INFORM Consumers Act takes effect on June 27th. Is your business ready?

Certain businesses in the e-commerce space should mark June 27, 2023, on their calendars. That’s the date a new law – the INFORM Consumers Act – takes effect. The FTC and the states share law enforcement authority and violations could result in steep civil penalties and – in cases brought by the states – “damages, restitution, or other compensation.” Are you covered by the statute? And if you are, are you taking the necessary compliance steps? FTC staff just issued a to-the-point publication that merits your attention: Informing Businesses about the INFORM Consumers Act.

Congress passed the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act – or the INFORM Consumers Act – to add more transparency to online transactions and to deter criminals from acquiring stolen, counterfeit, or unsafe items and selling them through online marketplaces. Don’t let another day pass without considering what the new law means for your business or your clients’ companies.

The INFORM Consumers Act puts new requirements in place for “online marketplaces” – 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 United States.” Online marketplaces covered by the law must collect and verify certain financial and identifying information from “high-volume third party sellers” – defined as a person or business that meets specific sales thresholds on that platform. What’s more, 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. In addition, online marketplaces must 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. 

You’ll want to read the new business guide and the text of the law for details, but it boils down to this. Under the INFORM Consumers Act, online marketplaces must have more information about who’s selling on their platform. Covered sellers must promptly comply with those requests for information or risk suspension. And consumers who buy from those sellers will have a place to report questionable activity. 

Informing Businesses about the INFORM Consumers Act includes more about the law, with a particular focus on the responsibilities of online marketplaces. With the June 27th effective date approaching, it’s time for online marketplaces to rev up their compliance efforts. The FTC will be watching and expects online marketplaces to have INFORM Consumers Act measures in place by the effective date. Have you spotted a possible violation of the INFORM Consumers Act? Report it to the FTC.