The INFORM Act: What You Need to Know

The Integrity, Notification, and Fairness in Online Market Retail Marketplaces for Consumers Act, aka INFORM Act, was approved by Congress in December 2022 and goes into effect June 27. It’s meant to help stem the massive tide of stolen or counterfeit goods sold from ecommerce marketplaces, injecting a level of transparency and accountability.

The Buy Safe Coalition, which includes RILA (Retail Industry Leaders Association), estimated in 2021 that $54 billion was in lost annually from the sale of fraudulent goods online. You can imagine it’s gone up since. Even Amazon, long cited as a source of counterfeit traffic, has been working hard to clamp down, creating a coalition, hiring former federal prosecutors and filing lawsuits.

Under the INFORM Act, the Federal Trade Commission can impose a fine of $46,517 for a first-time violation, while they and state attorneys general can impose injunctions and pursue civil actions against marketplace operators that violate the act, up to and including shutting them down.

In general, the onus is on operators to ensure that their sellers are on the level. They must collect and verify information such as bank account number, contact information, tax ID number and working phone and email address from high-volume sellers. This is defined as those earning $5,000 or more or selling 200+ “new” items for any 12-month period within the last two years.

Alexandra Megaris, an advertising and marketing partner with the Washington, DC law firm of Venable LLP, handles cases before the FTC on behalf of ecommerce sellers. She joins our MCM CommerceChat podcast to provide some clarity and context on the ramifications of the INFORM Act.

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