Story Idea: Online sales of counterfeit, stolen products should decline under new law

WASHINGTON – For too many years, it’s been easy for thieves to sell counterfeit, stolen or unsafe products online to unsuspecting shoppers. This hurts both consumers, who often buy counterfeit products that don’t meet U.S. safety standards, and legitimate businesses. Some manufacturers’ reputations take a hit from inferior counterfeits while honest retailers whose products get stolen need to hike their prices to recoup their losses, potentially losing more customers to vendors of cheaper fake or stolen goods.

Shady online sales are expected to decline significantly once the INFORM Consumers Act takes effect Tuesday, June 27. This new law is aimed at online marketplaces that sell products on behalf of third parties, either individuals or businesses. 

“This is a game-changer,” said Teresa Murray, Consumer Watchdog at U.S. PIRG Education Fund. “For bad guys, stealing items has generally been the difficult part. Selling things online once you’ve stolen them is easy. We hope that with the INFORM Act, it’s not nearly as easy in the future.”

All online marketplaces now will be required to collect several pieces of personal and financial information about “high-volume” sellers, defined as those with 200 or more sales totaling at least $5,000 in a 12-month period. Those sellers must submit information such as a copy of a government-issued ID, their bank account number, a taxpayer identification number and a working email and phone number. Sellers with at least $20,000 in annual sales must also provide confirmed information so customers can contact them directly, rather than only through whichever online sales platform they’re using. 

The law won’t stop smaller sellers, who might sell fewer than 200 items in a year, Murray said. But it will prevent thieves from simply creating a new account to duck the requirements or start fresh if they get caught selling illegal goods. Online marketplaces that don’t comply could face fines of $50,120 per violation. You can find tips to spot counterfeit and stolen items in our new consumer guide.

“Many online marketplaces haven’t been doing enough to protect consumers from sellers who appear to be peddling stolen or counterfeit goods,” Murray said. “The only people opposing this may be thieves.”

A wide variety of stakeholders supported the law, including the U.S. Chamber of Commerce, the Retail Industry Leaders Association, large retailers such as Home Depot and Walgreens and the Coalition to Protect America’s Small Sellers that includes eBay, Etsy, Poshmark and others

For tips on how to avoid buying counterfeit or stolen products, see our consumer guide.