Florida’s E-commerce Legislation Would Conflict With the INFORM Act
A newly introduced bill in the Florida Senate would require online marketplaces, such as Amazon and eBay, to verify and disclose the location of third-party sellers. However, online marketplaces already provide this information to consumers because a recent federal law requires them to do so. Moreover, differences between the proposed Florida legislation and existing federal law would create conflicting rules for online marketplaces operating in Florida. Therefore, the Florida bill fails to offer additional benefits to consumers but would create confusion for online marketplaces.
The INFORM Consumers Act, a federal law that went into effect on June 27, 2023, requires that online marketplaces collect, verify, and disclose information about high-volume third-party sellers on their platforms. The purpose of this disclosure is to help inform consumers about the identity of third-party sellers, increase transparency for online commerce, and deter bad actors from selling stolen, counterfeit, or unsafe products through third-party marketplaces. The law also requires online marketplaces to give consumers a way to report suspicious behavior and conduct about sellers. While the INFORM Act is not a silver bullet to stop counterfeiting, it empowers consumers and platforms by providing greater information about products sold online.
Florida Bill 1342, introduced in January 2024, creates essentially the same requirements. The bill would require marketplaces to verify a seller’s location and disclose that information to consumers if the seller is in or operating from a country of concern. Listed countries of concern are China, Russia, Iran, North Korea, Cuba, Venezuela, and Syria. The law also requires that the platform hold proceeds of sales from countries of concern for 120 days before they transfer funds to the seller.
However, the bill fails to address whether online marketplaces already complying with the requirements of the INFORM Act would satisfy the requirements in Florida Bill 1342. For example, the INFORM Act requires online marketplaces to disclose the location of a high-volume seller, regardless of the origin country. The Florida bill requires that sellers disclose for sellers operating from a country of concern. Would the marketplace be in violation of the Florida law if it discloses a seller is operating from China, but does not disclose that China is considered a country of concern? Without clarification on this requirement, online marketplaces could violate the Florida law without violating the INFORM Act.
The Florida bill would also slow down online marketplace operations. The Florida bill requires that online marketplaces verify the locations of all sellers, regardless of their sales volume, but it does not specify if online marketplaces must verify new sellers before listing their products. In contrast, the INFORM Act only requires online marketplaces to verify information provided by sellers when they surpass a threshold of 200 sales and $5,000 in gross revenue in any continuous 12-month period. As a result, online marketplaces have a buffer window before they must display the information for new sellers. This difference creates another opportunity for platforms to violate the Florida law without violating the federal law.
While the differences between these laws are small, consumers and businesses are better served by a single, comprehensive federal law, than by several inconsistent state laws. States should not pass legislation that conflicts with federal law because doing so would impose unnecessary business costs that would be ultimately passed to consumers. This is especially true in e-commerce, where buyers and sellers would face significant obstacles to interstate commerce if they had to comply with many different requirements.
State lawmakers should not be setting foreign policy. If state legislators in Florida feel strongly about the need for more consumer protection around products from countries of concern, they should work with Congress to enact a tougher federal law. However, state policymakers should not pass legislation that duplicates existing federal laws, like the INFORM Act, with confusing and potentially contradictory stipulations. Doing so would only lead to challenges for compliance and create barriers to online commerce in the state and beyond.
