A New Act to Combat Retail Crime Goes Into Effect Today — Here Are the Key Points
A new act designed to prevent retail crime went into effect on Tuesday after being signed into law last year.
Dubbed the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM Consumers) Act, the legislation establishes better rules for the secure and safe e-commerce usage in the United States to protect consumers from fakes and stolen goods sold via online marketplaces. It also requires these platforms to verify identities of high volume third party sellers (those who make 200 sales or more in a year totaling more than $5,000) to help combat counterfeit or stolen goods from being sold.
The law will require e-commerce platforms to have a hotline or system for users to report suspicious activity, which will be implemented by the Federal Trade Commission.
“People deserve to know basic information about those who sell them consumer products online. By providing appropriate verification and transparency of high-volume third-party sellers, the INFORM Consumers Act will deter online sales of stolen, counterfeit, and unsafe goods and protect consumers. The bill is crucial to protecting Americans from scammers on the internet, and we’re thrilled our bipartisan legislation was implemented today,” said U.S. senators Bill Cassidy, M.D. (R-LA) and Dick Durbin (D-IL) in a statement regarding the new law.
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The legislation, which seeks to curb the activity of organized retail crime rings from profiting from their theft, comes into effect during a period of surging retail crime across the U.S. In their most recent earnings calls, CEOs from Target, Walmart and TJX Companies discussed how retail theft has hit their businesses in the last quarter and how the industry needs to come together to combat the growing problem.
In December of 2021, the CEOs of 20 leading retailers across the U.S. sent a letter to Congressional leadership to urge lawmakers to pass the INFORM Act. Signatories included the heads of Nordstrom, Target, Dick’s Sporting Goods and Foot Locker. The Buy Safe America Coalition, which includes Nordstrom, Ulta Beauty, Dick’s Sporting Goods, Gap Inc., Levi Strauss & Co. and more retail members, also supported the legislation.
The American Apparel and Footwear Association (AAFA) and Footwear Retailers and Distributors of America (FDRA) were among 12 trade organizations that called on Congress to implement the Inform Consumers Act as well as the Shop Safe Act, which makes marketplaces liable for registered trademark infringement by a third-party seller of goods.
“AAFA is pleased to see the INFORM Consumers Act take effect today to slow the epidemic of dangerous counterfeits that are flooding American doorsteps and living rooms,” said Steve Lamar, AAFA president and CEO in a statement. “As we continue to support this crucial initiative, we’ll also continue to advocate for Congress to reintroduce the Shop Safe legislation to tame the influx of dangerous counterfeits and illicit products. Making sure consumers are aware of who is selling their fashion is a first step, but we do need Congress to pass the companion Shop Safe Act to ensure third party marketplaces can’t profit off of fakes.”
In a statement, FDRA said it “looks forward to building on this Act with additional efforts to strengthen footwear intellectual property protection.”
The National Retail Federation’s 2022 National Retail Security Survey found that retail shrink, when taken as a percentage of total sales in 2021, accounted for $94.5 billion in losses in 2021.
“Retailers are thrilled to see the INFORM Consumers Act become a reality today because it will make it much harder for criminals to hide behind fake screen names and bogus business accounts to sell illicit goods,” said Michael Hanson, SVP of public affairs for Retail Industry Leaders Association (RILA) in a statement.
