July 05, 2023

AdWeek Quotes Alex Megaris on the Inform Consumers Act and Its Impact on Online Marketplaces

2 min

On July 5, 2023, Alexandra Megaris was quoted in AdWeek regarding the Inform Consumers Act and its impact on online marketplaces.

According to the article, the Integrity, Notification and Fairness in Online Retail Marketplaces—shortened to the Inform Consumers Act—went into effect on June 27. It is intended to reduce organized shoplifting not by arresting perpetrators, but by choking off access to the platforms where they can fence what they steal.

The law compels online marketplaces that host the resale of new or unused goods to require high-volume resellers to disclose a bank account number, tax ID number, and verifiable contact information, including a physical mailing address, email address, and telephone number.

"It's putting the responsibility on the marketplaces themselves to police. That's the new thing—the liability is on the marketplaces," said Megaris.  Detailed seller information like tax ID number and working contact information "needs to be recorded and maintained in a way that you can prove to the FTC or state attorney general that you have this information," she said.

The Inform Act also aims to curb the online sale of counterfeit merchandise.

Faced with this problem, brands have historically been left to enforce their own intellectual property rights or simply hope that Customs and Border Protection would discover and seize illicit shipments—an endless game of whack-a-mole. Now, however, if a resale platform is moving fake goods, the Inform Consumers Act "has given the federal agency [Federal Trade Commission] and also state attorneys general and every state the authority to bring a civil action against the marketplace," said Megaris.

While the Inform Consumers Act might deter local offenders from stealing, it'll probably be less effective when it comes to large criminal enterprises. "Even if the FTC devotes significant resources to enforcing the statute . . . bad actors on these marketplaces can certainly figure out a way to evade [the law]," Megaris said. "The same people that are selling counterfeit goods are going to be able to come up with a counterfeit document."