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INFORM Consumers Act Now in Effect – Is Your Business Ready?

West Palm Beach Business Litigation Attorney 2023-01-26 16-49-13

The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act – or the INFORM Consumers Act – has taken effect as of June 27, 2023. The act was passed by Congress to add more transparency to online transactions and to deter criminals from acquiring stolen, counterfeit, or unsafe items and selling them through online marketplaces. The Federal Trade Commission and the States now have authority to enforce the new statute and online marketplaces that run afoul of the law could be subject to steep financial penalties. The FTC’s official blog breaks down what you need to know about the new act:

The INFORM Consumers Act puts new requirements in place for “online marketplaces” – 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 United States.” Online marketplaces covered by the law must collect and verify certain financial and identifying information from “high-volume third-party sellers” – defined as a person or business that meets specific sales thresholds on that platform. What’s more, online marketplaces generally must disclose on those sellers’ product listing pages (or in order confirmation messages and account transaction histories) the seller’s name, address, and contact information. In addition, online marketplaces must suspend high-volume third-party sellers that don’t provide the required information and must offer a clear way for consumers to report suspicious conduct.

You’ll want to read the new business guide and the text of the law for details, but it boils down to this. Under the INFORM Consumers Act, online marketplaces must have more information about who’s selling on their platform. Covered sellers must promptly comply with those requests for information or risk suspension. And consumers who buy from those sellers will have a place to report questionable activity.

Informing Businesses about the INFORM Consumers Act includes more about the law, with a particular focus on the responsibilities of online marketplaces. With the June 27th effective date approaching, it’s time for online marketplaces to rev up their compliance efforts. The FTC will be watching and expects online marketplaces to have INFORM Consumers Act measures in place by the effective date.

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