The newly enacted INFORM Consumers Act presents a valuable opportunity for the FTC and state authorities to work together in protecting consumers from illicit goods sold online stemming from organized criminal activities.
Last week, the Retail Industry Leaders Association (RILA) filed comments urging the Federal Trade Commission (FTC) to work closely with state AGs to help facilitate the nationwide implementation of the INFORM Consumers Act. The letter to the FTC can be read here.
The INFORM Consumers Act aims to increase transparency in online transactions, preventing criminals from selling stolen, counterfeit, or unsafe items online. Criminal organizations exploit online platforms to sell stolen goods, laundering nearly $70 billion annually from organized retail crimes. This not only harms consumers but also legitimate businesses.
INFORM mandates online marketplaces to collect and verify specific information about high-volume third-party sellers. This data must be verified yearly, and sellers with unverifiable information should be suspended. Additionally, online marketplaces need to disclose certain details about high-revenue third-party sellers. INFORM also necessitates online platforms to have a clear reporting system for suspicious activities.
Congress has directed the FTC to collaborate with state attorneys general for enforcement to facilitate effective implementation. Many state attorneys general have already been fighting organized retail crime, and the INFORM Act strengthens their hand.
RILA provided the FTC with several recommendations to support INFORM, including:
- Prioritizing INFORM Consumers Act enforcement, given its clear consumer protection benefits.
- Enhancing public reporting mechanisms for suspicious marketplace activities.
- Adjusting the FTC’s reporting system to better cater to non-consumer entities, like businesses, who might spot suspicious activities.
- Proactively sharing information with state attorneys general about potential INFORM violations.
- Establishing a Working Group on INFORM to facilitate collaboration and information sharing.
The INFORM Consumers Act is a crucial instrument to shield consumers from scams. As directed by Congress, proper enforcement by both the FTC and state attorneys general is essential.