Will new organized retail crime law help retailers?

The INFORM Consumers Act requires online marketplaces like Amazon and Facebook to protect consumers from counterfeit, unsafe and stolen goods from bad actors.

The Integrity, Notification, and Fairness in Online Retail Marketplaces (INFORM) for Consumers Act – a law designed to make it more difficult for organized retail crime groups to sell illicit goods through online marketplaces like Amazon or Facebook – takes effect Tuesday. 

The bipartisan legislation requires online marketplaces to protect consumers from counterfeit, unsafe and stolen goods from bad actors. 

It's part of ongoing efforts to combat organized retail crime that has proliferated the industry. In 2022, these thefts, many of which have garnered national attention, cost retailers and communities $95 billion, and it's only getting worse, according to the National Retail Federation (NRF). 

Starting Tuesday, online marketplaces will be required to collect, verify and disclose certain information from third-party sellers that conduct at least 200 transactions resulting in total revenues of $5,000 in a year. 

ORGANIZED RETAIL THEFT NEEDS STRICTER PENALTIES, US CHAMBER OF COMMERCE TELLS CONGRESS

Online marketplaces will have to acquire and verify a seller's bank account numbers, government-issued identification, tax identification numbers as well as contact information. Certain information such as sellers' names and contact information must also be disclosed to consumers, so they can report any suspicious activity on the marketplace. 

It will, in part, bolster the communication between the marketplaces, law enforcement and the retail community, David Johnston, vice president of asset protection and retail operations for the National Retail Federation, told FOX Business.

For the first time, if a consumer, retailer or law enforcement thinks that a marketplace isn't following the law, they can report it to the Federal Trade Commission (FTC) which will investigate the marketplace. If online marketplaces don't comply with the law, they can face a fine of $50,120 per violation, according to the FTC. 

"Online marketplaces have always been viewed as an avenue of anonymity and uncertainty as to who is actually selling the merchandise," Johnston.

LOWE'S PIONEERS SYSTEM TO SOLVE ORGANIZED RETAIL CRIME

However, "through the verification and validation required from the INFORM Act, it's now going to remove that veil not only for those that are investigating suspected items, but I think also for the consumers," he added. 

Industry experts don't expect it to solve the problem, though many are in agreement that it's a good first step. 

"It's too early to tell how far the needle will move," Johnston said. However, "it's a single step in the journey to curbing the organized retail crime that we're seeing and the increase in threats," he added. 

Johnston said the legislation will help to dismantle local or regional organized groups, but doesn't believe it will make much of a dent for "these larger, well-structured transnational groups" that are garnering millions of dollars through the resale system.

BUSINESSES TAKE DRASTIC ACTION TO PROTECT AGAINST RAMPANT SHOPLIFTING, ORGANIZED CRIME THEFTS

Retailers who have continued to face the threat of organized retail crime, which is growing in scope and complexity, are in agreement with Johnston that this is only a first step in tackling this issue. 

"Congress and states must focus on three paths forward: first, enforcing the new law of the land, second, creating capacity for law enforcement to investigate and prosecute cases through funding federal, state and local task forces," Home Depot spokesperson Evelyn Fornes told FOX Business. 

Fornes also noted that policymakers should also focus on "educating law enforcement and prosecutors on how to partner with retailers to combat dangerous criminals and organized crime." 

Home Depot has been ramping up its initiatives over the past several years to try and mitigate these crimes including working with federal and state task forces. 

GET FOX BUSINESS ON THE GO BY CLICKING HERE

An Amazon spokesperson told FOX Business that the company believes "establishing a standard, nationally consistent expectation for the entire industry is a positive development will help ensure small businesses selling products online do not have to manage an unworkable patchwork of state-level regulations." 

However, the company said it has been innovating on a "robust set of processes and tools for vetting and continuing to monitor sellers in our store" long before the legislation was passed into law. 

"This is a critical part of our ongoing commitment to customer and seller trust," the spokesperson continued. 

Walgreens said in December that it supported the legislation when it was introduced in October 2021, saying once enacted it will "empower every state attorney general to enforce the law’s provisions." 

The company also said it is "encouraging every state to make tackling ORC a priority by funding dedicated task forces to prosecute criminal rings operating in their communities."

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.