Posted May 11, 2023

Will the new INFORM law impact your e-commerce?

The INFORM Consumers Act goes into effect on June 27, and it may have direct, significant implications for industrial distributors' online catalogs and marketplaces.

capitol illustrationImplementing the INFORM Consumers Act aims to increase transparency and protect consumers from counterfeit, stolen, or dangerous products. However, the verification process may raise concerns about collecting, storing, and handling personal data.

Online marketplaces must adhere to stringent data protection laws and ensure that the collected information is used solely for the purposes outlined in the Act. Additionally, they must safeguard sensitive information from unauthorized access and potential breaches to maintain consumer privacy.

To protect sensitive seller information, online marketplaces should implement robust security measures like data encryption, secure authentication protocols, and regular security audits. Furthermore, they should have a well-defined data retention and deletion policy to minimize risks associated with data storage.

Marketplaces must also establish incident response plans and invest in employee training to ensure their staff can handle potential security breaches or unauthorized access.??Key provisions of the INFORM Consumers Act impacting high-volume third-party sellers include verifying their government ID, tax ID, bank account information, and contact details.

Small business owners may face challenges, such as increased administrative burdens, potential privacy concerns, and additional costs associated with compliance. They may also experience increased competition due to heightened transparency, which could impact their online marketplace operations.??

Experts expect the INFORM Consumers Act to change the online marketplace landscape significantly. Increased transparency and accountability may deter fraudulent sellers, creating a safer and more trustworthy consumer environment.

Complying with the new regulations may lead to increased administrative work and costs for sellers, but it could also boost consumer trust in their products. Overall, the Act is expected to promote a more level playing field and foster healthy competition.??To comply with the INFORM Consumers Act without compromising operations or competitiveness, small business owners should:??

A. Familiarize themselves with the Act's requirements and implement necessary changes promptly.?

B. Invest in secure data storage and management solutions to protect sensitive information.?

C. Maintain transparent communication with customers to build trust and credibility.?

D. Continuously monitor and adapt to changes in the online marketplace landscape to stay competitive.??Industry experts generally view the INFORM Consumers Act as a positive step toward ensuring integrity, notification, and fairness in online retail marketplaces.

The Act aims to protect consumers and promote transparency. However, its effectiveness will depend on the FTC's enforcement measures and the online marketplaces themselves. There may be areas for further consideration or refinement, such as addressing potential privacy concerns, minimizing administrative burdens on small businesses, and providing support to help them comply with the new requirements.

Ani Chaudhuri

Ani Chaudhuri is the CEO of Dasera. He has founded four technology companies to date: eCircle, acquired by Reliance in India; Opelin, acquired by Hewlett-Packard; Whodini, acquired by Declara; and Dasera. Prior to Dasera, Ani worked at McKinsey, HP and Tata Steel.