FTC Places Online Marketplaces on Notice of Obligations Under INFORM Consumer Act

June 23, 2023 / Richard B. Newman

“The INFORM Consumers Act requires online marketplaces to protect consumers from counterfeit, unsafe, and stolen goods by verifying their high-volume third-party sellers’ identities, and making it easier for consumers to report suspicious marketplace activity,” said FTC lawyer Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.  “The Commission will enforce the Act to the fullest extent possible and will collaborate with our state partners to hold online marketplaces accountable.”

The letters enclose a copy of the Act, highlight the responsibilities the Act places on online marketplaces, and urge that businesses carefully review the statute and take all steps necessary to fully comply by June 27, 2023.  In the letters, FTC staff also urge online marketplaces to communicate with their third-party sellers about the information the Act requires to be collected, verified and disclosed.

The letters also emphasize that a violation of the act may be treated as a violation of an FTC rule, and thus noncompliant online marketplaces may face enforcement that could result in civil penalties of $50,120 per violation.  The letters are informational and the FTC is not publicly releasing the names of the recipients.

Understanding Compliance Obligations is Crucial

As part of the FTC’s effort to fully inform the public about the provisions of the INFORM Consumers Act and to put businesses on notice of their obligations as of June 27, 2023, it has developed business education materials that are available on the agency’s website.

“Informing Businesses About the INFORM Consumers Act,” summarizes how online marketplaces can comply with the act when it goes into effect with links to the act itself.

As set forth in the new business guide and the text of the law, the Act esssentially boils down to this.  Under the INFORM Consumers Act, online marketplaces must have more information about who is selling on their platform.  Covered sellers must promptly comply with those requests for information or risk suspension.  And consumers who buy from those sellers will have a place to report questionable activity.

Richard B. Newman is an digital advertising practices attorney at Hinch Newman LLP.  Follow FTC defense lawyer on National Law Review.
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Richard B. Newman

Richard B. Newman is a nationally recognized FTC advertising compliance, CID investigation and regulatory enforcemetn attorney. He regularly provides advertising counsel and represents clients in high-profile investigations and enforcement proceedings initiated by the Federal Trade Commission, state attorneys general, departments of consumer affairs, and other federal and state agencies with jurisdiction over advertising and marketing practices. Richard is also an ecommerce lawyer and spam defense attorney. His practice additionally focuses upon false advertising defense, data privacy, cybersquatting, intellectual property law and transactional matters relating to the dissemination of national advertising campaigns, including the gamut of affiliate marketing, telemarketing, lead generation, list management and licensing agreements. Richard advises clients on how to minimize the legal risks associated with digital marketing, email marketing, telemarketing, social media influencer campaigns, endorsements and testimonials, negative option marketing models, native advertising, online promotions and comparative advertising,

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