Update: INFORM Act to Protect Against Online Counterfeiters: What the New Law Means for Brand Owners and Consumers
The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (the INFORM Act) was signed into law by President Biden on December 29, 2022. A positive step in the fight against online counterfeiting, the Act supports consumers and brand owners by increasing the accountability of online marketplaces. It will also create greater transparency by requiring online marketplaces to disclose key information about their third-party sellers.
INFORM Act Highlights
High-volume third-party sellers are defined in the Act as vendors who have made at least 200 sales totaling at least $5,000 over a 1-year period.
Online marketplaces will now be required to:
- Collect, verify, and disclose certain information from high-volume, third-party sellers including bank account information, government-issued identification, tax identification numbers; online marketplaces must also annually certify any changes to the information
- Make certain information (e.g., sellers’ names and contact information) available to consumers through the sellers’ product listings
- Suspend further sales by individuals or businesses who fail to provide the required information, or to update it upon request
- Provide consumers with methods to report electronically and by telephone any suspicious activity on the marketplace.
What This Means for Brand Owners
As we previously reported, the INFORM Act is the latest in a series of efforts to combat online counterfeiting. As more brands increasingly transition from traditional brick and mortar to online retail, consumers will continue to see an increase in the sale of counterfeits goods online. While e-commerce platforms have started to implement policies to manage counterfeit sales, contributory liability puts the burden of responsibility on the both the counterfeit seller and the platform. These practices will begin to create incentives for online retailers to be more diligent and proactive.
What to Expect Next
The bill provides the Federal Trade Commission (FTC) and State Attorneys General with the authority to enforce these requirements. Requirements are set to take effect in late-June 2023. Prior to June, it is likely FTC will continue to provide more details on these regulations. Gibney will continue to share ongoing developments.