The Integrity, Notification and Fairness in Online Retail Marketplaces for Consumers Act, also known as the INFORM Consumer act, went into effect Tuesday after Congress passed it at the end of last year.
E-commerce markets like Amazon and EBay have seen a significant increase in sales in the past decade, including a big jump during the pandemic. According to Census data, online retail sales accounted for over $200 billion in the second quarter of 2020, which was a 44.5% increase from the same time period in 2019.
The INFORM Consumer Act was created to protect consumers from third-party companies selling counterfeit or stolen items.
The Federal Trade Commission said in a statement on its website, “The goal of the INFORM Consumers Act is to add more transparency to online transactions and to deter criminals from acquiring stolen, counterfeit, or unsafe items and selling them through those marketplaces.”
Last week, the FTC sent letters to 50 different online marketplaces to call attention to the new law, because it will now force them to make all third-party sellers on their sites disclose their name, contact, tax and bank account information.
According to the National Retail Federation, 87% of retailers that they surveyed said that a federal law was needed due to the increase of theft, false advertisement and complaints made on their sites.
“Often they're told that there's no refund, there's no exchange, don't send it back,” said Lee Anne Lanniagan, who serves in customer relations and security at the Better Business Bureau of Central Ohio. “Once in a while, they're offered a fraction of the price of what they paid for it, because finally they're told, well, it costs too much to ship it back to China or cost you more to ship it to China than it's worth. They’re told you should take your $10 or you're very small, whatever we're offering and consumers are very frustrated by that and those are the people that get merchandise. Many, many consumers tell us that nothing ever arrives.”
Online marketplaces that don’t comply with the INFORM Consumers Act could face more than $50,000 in fines for each violation. The FTC along with the attorneys general will be in charge of enforcing the new law. Lanigan said that this new law will save many consumers a headache.
“Consumers report to us that it's not just that they're out the money, it's that they're out the stress and they're out the you know, they had made a purchase with a something specific in mind, and they've either missed that birthday or they've missed that other occasion that they were buying the merchandise for,” said Lannigan.
It’s not clear if the FTC plans to actively seek out violations or if they plan to follow up on continuous complaints, but the BBB encourages all consumers to double check all sites before buying and to use credit cards, not debit cards, if possible.