Anyone running a small business in March 2020 woke up to a devastating crisis that not only threatened their health but their livelihoods too. For the past 19 months, many of us have struggled to stay afloat. Those that were fortunate to stay in business owe much of their success to online marketplaces like eBay, Etsy, and Amazon Marketplace, which allowed sellers to bypass expensive brick-and-mortar locations and connect with more customers.
But a bill circulating in the U.S. Senate threatens to put our businesses in jeopardy again. The INFORM Consumer’s Act would impose new requirements and burdens on the millions of people who run small businesses. Similar bills introduced in more than a dozen state legislatures are generally supported by big-box retailers eager to siphon online money back to their stores. Lawmakers should reject them all.
On their face, the INFORM bills claim to make improvements to online marketplaces. In response to increasing instances of so-called “retail crime,” including counterfeit goods and online scams, the bills would require every online seller above a certain volume to disclose their current business and contact information to be available and searchable online.
The first problem is that the arbitrary volume requirement to qualify for these requirements is extremely low. Any business with gross revenue of more than $5,000 or more than 200 customer transitions per year would be classified as a “high volume seller.” This classification is laughable to millions of small sellers who sell bracelets, paintings, or rare books online. Two hundred transactions per year is less than one a day, and while $5,000 is real money, it’s nowhere near the billions in gross revenue of actual high-volume online sellers like Walmart, Amazon, or Target.
Why is this such a problem? Because the bills would also require these “high volume sellers” to disclose their personal business information. Many small online businesses don’t have formal business addresses in strip malls or high-end office parks. Many of them operate out of homes, in an extra bedroom or the shed out back. Requiring owners to publicly register their home addresses and personal phone numbers risks opening them up to harassment, scams, even theft. Imagine if an angry customer decides to show up at the owner’s house to complain about a product. Or if a robber learns exactly where a small jeweler keeps her valuable materials.
At the same time, these bills do little to deter the criminals behind online scams and counterfeit products that have become such a problem. The majority of online counterfeiting occurs overseas, well beyond the reach of INFORM legislation. Criminals could keep selling their fake goods with no repercussions, while American small businesses bear the burden of vanishing privacy. For this exact reason, the marketplaces rigorously police their own networks. Etsy announced that it removed almost half a million suspect listings in 2019, and closed 13,906 shops for repeat infringement. Amazon went a step further and blocked 2.5 million accounts believed to be selling counterfeits.
