The Federal Trade Commission warned 50 online marketplaces on June 20, 2023 that they must comply with the INFORM Consumers Act when it takes effect on June 27. Small sellers face two different thresholds: one for supplying identifying information to the marketplace, another for disclosure to buyers. A seller can fall below the public-disclosure threshold and still face a suspension of future sales for failing to supply required information. [S1][S2]
The collection rules apply to a “high-volume third party seller”: one with at least 200 separate sales or transactions of new or unused consumer products and at least US$5,000 in gross revenue during any continuous 12-month period in the preceding 24 months. Both tests matter. The marketplace need only count sales made through its platform for which it or its payment processor processed payment. This is not a test of the seller’s combined revenue across every sales channel. The statute covers consumer-product sales in the United States and excludes the marketplace’s own operator and certain business suppliers meeting specified disclosure, contractual and verification conditions. [S2]
Once a seller qualifies, the marketplace must require the information within 10 days. The requested records include a bank account number—or a payee name if there is no bank account—a business tax identification number, or, if the seller does not have one, a taxpayer identification number, and a working email address and phone number. An individual supplies their name; a non-individual seller supplies either government-issued identification for someone acting on its behalf or a government-issued record or tax document showing the business name and physical address. The marketplace then has 10 days after collection to verify the information. [S2]
The paperwork does not end with onboarding. At least annually, the marketplace must remind covered sellers to keep the information current and require an electronic certification within 10 days that changes have been supplied or that nothing has changed. If a seller fails to provide required information or certification, the marketplace must give written or electronic notice and a 10-day opportunity to respond, then suspend future sales until the seller supplies it. For a small shop, that makes monitoring marketplace notices part of keeping a sales channel open. [S2]
Public disclosure has a separate trigger: a high-volume seller with at least US$20,000 in annual gross revenue on that marketplace. The platform must clearly disclose the seller’s name, physical address and a way to communicate directly, subject to the law’s exceptions. That contact route can be a working phone number, email address or direct electronic messaging; it need not expose every contact detail collected privately. Disclosure can appear on the product listing, including through a link, or in a post-purchase confirmation or other communication and the buyer’s account transaction history. The US$20,000 threshold is no reason to ignore a verification request below it. [S2]
Home-based sellers have a narrower option than exemption from the law. On request, a seller who certifies that it has only a residential address, or a combined business and residential address, may receive partial disclosure: the marketplace can show country and, where applicable, state instead of the street address, with directions for consumer inquiries. That does not remove the information-collection duties. If the marketplace learns that the seller obtained partial disclosure through a false statement or fails to answer inquiries within a reasonable time, it must give notice and a 10-day opportunity to respond before suspending future sales unless the seller consents to the required identity disclosure. [S2]
The marketplace also inherits limits on the information it collects. Data gathered solely to comply with the Act cannot be used for another purpose unless required by law, and the platform must maintain reasonable security safeguards appropriate to the data and its use. Seller verification creates a compliance file, not unrestricted permission to reuse it. [S2]
Source documents
- FTC Puts Online Marketplaces on Notice About Their Responsibilities Under the New INFORM Consumers Acthttps://search.ftc.gov/news-events/news/press-releases/2023/06/ftc-puts-online-marketplaces-notice-about-their-responsibilities-under-new-inform-consumers-act
- Public Law 117-328, Division BB, Title III, Section 301 (136 Stat. 5555–5562)https://www.govinfo.gov/content/pkg/STATUTE-136/pdf/STATUTE-136-Pg4459.pdf