This blog was updated on March 6, 2024.
In summer of 2023, the INFORM Consumers Act caused confusion and anxiety for brands that sell on Amazon. Many brands received banners and emails requesting verification for certain information related to their Amazon seller accounts. These notifications often came with an alert that their account was at risk of deactivation. To help keep brands at ease, we posted this blog to explain the INFORM Consumers Act and how it impacts your brand.
What is the INFORM Consumers Act?
The INFORM Consumers Act is a U.S. federal law that took effect on June 27, 2023. This law places new obligations on Amazon and high-volume third-party sellers who sell products in Amazon’s U.S. store. Under the new law, Amazon must collect and verify the following information:
- Identity: (a) For individual sellers: the name of the individual legally authorized to act on the sellers’ behalf; (b) For business sellers: the business name and name of a business point-of-contact
- Bank account information
- A working business phone number
- Business address
- Tax identification number
- A working email address
The INFORM Consumers Act applies to third-party sellers on Amazon who have sold 200 or more new or unused consumer products and have generated $5,000 or more in gross revenue in a continuous 12-month period.
What Is the INFORM Consumers Act ?
In 2023, Congress passed the INFORM Consumers Act to make online transactions more transparent and to deter the online sale of stolen, counterfeit, or unsafe merchandise. Under the law, “online marketplaces” where “high-volume third party sellers” offer new or unused “consumer products” must collect, verify, and disclose certain information about those sellers. In addition, online marketplaces must offer a clear way for people to report suspicious activity.
The Act requires online marketplaces to collect and verify bank account information, contact information, and tax ID information from high-volume third party sellers that sell consumer products through those online marketplaces’ platforms, and to disclose to consumers identifying information for certain high-volume third party sellers, subject to exceptions. The Act also requires online marketplaces to protect data collected to comply with the Act, to suspend high-volume third party sellers who do not provide required information or who provide false information, and to provide consumers with a mechanism to report suspicious marketplace activity to the online marketplace.
Are You Covered By the INFORM Consumers Act?
The first inquiry is whether the INFORM Consumers Act impacts you as a seller. This depends on your answers to three questions.
- Do you sell on a platform that meets the law’s definition of an “online marketplace?” The law defines an “online marketplace” as a person or business that operates a consumer-directed platform that allows third party sellers to engage in the “sale, purchase, payment, storage, shipping, or delivery of a consumer product in the United States.” Many of the companies that meet the definition of “online marketplace” are national names, but smaller niche platforms may be covered, too.
- Do you sell merchandise that meets the law’s definition of “consumer product?”
The law defines “consumer product” to include “tangible personal property for sale and that is normally used for personal, family, or household purposes.” - Do you meet the definition of a ‘‘high-volume third party seller?”
The law defines a “high-volume third party seller” as a seller in an online marketplace that doesn’t operate the online marketplace and that, in any continuous 12-month period during the past 24 months, has had 200 or more separate sales or transactions of new or unused consumer products, and $5,000 or more in gross revenues. In calculating the number of sales or amount of gross revenues for the “high-volume” threshold on a given online marketplace, the only sales that count are ones made though that online marketplace and for which payment was processed by the online marketplace, either directly or through its payment processor. The law specifically exempts businesses that have a contractual relationship with the marketplace to manufacture, distribute, wholesale, or fulfill shipments of consumer products; that have made their name, business address, and contact information available to the general public; and that provide the marketplace with identifying information that the marketplace has verified.
That means the INFORM Consumers Act impacts you if you sell consumer products in an online marketplace, if you meet the minimum sales thresholds in the law, and if you don’t meet all the factors required for an exemption. Furthermore, marketplaces can implement measures on collection, verification, and disclosure that go beyond what the Act requires. The Act specifies a floor, not a ceiling, on what marketplaces must do.
What Brand Information Does Amazon Share with Customers?
To ensure that customers have the best information at their disposal when making shopping decisions, Amazon maintains a seller profile page for every brand that sells on Amazon. This page includes their name, address, optional customer-service phone number, and a link to Amazon’s Buyer-Seller Messaging chat service. Since this page satisfies some of the new requirements under the INFORM Consumers Act, Amazon is not changing it.
To comply with the new law, Amazon began notifying customers in shipping confirmation emails when an item in their order was supplied by a different seller than the one they ordered from. Amazon also provided a link to the supplying seller’s profile page in the customer’s order-history invoices. This mainly occurred for sellers who had not opted out of FBA’s virtual tracking program.
Channel Key Takeaway
Congress passed the INFORM Consumers Act to add more transparency to online transactions and deter online criminal activity such as acquiring and selling stolen, counterfeit, or unsafe items. As the largest online marketplace in the U.S., Amazon must comply with the new law or face potentially severe penalties. In doing so, the ecommerce giant was obligated to contact every seller on its platform that meet certain sales criteria. If your brand sold 200 or more products and generated $5,000 or more in gross revenues within the 24 months prior to June 2023, you were likely asked to submit information to Amazon to keep your account active.
