Online marketplaces have become incredibly popular for online shopping, bringing convenience and ease to consumers who can now shop from the comfort of their own homes. These platforms offer a unique advantage over traditional online retailers, particularly for creative artists and entrepreneurs who can sell their products without the need to open a physical store or build a website from scratch. Online marketplaces provide a wide-reaching platform for small business owners to showcase their products and services to a broader audience. However, the lack of strict regulations imposed on sellers in these marketplaces also presents an opportunity for fraudsters to take advantage of unsuspecting consumers.
Even well-known brands like Facebook and Amazon Marketplace are not immune to fraud, as fraudsters operating from outside the U.S. can still exploit consumers. To combat this issue, the U.S. Congress introduced a bill in 2021 called The INFORM Consumers Act, with the primary goal of protecting consumers from fraud and counterfeit goods.
What is the INFORM Consumers Act?
The INFORM Consumers Act is a bill introduced by the U.S. Congress to address the rising concern of fraud and counterfeit goods on online marketplaces. Online marketplaces such as Etsy and eBay are required to comply with this act by June 27, 2023. The bill imposes certain due diligence measures that online marketplaces must implement to ensure that their sellers are legitimate businesses and that the products they sell are authentic.
How Does the INFORM Consumers Act Protect You?
Under the INFORM Consumers Act, online marketplaces must verify the identity of their sellers by collecting and verifying their tax ID numbers, government-issued IDs, and bank account information. They are also required to implement protocols to identify and remove counterfeit products from their platforms, as well as provide consumers with detailed information about the products they purchase. This includes information such as the identity of the seller, their name, business address, contact information, and country of origin for the products.
While complying with the INFORM Consumers Act may result in increased costs for online marketplaces as they invest in new systems, controls, and processes, it ultimately benefits consumers. With these measures in place, consumers can have more confidence in the products they purchase online and be better protected from potential fraud caused by counterfeit products and nefarious sellers.
The Benefits of Due Diligence Technology
Thanks to the extensive due diligence technology available today, online marketplaces have the means to implement thorough and efficient due diligence controls. These controls help mitigate risks, fraud, and financial loss for both customers and businesses as a whole. For example, Thomson Reuters Risk and Fraud Solutions offer a range of end-to-end solutions, including document authentication, person and business verification, in-depth risk scoring, and enhanced due diligence reporting.
While online marketplace providers may find the increased costs challenging, integrating solid due diligence tools can prevent fraudsters from exploiting unsuspecting consumers. By taking the time to ensure that their sellers are legitimate, online marketplaces can build trust and confidence in the buyer-seller relationship and bring consumers back to their platforms.
With the INFORM Consumers Act, consumers can now shop online with peace of mind, knowing that steps are being taken to protect them from fraud and counterfeit goods. To learn more about the bill and its impact, visit Garrity Traina, a trusted source of information on consumer protection and online marketplace regulations.
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