03/15/2023
E-Commerce Business Owners: Prepare to Verify Your Business Identity under the Inform Consumers Act
E-Commerce businesses should prepare to be contacted by Amazon, Etsy, Shopify and other marketplace platforms to verify the identity of the business. The verification requirement is a result of two new laws: the federal Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (the “INFORM Consumers Act”), and California's S.B. 301. The purpose of these laws is to combat the online sales of counterfeit/dangerous/stolen goods and money laundering.
Web marketplaces like Amazon, eBay, Etsy, and Shopify (and small businesses providing similar marketplaces) will be required to start collecting information, verifying, and providing to buyers under certain circumstances, the identity of “high-volume third-party sellers”-those sellers during the last 24 months with 200 or more sales/transactions of new or used tangible consumer goods and an aggregate of $5,000 or more in revenue over a continuous 12-month period. Platforms must suspend accounts if the info is not provided within 10 days of the platform’s request. Information to be collected includes the seller’s name, address, telephone number, tax id, bank account information (with alternative for sellers without bank accounts), and if an entity seller, a valid government-issued ID for an individual acting on a seller’s behalf, or a copy of a government-issued record or tax document that includes the name and physical address of the seller.
For high-volume third-party sellers with $20,000 or more in annual gross revenue, marketplaces must provide buyers with clear and conspicuous information about the seller (certain seller contact info) on the seller’s product listing pages, or order confirmations/buyer’s transaction history.
E-commerce businesses should be aware of these new laws due to the 10-day compliance requirement, as their account could be suspended for noncompliance. The marketplaces will probably be sending out alerts over the next few months concerning the new requirements and when information must be provided. Under the federal law, online marketplaces must comply by June 27, 2023, and under California law by July 1, 2023. Other states such as Arkansas, Colorado, Illinois, and Ohio have similar laws. Expect other states to follow suit.
Small business marketplaces that must comply should update their privacy policies to add this new information being collected, and how it will be used and secured. Expect nationwide marketplaces to do the same.
Obviously, there are concerns about the privacy and security of seller information, and suspension of e-commerce business accounts for failure to comply. Businesses can ask about how the marketplace is securing personal information if they don't disclose that up front.
Have questions or need help with compliance? Please contact Evening Legal for a consultation.