The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act, also known as the INFORM Consumers Act, was passed by Congress in December of 2022 as part of the Consolidated Appropriations Act of 2023.
On June 20, 2023, The Federal Trade Commission (“FTC”) sent letters to 50 online marketplaces throughout the country, putting each on notice regarding their obligation to comply with the Act when it takes effect on June 27, 2023. Online marketplaces have a very inclusive definition – quite simply, they are e-commerce websites that join buyers and sellers, which started in the mid-‘90s and are now extremely commonplace.
The letter that was sent by the FTC stated the Act “imposes obligations on online marketplaces regarding the collection, verification, safeguarding, and disclosure of certain identifying information of “high-volume third-party sellers” that sell, offer to sell, or contract to sell new or unused consumer products in the United States through marketplaces’ platforms. The Act also requires online marketplaces to provide for electronic and telephonic reporting of suspicious marketplace activity to the online marketplace in certain circumstances.”
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection stated, “[t]he INFORM Consumers Act requires online marketplaces to protect consumers from counterfeit, unsafe, and stolen goods by verifying their high-volume third-party sellers’ identities, and making it easier for consumers to report suspicious marketplace activity.” He noted ‘[t]he Commission will enforce the Act to the fullest extent possible and will collaborate with our state partners to hold online marketplaces accountable.”
A violation of the INFORM Consumers Act will be treated as a violation of a Federal Trade Commission rule. Online marketplaces that violate this Act could face FTC enforcement and civil penalties of $50,120 per violation. Additionally, the Act gives enforcement authority to the State Attorney Generals and other officials authorized by the state, who may file an action in federal court, or seek civil penalties and other remedies under state law.
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