E-commerce and direct-to-consumer (“DTC”) businesses should be aware of the requirements of the federal Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act enacted by Congress in 2023. The Act is called the INFORM Consumers Act. Many e-commerce and DTC businesses already comply with the Act, either because the required information is supplied as part of ordinary business practices or because online sales platforms changed their Terms of Service to require the provision of the information. However, new e-commerce and DTC entrepreneurs should be prepared to comply with the INFORM Consumers Act. Confirming compliance is another one of those due diligence requirements when considering an e-commerce merger and/or acquisition. Here are a few things to know about the INFORM Consumers Act.
What information must be supplied?
The INFORM Consumers Act requires online sellers to provide basic contact information, which, in some cases, must then be disclosed to consumers through the online sales platform/marketplace. One purpose is to ensure that consumers have contact information for online sellers, allowing for “direct and unhindered communication” to inhibit fraud and deceit. Another underlying purpose of the Act is to assist in the collection of contact and financial information in the event of lawsuits, judgments, and/or fines to help prevent counterfeiting, piracy, and other illegal business practices. Thus, the basic information that must be disclosed to an online sales platform/marketplace is:
- Name (if selling as an individual) OR
- Business name and name of an individual acting on behalf of the business AND some form of valid government-issued identification for that individual OR a valid tax document that includes the business name and physical address of the seller
- Valid and working email address
- Valid and working phone number
- Physical street address
- Seller’s taxpayer identification number
- Seller’s Bank account information
What information will be disclosed to consumers?
For some sales listings, the online sales platform is required to provide some of this information to consumers (as part of the listing). This information includes Seller’s:
- Full name
- Physical address
- Contact information such as phone number, email address, etc.
- If a different business is used to supply the product being sold, that must be disclosed and, upon request, the name, address, and contact information for that business must be provided to the consumer
Does the INFORM Consumers Act apply to my e-commerce business?
Maybe. That Act applies to “third-party sellers” with “high volume.” “Third-party” basically means that the seller does not own the online sales platform/marketplace. “High volume” means a seller that has had 200+ separate sales and $5,000+ in gross revenues during any continuous 12-month period in the previous 24 months. The Act also only applies to sellers of “consumer” goods and products.
What if an e-commerce business does not comply?
If an e-commerce business does not comply with the requirements of the INFORM Consumers Act, the online sales platform/marketplace is required to suspend the seller’s account. For many sellers that is the harshest possible punishment.
Contact the Internet Law and E-commerce Attorneys At Revision Legal
For more information, contact the experienced Internet Law and E-commerce Merger & Acquisition Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.
