The Federal Trade Commission (FTC) announced the INFORM Act will take effect on June 27. Businesses with an online presence should understand what the new law means and how to prepare to avoid penalties. See Gibney’s prior update for more details on the Act requirements.
Background
Congress passed the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act – or the INFORM Consumers Act. To combat against online counterfeiting, the goal of the Act is to add more transparency to online transactions and deter criminals from acquiring stolen, counterfeit, or unsafe items and selling them through online marketplaces.
INFORM Consumers Act Guidelines
Under the new law, online marketplaces where high-volume third party sellers offer new or unused consumer products must:
- Collect, verify, and disclose certain information about those sellers
- Suspend high-volume non-compliant third party sellers
- Provide a clear reporting mechanism for consumers to report suspicious conduct
What are the penalties for violations?
A violation of the law is treated as a violation of an FTC rule and can result in civil penalties of $50,120 per violation. The statute also gives enforcement authority to State Attorneys General and other officials authorized by the State to file an action in federal court to enjoin further law violation, seek civil penalties, and obtain damages.
How Businesses Can Prepare
- Review read the new business guide to determine if you are covered by the statute
- Review and implement privacy and security safeguards
- Update their Terms and Conditions
- Consult with an IP Attorney to ensure compliance
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