Were you taken advantage of after making an online purchase from a fraudulent seller? A new law may help victims who have purchased harmful or counterfeit products online hold deceptive sellers and the marketplaces they use for engaging in organized retail theft accountable.
Here’s a quick look at the INFORM Act, which takes effect at the end of June 2023, what it entails, and how you can get compensation for your losses after being defrauded by a retailer.
What’s In The INFORM Act?
The INFORM Act is legislation designed to prevent unauthorized or fraudulent sellers from trading counterfeit products or otherwise taking advantage of unsuspecting consumers. This stands for Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers and is meant to increase the transparency of sales transactions online and discourage dishonest sellers from acquiring stolen, counterfeit, or dangerous goods.
Not only does it require online retailers who do large sales volumes to provide additional information about themselves for verification, it also imposes penalties for digital marketplaces who don’t comply.
Here’s what the Act entails:
- Online marketplaces like eBay and Amazon must verify additional information about sellers that move large quantities of product.
- The more business a seller does, the more information they will need to provide.
- This includes name and address, telephone number, tax ID number, bank account information, and other identifying data.
- Sellers are required to keep their contact information current and to certify that the information that the marketplace has is correct at least once per year.
- The law applies to online retailers with 200+ individual transactions and $5,000+ in sales revenue during any consecutive 12-month period during the last 2 years.
- Retailers with annual gross revenues of $20,000+ will have an additional disclosure requirement and must include their name and physical address on product listing pages, account transaction history pages, and order confirmation emails.
- Marketplaces must also require sellers to provide an easy, clear way for customers to report suspicious behavior or activity and suspend seller accounts that don’t comply.
- Sellers must respond to customer communications within a reasonable amount of time or risk being suspended.
- The Act will be enforced by the Federal Trade Commission (FTC) and a fine of $50,120 can be assessed to online marketplaces per violation or seller that has not been properly verified.
- Companies who have made their information public or who have established retail businesses are exempt from the Act since these organizations have call centers or dedicated staff who handle customer concerns.
- There is also a limited exception on how much contact information a seller must provide to the public if they only operate their businesses out of their home.
Dangerous & Defective Product Injuries
Fraudulent retailers often list defective or dangerous products online that don’t meet industry regulations and have the potential to cause serious harm or even death. These items may be stolen or collected from the trash, or they may be counterfeit versions of products made by expensive brands.
And prior to the INFORM Act, these sellers often got away with their crimes, because marketplaces required very little information from retailers who wanted to trade products on their website. It was nearly impossible to track down the actual individual or organization that made the sale, leaving unwitting victims of fraudulent purchases left to absorb the costs.
Now Marketplaces May Be Partially Responsible
Under this new legislation, marketplaces bear more responsibility for ensuring the sellers that use their platforms are legitimate and are trading safe, authentic products. In addition to being fined by the FTC, marketplaces that fail to collect adequate information on fraudulent sellers may also be financially responsible for injuries or damages their products cause.
Were You A Victim Of A Shady Online Seller? Get Legal Help Now
If you purchased a defective product from an online retailer and were injured or otherwise suffered damages as a result, the INFORM Act gives you more leverage over holding the seller and the marketplace that failed to authenticate them responsible.
At Mazow | McCullough, PC, we have the experience and track record necessary to zealously advocate for you to be fairly compensated for the losses you incurred. Our veteran consumer protection attorneys can help you get the justice you deserve so you can move forward after being taken advantage of by underhanded sellers.
Contact our Salem, MA law office at (978) 744-8000 or toll free at (855) 693-9084 to get more information or book your free initial consultation to discuss your legal needs. Our team is standing by to take your call.