. Bank account numbers
  2. Government-issued identification
  3. Tax identification numbers
  4. Contact information

High-volume sellers include ones that conduct at least 200 transactions resulting in total revenues of at least $5,000 during a continuous 12-month period.

Furthermore, online marketplaces must make certain information available to consumers via product listings. They must also provide methods for the consumer to report suspicious activity electronically and/or by phone.

 

The INFORM Consumers Act Is Effective As of June 27, 2023

The FTC sent letters to 50 online marketplaces operating in the US, notifying retailers of their obligation to comply. The letters state that a violation of the act is a violation of an FTC rule, and noncompliant marketplaces may face civil enforcement penalties and/or steep civil penalties of up to $50,120 per violation.

15 USC §45f. (4) states, “If a high-volume third-party seller does not comply with the requirements to provide and disclose information under this subsection, the online marketplace shall, after providing the seller with written or electronic notice and an opportunity to provide or disclose such information not later than 10 days after the issuance of such notice, suspend any future sales activity of such seller until the seller complies with such requirements.”

 

Grow Your Business, Reduce Risk, and Safeguard Your Brand With LegitScript

Are you an online marketplace subject to the INFORM Consumers Act and concerned about how it affects your business? LegitScript’s Product Monitoring solution protects your users from problematic products, content, and advertisements. Download Platform Monitoring for E-commerce Marketplaces and then contact us for more information about how LegitScript can help safeguard your brand.

Smelting words into subject matter expertise since 2020, Thea Le Fevre specializes in B2B SaaS Content Marketing. She believes in embracing innovation and produces AI-assisted content along with organically crafted content. Take a deep dive into her work for up-to-date industry news surrounding issues in trust & safety, payments risk & compliance, healthcare, and more.

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