New law in place aimed at curbing online organized retail crime 

by Kim Souza ([email protected]) 494 views 

The U.S. Congress recently passed the INFORM Consumers Act effective June 27 in hopes of deterring criminals from acquiring stolen and counterfeit items and selling them through online marketplaces.

Officially on the books as the Integrity, Notification and Fairness in Online Retail Marketplaces (INFORM) for Consumers Act, the legislation will be enforced by the Federal Trade Commission (FTC). The law puts requirements in place for online marketplaces, which are 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 U.S. Online marketplaces covered by the law must collect and verify certain financial and identifying information from high-volume third-party sellers, which can be defined as a person or business that meets specific sales thresholds on that platform.

The new law also requires that online marketplaces disclose on sellers’ product listing pages or in confirmation messages the seller’s name, address and contact information providing more transparency between the buyer and actual seller. The high-volume third party sellers that don’t provide the required information must be suspended immediately from the marketplace and consumers must be notified of the suspicious conduct, the law stipulates.

The National Retail Federation (NRF) has lobbied hard for more laws that fight organized retail crime (ORC). The retail trade group said about 45% of ORC groups used online marketplaces to sell stolen or counterfeit goods in the past two years. The large number of legitimate sellers on popular online marketplaces provides greater anonymity and better cover for action to resell ORC goods compared with physical retail venues, which involve face-to-face interactions with customers who may recognize the illicit origin of goods, according to the NRF.

The industry estimates ORC activity took a $94.5 billion bite out of retail industry sales in 2022. NRF reports that ORC groups largely target everyday consumer goods, which offer a favorable balance between ease of theft, monetary value and ease of resale. About 70% of retailers believed the threat of ORC had increased during the past five years but has ramped up significantly since 2020, according to the NRF 2022 survey of retailers.

“Retailers are thrilled to see the INFORM Consumers Act become a reality because it will make it much harder for criminals to hide behind fake screen names and bogus business accounts to sell illicit goods,” said David French, senior vice president of government relations for NRF.

The Retail Industry Leaders Association (RILA) said the law will make it harder for criminals to hide behind fake screen names and bogus business accounts to sell illicit goods.

“With INFORM in effect, retailers and law enforcement will have a new mechanism for deterring bad actors,”  RILA senior executive VP, retail operations Lisa LaBruno said in a statement.

While NRF applauds the new law, the trade group continues to urge Congress to pass the Combating Organized Retail Crime Act which seeks to enhance resources and coordination among federal, state and local law enforcement agencies.