State legislators push for online shopping protections

LANSING — As consumers prepare to place their holiday Amazon orders, Michigan lawmakers are considering  protections to keep fraudulent online sellers from stealing Christmas.

Online marketplaces like Amazon and eBay would have to post information about high-volume third-party sellers, if legislation recently introduced in the House passes. Those are companies that have either sold 200 or more new or unused items over 12 months, or had more than five sales worth $5,000 in revenue over the same period.

Within three days of becoming a high-volume, third-party seller, online merchants would be required to provide their platform with a government-issued ID of the individual representing the business, or a government-issued document or tax record. If they don’t, they can’t sell on that marketplace.  

The bills would also require online marketplaces to post information about the seller, including their full name, address and phone number and email address.

The three-bill package was introduced by House Majority Floor Leader Rep. Ben Frederick, R-Owosso, and Reps. Samantha Steckloff, D-Farmington Hills, and Mark Tisdel, R-Rochester Hills. 

“When you go to a store to buy something, you know the name of that store, its location and how to get in touch in case something is amiss,” Rep. Matt Hall, R-Marshall, a cosponsor of the bills said.

“You may even catch the name of the person who helps you and makes that sale. Far too often with an online marketplace, you don’t have that information and that’s when problems can occur.”

The Michigan Retailers Association helped develop the bills, said Amy Drumm, the senior vice president of government affairs for the association. 

“We have pawn shops and secondhand dealer stores that are physical, walk-in retail locations that have a lot of regulations to prevent stolen items and fraudulent items from being sold at those stores. We don’t have the same protections for online marketplaces,” Drumm said.

The goal is to provide transparency and clarity, and to ensure products purchased on an online marketplace are vetted the same way as they are at retail stores, Drumm said.

People who are connected with organized retail crime rings are finding it easy to resell items on online marketplaces because there isn’t a lot of regulation, Drumm said.

Many people have horror stories about online products from receiving expired baby formula to skincare products that contain dangerous chemicals. Without verification of these businesses, consumers and marketplaces cannot seek resolutions, Steckloff said.

Steckloff once received a different deodorant than the one that was consistent with her cancer treatment and that she had ordered online.

“These are very common things and if we don’t have any sort of protection or some sort of regulation this is going to continue to happen,” Steckloff said.

“While (the legislation) won’t fix everything, it’s another layer of protection for my residents,” Steckloff said.

Frederick said that while online marketplaces aren’t opposed to the protections themselves, they would like to see a federal policy first.

“I don’t agree with that notion, because I don’t think waiting for the feds to do something has typically worked out as a reasonable strategy,” he said. “People are being harmed now, and we’re also seeing a number of marketplaces that actually are doing these things already as best practices.”

“I don’t want Michigan’s consumers to have to wait for the federal government to act on something we may be able to do ourselves,” he said.

While there are federal efforts underway that would require marketplaces to verify seller information, other states are already working on legislation. Arkansas was the first to pass this type of legislation, according to the Toy Association Inc., a not-for-profit organization representing the U.S. toy industry.

That legislation has national implications, as it would require marketplaces to keep information for consumers in Michigan. But Steckloff questioned why marketplaces wouldn’t keep the information for all consumers.

“Let’s just say you’re using your friend’s computer from Florida. They’re not going to be able to distinguish ‘Florida, they don’t need to see this information,’” Steckloff said.

Drumm said: “We are not alone in looking at this. When you’re talking about marketplaces, they aren’t just located in one state. They’re operating online, which could be accessed from any state. Regulations passed in one state would have to be complied with in all the states, essentially.” 

While Amazon supported the U.S. House’s most recent resolution to protect consumers, it opposed state legislation. These policies favor large brick-and-mortar sellers over small businesses, harm honest sellers and don’t prevent fraud and abuse, Brian Huseman, Amazon’s vice president of public policy, said.

EBay could not be reached for comment.

Frederick said requiring sellers to prove they’re a proper, legal business levels the playing field for businesses, keeping them from competing with bad actors.

If you have a real business, you’re going to have information like a tax ID, Steckloff said.

The legislation was referred to the Judiciary Committee.