INFORM Act Set to Change E-Commerce


The INFORM Consumers Act has been signed into law by President Biden. According to Loss Prevention Magazine, online E-commerce marketplaces, such as Amazon and Shopify, will be required to verify the identities of high-volume third-party sellers. The law will also require those marketplaces to give some basic information about sellers to customers and law enforcement.

Many retailers have been pushing for this law to be signed as retail theft and counterfeiting continues to rise. E-commerce platforms and websites, like any other public marketplace, can potentially be used by individuals to sell stolen goods, particularly because they often have a large number of users and can be easily accessed—making it possible for thieves to quickly and easily reach a wide audience for their stolen items.

“As e-commerce grows more and more popular it brings increased opportunities for counterfeiting and retail theft,” said Daniel Keyes, Senior Research Analyst, Merchant Services, at Mercator Advisory Group. “E-commerce platforms may have to adjust how they manage marketplaces of third-party sellers to meet the requirements of the new act, but doing so can ultimately build consumer trust and benefit their businesses in the long run.”

Implementing robust verification processes for sellers will make it easier to prevent the sale of stolen goods. The INFORM Consumers Act requires e-commerce platforms to collect bank account information, tax ID, and contact information on “high volume” sellers. High-volume is defined as 200 or more transactions, or $5,000 in gross revenues, in a year. Sellers with $20,000 in revenue must also report their physical address and contact information to customers to the public, except if the business does not have a physical address or is based out of someone’s home.



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