Senator Pushes Crackdown On High-Volume Online Sellers
High-volume online marketplace sellers may face additional state and local regulation.
Sen. Kevin Thomas, D-Garden City, has proposed legislation (S.8391) that requires the state to collect additional information from some sellers before they can sell their goods to those living in New York state.
“Online marketplaces have grown in popularity over the years, and those companies should be held to the same standard as the brick-and-mortar stores serving our communities,” Thomas wrote in his legislative justification. “Basic transparency and verification requirements for high-volume third-party sellers, many of which are anonymous or based overseas, is necessary to ensure consumers are purchasing from a legitimate company, rather than an entity established to deceive online shoppers.”
Thomas wants to amend the state General Business Law to include a new section requiring online marketplaces to collect a bank account number, contact information and a business tax identification number from each high-volume third-party, which Thomas defines as a seller with at least $20,000 in gross annual revenues. The online marketplace would have to verify the information provided and implement reasonable security to protect the data collected. High-volume sellers would also be required to disclose information about themselves, including the seller’s full name, physical address and contact information. The online marketplace must also disclose to consumers a way to report suspicious activity of high-volume third-party sellers. The online marketplace also would have the power to suspend future sales activity of high-volume third-party sellers who are not in compliance with the state law’s requirements.
If Thomas’ legislation becomes law, those in violation could face a civil penalty not to exceed $10,000 for each violation brought by the state attorney general.
U.S. Senators Dick Durbin, D-Ill., and Dr. Bill Cassidy, R-La., introduced legislation in 2021 to combat the online sale of stolen, counterfeit, and dangerous consumer products by ensuring transparency of high-volume third-party sellers in online retail marketplaces. The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM Consumers) Act would direct online retail marketplaces that include third-party sellers of consumer products to authenticate the identity of “high-volume third-party sellers,” which will help deter the online sale of counterfeit goods by anonymous sellers and prevent organized retail crime rings from stealing items from stores to resell those items in bulk online. The bill will also ensure that consumers can see basic identification and contact information for high-volume third party sellers of consumer products on online marketplaces.
Arkansas was the first state to pass the INFORM Act at the state level in April 2021. Florida lawmakers introduced their own version of the legislation in January.
“This bill ensures that high-volume third-party sellers provide information to the online marketplace to guard against counterfeit, fraudulent or stolen goods being sold to unsuspecting consumers,” Thomas wrote. “In a report prepared by the Department of Homeland Security’s Office of Strategy, Policy, and Plans, it is stated that these trafficked goods ‘threaten public health and safety, as well as national security.’ While certain online marketplaces collect information from high-volume third-party sellers, it is not required by New York state law. Similar bills have been introduced at the federal level and in 22 states across the U.S.”