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The INFORM Act Passes; Combating Counterfeiting with Transparency in Online Sales

01/18/2023 | 2 minute read

Posted in FTC

The recent passage of the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (INFORM Act) bears significant implications for brand owners and online marketplaces. For brand owners, the disclosure of collected information could yield valuable intelligence about possible counterfeiters. Such information can be used to help brand owners enforce their rights by giving them a point of contact for those enforcement efforts. Such information is not as readily available today, and when it is, it is not always accurate. For online marketplaces, there is significant compliance work to be done between now and June to comply with the act. Online marketplaces will need to act quickly to avoid Federal Trade Commission (FTC) investigations for noncompliance.

Signed into law at the end of 2022, the INFORM Act goes into effect in June. The act is an attempt to address some concerns with the trafficking and sale of counterfeit goods on online marketplaces. The act requires online marketplaces to not only collect but also to verify, and in some situations disclose, certain information regarding high-volume third-party sellers of consumer products. A high-volume seller is defined as any seller that, in a continuous 12-month period, has entered into and completed 200 or more discrete sales or transactions and, as a result, has accumulated an aggregate total of $5,000 or more in gross revenue.

    The FTC and state attorneys general are charged with enforcing the provisions of the INFORM Act. Violations of the act will be treated as violations of a rule defining an unfair or deceptive act or practice of the FTC Act. We expect the FTC to draft regulations to support the enforcement of the act, and we will provide updated information once that guidance is promulgated.