(Image from HupSpot e-commerce blog)
On Feb. 4, the INFORM bill and the Shop Safe bill passed in the House and have now been sent to the Senate to review. Both bills aim to limit and hopefully stop the sales of stolen goods online as well as keep consumers safe from defective or dangerous counterfeit products. Although the two bills have some bipartisan support in the House and the Senate, the outcome of the Senate votes is still unsure.
According to the Wall Street Journal, the Inform Consumers Act would make those who “make more than 200 sales accounting to $5,000 or more in a year” register on online sale sites with government information such as their tax or government ID. The Shop Safe Act would require online sale sights to verify sellers’ identities and authenticate goods being sold.
Vega Bharadwaj, Marieke Brock, Bridey Heing, Ramon Miro, and Noor Mukarram, researches for the U.S. Patent and Trademark Office as well as the U.S. Department of Commerce estimate that “$143 billion of counterfeit or pirated goods are sold domestically and abroad each year.” Although this might not seem like a lot compared to the global gross domestic product of 2020, about $85 trillion dollars, stopping counterfeit and pirated goods sales is still important in ensuring a healthy and safe economy.
The two bills seem well within Congress’ rights to regulate commerce as online goods are thought of as interstate commerce, according to Stimmel Law. Hopefully, these laws will protect consumers from buying illegal goods and discourage theft and illegal sales. However, enforcing these bills, if they become laws, might prove difficult given the vastness of the domestic and international e-commerce world. According to U.S. Customs and Border Protection, more than 90% of counterfeit seizures are from international mail, and many of these are e-commerce packages.
Although the U.S. Customs and Border Protection has guidelines for e-commerce shipping, their guidelines don’t seem like they would be very helpful in identifying counterfeit goods. They ask for detailed product descriptions, values, quantities, weights, the country of origin, and possible other requirements. But, it doesn’t seem like there’s a clear-cut way to check for authenticity, at least, not written in their guidelines.
Hopefully the Inform Consumers Act and the Shop Safe Act will get passed and make online shopping a bit safer, at least in the U.S. Even cutting down on the sale of counterfeit and pirated goods a little bit is still progress and these bills seem like a step in the right direction to providing consumer safety and creating a better economy.
Discussion questions:
1. What do you think of the Inform Consumers Act and the Shop Safe Act?
2. With a rise in online shopping, especially during the pandemic, how else can we keep consumers safe?
3.What form of e-commerce do you think is the most affected by counterfeit and/or pirated products?
Sources:
San Francisco Chronicle article: https://www.sfchronicle.com/politics/article/Could-new-laws-about-online-sales-stop-mass-16832692.php
U.S. Intellectual Property and Counterfeit Goods research: https://www.uspto.gov/sites/default/files/documents/USPTO-Counterfeit.pdf
Statista GDP information: https://www.statista.com/statistics/1117921/sales-losses-due-to-fake-good-by-industry-worldwide/
Stimmel Law information: https://www.stimmel-law.com/en/articles/laws-pertaining-commerce-internet
U.S. Customs and Border Protection counterfeit products information: https://www.cbp.gov/trade/fakegoodsrealdangers
U.S. Customs and Border Protection e-commerce guidelines: https://www.cbp.gov/sites/default/files/assets/documents/2020-Jan/E-Commerce%20Compliance%20Guide%20for%20Online%20Sellers.pdf
Vice News video about the dangers of e-commerce: https://www.youtube.com/watch?v=lWhUu5x-tgE
3 comments:
I think it's a pretty great idea, I don't see any drawbacks to it other than maybe causing a slight inconvenience for sellers. However, it wouldn't prevent from small-time scammers who might sell 199 or $4999 worth of products before creating alternate accounts or whatnot. The registration and required provision of package information is definitely a smart move in terms of making it more difficult and pesky for potential scammers to sell counterfeit items.
One thing that could be changed to improve efficiency is make a blacklist or a site where people who purchase items can report faulty goods to warn other potential customers of scam. I know that this is already possible on websites like Amazon or Etsy but there is nothing preventing sellers from deleting online reviews in order to preserve a visage of innocence and authenticity. I wouldn't suggest this to be incorporated into either bills but I do think it could be another helpful countermeasure.
I think the reselling market is the most prone to counterfeit products simply because sellers are usually anonymous and many sites like StockX or Ebay have no return policies. One of the main reasons I try to stay away from those sites is because I'm not trying to spend money on an item I want and then end up getting a cardboard box stuffed with dirty socks instead. Websites owned by larger companies do a good job of filtering what is put on their sites and are usually pretty responsible when it comes to reimbursing customers.
I similarly believe that the Consumers Act and Shop Safe Acts are positive measures which can benefit consumers who engage in online shopping. Mandating registration with personal information would ensure better accountability and promote product control, thus addressing the current issues with the system of online sales. I was quite surprised by the $143 billion value that counterfeit and defective good sales amounts to annually, and definitely think that rechanneling some of that money back into established businesses and sellers would positively impact the economy/supply chain. While some e-commerce businesses may make small profits, others can generate tens of thousands of dollars in profit every month, which is why it is important to ensure that their sales provide the promised products to consumers. I think that another improvement to ensure quality control and a positive seller-consumer relationship would include a reporting system, in which e-commerce businesses are investigated if people report the site for providing counterfeit items/scamming. In e-commerce, people often pair with a supplier who takes care of the orders that are registered on the site, so the problem with the business could also originate on the supply level. If a supplier packages counterfeit items or random products and ships them out to the consumers, it could save the supplier a lot of money (i.e. not shipping the intended $300 necklace but instead placing in a pair of $10 flip flops). E-commerce site owners may be unaware of this until massive complaints may build up, as their stores generate passive income which leads to generally lower amounts of attention/maintenance to the business than other established brands.
I agree with Amitai and Edan that the acts are good ideas and it's surprising to me that verifying the identity of the seller wasn't already required. Also, I really like Edan's point that people who sell less than 200 items or $5,000 per year aren't held accountable. This seems like a silly provision that will let many people fall through the cracks. Perhaps verifying one's identity for selling a single item is an inconvenience, but that inconvenience is worth the reliability of e-commerce.
I'd also like to elaborate on the importance of eliminating counterfeit goods online. In the case of pharmaceuticals, (unknowingly) purchasing counterfeit drugs can lead to drastic consequences. Some drugs may be less potent than advertised, and some may even lie about the ingredients. This can lead to deadly consequences, so it is essential that the Consumers Act and Shop Safe Act are passed to avoid future issues. The FDA has an updated list of illegal online pharmacies: https://www.fda.gov/drugs/drug-supply-chain-integrity/internet-pharmacy-warning-letters.
However, I would also like to add that resorting to the big companies (Amazon, Etsy) is not always the best idea. I have personal experiences with faulty products from Amazon, and it doesn't seem like a good idea to rely on a company that has basically turned into a monopoly. Supporting smaller, trustworthy websites is important as people may grow skeptical of smaller websites just because they are unpopular.
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