Several retailers and retail organizations on Tuesday applauded the introduction of congressional legislation aimed at curtailing the sale of fake and stolen goods through online marketplaces.
They include the American Apparel & Footwear Association, the Retail Industry Leaders Association and the Buy Safe America Coalition (a RILA effort that includes retailers, consumer groups, wholesaler-distributors, and manufacturers including Walgreens, Dick's Sporting Goods and the Toy Association, among others). Not among them so far is the National Retail Federation, which declined to comment Wednesday.
Support in the industry is broad, and the effort in Congress is bipartisan. The "Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act," or INFORM Consumers Act, was introduced in the Senate Tuesday by Senators Dick Durbin (D-Illinois) and Bill Cassidy (R-Louisiana), with cosponsors including Chuck Grassley (R-Iowa), Mazie Hirono (D-Hawaii), Chris Coons (D-Delaware) and Thom Tillis (R-North Carolina).
A similar bill was introduced last year in the House. Its sponsor, Rep. Janice Schakowsky, is working on garnering bipartisan support before introducing it again this session, according to a RILA spokesperson, who noted that the relevant House committee has traditionally enjoyed bipartisan support on consumer protection issues.
If enacted, the law would require online retail marketplaces that include third-party sellers to authenticate the identity of "high-volume third-party sellers," according to a press release Tuesday from Durbin's office. That would "help deter the online sale of counterfeit goods by anonymous sellers and prevent organized retail crime rings from stealing items from stores to resell those items in bulk online," per that release. The bill would also allow shoppers to see such sellers' basic identification and contact information.
"We need common-sense transparency to protect consumers from the sale of fraudulent, expired, defective and unsafe products," Buy Safe America Coalition spokesperson Michael Hanson said in a statement. "The INFORM Consumers Act will make it much harder for scam artists and criminal enterprises to peddle illicit goods to unsuspecting American consumers."
Bill supporters from Buy Safe America tied the 44% rise of U.S. e-commerce during the pandemic to attempts by "criminal networks [targeting] unsuspecting customers with the sale of stolen, counterfeit, expired, dangerous and defective products," with links to a slew of news stories to demonstrate that. Many of those stories feature Amazon, which faces chronic issues of counterfeit and stolen goods sold through its marketplace. Amazon, which last year was pressed by the Buy Safe America Coalition to support the effort, on Wednesday didn't immediately return requests for comment.
The e-commerce giant has touted its own efforts to fight counterfeits, including last year's announcement of a "counterfeit crimes unit," and frequently takes sellers to court, sometimes in concert with affected brands. But the problem has proven to be intractable. In January, the Office of the U.S. Trade Representative released its 2020 Review of Notorious Markets for Counterfeiting and Piracy, detailing markets known for fake goods and finding a high level of such sales through Amazon's foreign domains, including in the U.K., France, Germany and Italy.
The issue also came up at a congressional hearing last year, when Amazon founder and CEO Jeff Bezos and other tech leaders were in the hot seat. In that hearing, lawmakers asked Bezos for more transparency around sellers, something that supporters also say is key to combating these sales.
By contrast, Walmart, which has recently made a concerted effort to expand its own third-party marketplace, "strongly supports" the bill. It's an "important piece of legislation" that levels the playing field for brick-and-mortar retailers, which already face strict limits around selling fraudulent goods, and a matter of customer trust, according to Walmart spokesperson Randy Hargrove.
"We believe the bill would increase transparency and accountability on online marketplaces, we think it would address the serious concern of stolen and counterfeit goods on online marketplace platforms and it would help protect consumers," Hargrove said by phone. "And I'll go a step further – the bill's seller disclosure and verification requirements are best practices for all marketplaces, and they're needed to empower consumers and law enforcement officials to reduce fraudulent sales."
In general, such efforts to verify seller identity and track fakes have been limited and insufficient, to the detriment of brands, according to AAFA President and CEO Steve Lamar. "The burden to flag and seek removal of these counterfeits has unfairly fallen on our member brands," Lamar said in a statement. "We expect to see online marketplaces vet — and proactively exclude — counterfeiters to protect invaluable intellectual property and the safety of consumers."
