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Retailers Join Fight To Get Amazon And Other Marketplaces To Identify Third Party Sellers

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G GPS ap, JC Penney JCP , Birkenstock, and Levi’s have joined a coalition of apparel and retail trade groups pushing for legislation to require Amazon AMZN and other online marketplaces to do a better job of monitoring third party sellers.

The coalition says the legislation will address the problem of counterfeit and stolen merchandise being sold online by third party sellers whose identities are kept hidden from consumers. Counterfeit and stolen merchandise has become an even bigger problem online during the pandemic, the coalition says, as counterfeits and organized crime rings have rushed to capitalize on the surge in online spending.

The group, the Buy Safe America Coalition, was launched last month by the Retail Industry Leaders Association (RILA). Fifteen other industry associations are members, including the American Apparel and Footwear Association, the Consumer Healthcare Products Association, The Toy Association, and the International Council of Shopping Centers.

The group today announced the new retail and brand members, and said it expects more will join the campaign.

It is pressing Congress to pass the INFORM (Integrity, Notification, and Fairness in Online Retail Marketplaces) for Consumers Act. That legislation would require Amazon and other marketplaces to verify the identities of third party sellers and make that information available to consumers.

Tracking down ‘bad actors’ online

“It never hurts to have transparency and accountability in a system, and given how much is sold online, whether its counterfeit or stolen, having that one more tool for law enforcement, to be able to help track down the bad actors, the criminal enterprises, just seems like a no-brainer to us,” said Michael Hanson, spokesperson for the coalition.

While the legislation would apply not just to Amazon but also to Etsy, eBay, and all other e-commerce sites with third party sellers, Amazon is the biggest target of the act because of its size.

“The focus, as people talk about this, is on Amazon because they are the largest. They have 38, 39% of the market,” said Hanson,who is senior executive vice president, public affairs, for RILA.

Consumers often do not realize they are buying from a third party seller, rather than Amazon, when they place an order, and Amazon’s policies regarding information about third party sellers make it difficult for brands to take action against sellers of counterfeit or stolen goods.

Tracking down third party sellers on Amazon often involves “a pretty byzantine process which always makes it difficult for retailers to get the information necessary to stop the bad actors from selling those goods,” Hanson said.

The Senate version of the INFORM act was introduced in March by Illinois Democratic Senator Dick Durbin, and Louisiana Republican Senator Bill Cassidy. The companion House bill was introduced in July by Democratic Representative Jan Schakowsky of Illinois and Democratic Representative Kathy Castor of Florida.

High-volume sellers targeted

The act calls for Amazon and other online marketplaces to verify the government ID, tax ID, bank account information and contact information of its high volume third party sellers and require those sellers to provide their contact information to consumers. The act defines high-volume sellers as sellers with 200 or more sales in a 12 month period, amounting to $5,000 or more.

A report released in January by the federal Department of Homeland Security said e-commerce sites have replaced flea markets, street corners, and back alleys as the place where the majority of stolen or counterfeit goods are sold today.

“While counterfeit and pirated goods have been sold for years on street corners, alleys, and from the trunks of cars, these illicit goods are now marketed to consumers in their homes through increasingly mainstream e-commerce platforms and third party online marketplaces that convey an air of legitimacy,” the report stated.

In the past, the report said, “consumers could identify products by relying on “red flag” indicators—such as a suspicious location of the seller, poor quality packaging, or discount pricing.” Now, however, consumers are “regularly exposed to counterfeit products in settings and under conditions where the articles appear genuine” - such as a well-known e-commerce website.

Amazon’s Crime Unit

Amazon did not respond to a request for comment, but in June it announced the formation of its Counterfeit Crimes Unit, made up of former federal prosecutors, investigators and data analysts. Amazon said it invested over $500 million and had more than 8,000 employees assigned to fight “fraud and abuse” in 2019. It said it blocked over 2.5 million suspected bad actor sites from selling through Amazon and blocked over 6 billion suspected bad listings in 2019.

An Amazon spokesperson told Bloomberg News last month that that company is already doing a number of the third-party seller identification measures that would be required by the act.

But RILA and its coalition members say that while they have been pushing Amazon for changes in third party accountability for more than a decade they haven’t seen significant movement on the issue.

“We can’t rely on third-party marketplaces’ current efforts to stop stolen and counterfeit goods from being sold on their platforms,” Jim DePaul, executive vice president of stores, JC Penney, said in a statement released today by the coalition.

“Requiring basic safeguards to better collect and verify the identity of those selling goods online is one of the simplest ways to prevent the proliferation of counterfeit and stolen goods being sold online,” he said.

Stephanie Lester, head of Government Affairs at Gap Inc, in a statement also released today, said the INFORM act “will help ensure American families shopping for apparel online will have confidence that they are purchasing authentic products from trusted brands.”

“People are buying more and more online,” Hanson said. “We need that transparency and accountability so consumers can make sure they know they’re getting reputable goods. And not these illicit and stolen goods. That’s why this piece of legislation is so important.”

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